How To Flip Houses In South Dakota: Step By Step (2024)

Flipping houses has long been regarded as one of the best ways to build wealth, offering the potential for substantial profits without the need for a college degree. If you're interested in seeing what flipping can do for you and your financial future, there's one state that should be on your radar: South Dakota.

Beyond its picturesque landscapes and welcoming communities, South Dakota presents a unique opportunity for aspiring real estate investors. With its remarkably low unemployment rate and robust demand for housing, the state offers a promising environment for house-flipping success.

This favorable combination of factors makes South Dakota a hotspot for house flippers seeking to capitalize on the growing need for well-maintained homes. In this article, we will teach you everything you need to know about how to flip houses in South Dakota, including:

• What Is Flipping Houses?
• South Dakota House-Flipping Statistics
• How To Flip Houses In South Dakota (7 Steps)
• How To Find Houses To Flip In South Dakota
• Do You Need A License To Flip Houses In South Dakota?
• How To Flip A House In South Dakota With No Money
• Best Cities To Flip Houses In South Dakota
• Final Thoughts On Flipping Homes In South Dakota

*Before we begin our guide, we also invite you to view our video on How To FLIP A HOUSE For Beginners (Step-by-Step). Host and CEO of Real Estate Skills, Alex Martinez, & Stan Gendlin share how to flip a house from start to finish in South Dakota! 

Together, Alex & Stan have completed over 1,000+ house flips. What you learn in this video will give you the confidence and guidance to successfully complete your fix-and-flip project!

What Is Flipping Houses?

Flipping houses often referred to as rehabbing, involves purchasing properties to renovate and improve them before reselling them for a profit. This real estate strategy entails three pivotal stages: acquisition, rehabilitation, and resale.

In the buying phase, investors aim to secure properties at advantageous prices, often distressed or undervalued homes. Subsequently, the rehabilitation phase focuses on renovating and upgrading the property to enhance its market value and appeal. The final step is reselling the property, ideally at a higher price point, to capitalize on the improved value and attract potential buyers.

Profits in house flipping are maximized by carefully managing each stage of the process, from selecting properties with potential to negotiating favorable purchase prices and conducting cost-efficient renovations.

Amid South Dakota's thriving real estate market, learning the art of flipping houses can be particularly rewarding. The state's low unemployment rate translates into strong housing demand, further boosting the potential for lucrative returns on investment. As a result, now is as good of a time as any to learn how to flip houses in South Dakota.

South Dakota House-Flipping Statistics

Understanding how to flip houses in South Dakota starts with learning the most fundamental indicators of the local market. As a result, we’ve provided some of the most critical South Dakota house-flipping statistics investors should know before making any deals of their own:

• Average Home Prices: $296,096
• 1-Year Appreciation Rate: +3.4%
• Median Days On Market: 45
• Active Listings: 2,695
• New Listings: 1,112
• Foreclosure Rate: One in every 77,675 households
• Population: 909,824
• Median Household Income: $63,920
• Unemployment Rate: 8%

*All South Dakota housing market statistics are as of Q3 2023.

Attend our FREE training at Real Estate Skills. Gain insider knowledge, expert strategies, and essential skills to make the most of every real estate opportunity that comes your way.

How To Flip Houses In South Dakota (7 Steps)

New investors flipping homes in South Dakota should follow these steps closely:

1. Find A House-Flipping Mentor
2. Research The Local Housing Market
3. Find & Analyze Distressed Properties
4. Raise Capital To Fund The Deal
5. Close On The House
6. Renovate The Property
7. Resell The House

1. Find A House-Flipping Mentor

A house-flipping mentor is an experienced individual who guides and supports newcomers through their first attempts at real estate investing, particularly in house-flipping. Real estate mentors can come in various forms, ranging from seasoned professionals to friends with substantial expertise in real estate. Their role goes beyond imparting knowledge; they provide valuable insights, advice, and a support system that can significantly benefit those new to the house-flipping industry.

For novice investors, partnering with a mentor is an important step in navigating an intimidating sector. A mentor's wealth of experience can help newcomers sidestep common pitfalls, evade costly mistakes, and streamline their approach. By leveraging their mentor's insights, investors can fast-track their journey to successful house flipping. Mentors offer security and reassurance, empowering investors to make informed decisions and act confidently, even in uncertain situations.

Working with a mentor can instill valuable skills beyond real estate's technicalities. These relationships can bolster investors' confidence, enabling them to negotiate effectively, make calculated decisions, and build strong connections within the industry. If for nothing else, a mentor is a guide, imparting practical know-how and intangible qualities that contribute to long-term success.

Ready to start house-flipping in South Dakota? Join Alex Martinez at his FREE training to learn how to get started with house-flipping and wholesaling!

2. Research The Local Housing Market

For the most up-to-date information on the South Dakota real estate market, aspiring investors should reference the following sources:

• Zillow Housing Data Research
• Zillow’s South Dakota Market Overview
• Redfin’s South Dakota Housing Market Overview
• Realtor.com’s South Dakota Market Overview
• Realtor.com’s Residential Data Library
• South Dakota Association of Realtors
• ATTOM Data Solutions’ South Dakota Real Estate & Property Data
• SoFi’s State Foreclosure Data
• U.S. Census Bureau’s South Dakota Data
• Bureau Of Labor Statistics’ South Dakota Economic Data
• South Dakota Real Estate Commission
• Federal Reserve Bank of St. Louis’ South Dakota Data

3. Find & Analyze Distressed Properties

Real estate investors must seek properties below market value to maximize profit margins and unlock the potential for substantial gains; this often leads them to work with distressed property owners—those facing financial difficulties or properties needing significant repairs. Identifying and analyzing these distressed properties is a cornerstone of successful house flipping, particularly in South Dakota.

Once potential deals are identified, new investors need a reliable methodology to evaluate their viability. One widely embraced approach is the 70% rule, a rule of thumb that assists in determining the maximum allowable offer for a property. The 70% rule stipulates that investors should aim to purchase a property at 70% of its after-repair value (ARV) minus the cost of repairs needed to bring it up to market standards.

Here is the formula:

ARV - Fixed Cost - Rehab Costs - Desired Profit = Maximum Allowable Offer (MAO)

By following the 70% rule, investors can calculate the maximum price they should offer for a distressed property while still factoring in potential repair expenses and leaving ample room for profit. This rule guards investors against overpaying for a property and ensures that they stand to make a substantial return on investment even after the necessary renovations.

Read Also: Free ARV Calculator: After Repair Value Calculation

4. Raise Capital To Fund The Deal

One of the most common misconceptions when flipping houses is the need for personal funds to finance the deals. In reality, real estate investors often rely on external sources of funding to fuel their projects. In South Dakota, where the potential for profitable house flipping is rising, accessing capital becomes a critical aspect of the investment process.

Two funding options frequently tapped by borrowers are hard money lenders and private money lenders. Hard money lenders are specialized lending entities offering short-term loans backed by the property itself. These loans are known for their relatively lenient qualification criteria, making them accessible to investors with less-than-perfect credit. On the other hand, private money lenders consist of individuals who lend their funds to investors, often based on personal relationships or networking connections.

Although both hard and private money lenders offer quick access to funds—a vital aspect in the fast-paced world of house flipping—it's important to note that their convenience often comes at a cost. Interest rates associated with these loans are often higher than traditional financing options, with rates frequently hovering in the double digits. However, the speed at which the funds are available can significantly outweigh the higher interest costs, especially when a timely purchase can secure valuable property.

5. Close On The House

Closing on a house in South Dakota involves several crucial steps. South Dakota operates as an escrow state, meaning a neutral third party, such as a title company or attorney, oversees the closing process to ensure all legal and financial aspects are handled appropriately.

The closing process typically begins with preparing a purchase agreement that outlines the terms and conditions of the sale, including the agreed-upon purchase price and any contingencies. Once the deal is reached, the earnest money is deposited into an escrow account to demonstrate the buyer's commitment.

Next, a title search is conducted to ensure the property's ownership history is clear of any liens, encumbrances, or other issues. Simultaneously, the buyer arranges for a home inspection to assess the property's condition and identify any necessary repairs or improvements.

As the closing date approaches, the parties finalize the necessary paperwork, including the loan documents if financing is involved. On the closing day, all parties gather to sign the required documents, including the deed, promissory note, and settlement statement. The funds are distributed to the appropriate parties, and ownership of the property is transferred to the buyer.

In South Dakota, the escrow process adds an extra layer of security and transparency to the closing process, ensuring that all legal and financial requirements are met before the property changes hands. With the guidance of experienced professionals, investors can navigate the intricacies of closing on a house in South Dakota with confidence and ease.

6. Renovate The Property

The primary objective of renovating a home is to undertake projects that offer the highest return on investment (ROI). By strategically selecting improvements that enhance the property's value while addressing its most critical aspects, investors can ensure that their renovation efforts substantially increase the home’s overall worth.

According to Remodeling Magazine, the renovations that return the most money to investors in South Dakota (and the rest of the West/North/Central region of the United States) are:

• Electric HVAC Conversion: Recoups 93.7% of the original cost
• Vinyl Siding Replacement: Recoups 90.1% of the original cost
• Manufactured Stone Veneer: Recoups 89.8% of the original cost
• Minor Midrange Kitchen Remodel: Recoups 83.5% of the original cost
• Garage Door Replacement: Recoups 77.9% of the original cost

7. Resell The House

After successfully renovating the house, the next crucial step is to resell it swiftly to avoid unnecessary holding costs. Selling the home quickly prevents additional expenses and capitalizes on the investment's potential return. Investors can consider several strategies to achieve a faster and more profitable sale.

Firstly, staging the property can significantly enhance its appeal to potential buyers. Staging involves arranging furniture and decor to showcase the home's best features, helping buyers envision themselves living there. Additionally, enlisting the expertise of a real estate agent or Realtor can streamline the selling process. These professionals bring market knowledge, negotiation skills, and an established network to the table, which can attract more qualified buyers and potentially lead to a quicker sale.

Furthermore, effective marketing can’t be underestimated. Employing high-quality photos, virtual tours, and compelling property descriptions can generate more interest and inquiries from prospective buyers. Utilizing online platforms and social media channels can widen the property's exposure and attract a larger pool of potential purchasers.

By strategically combining these approaches and capitalizing on the property's improved features, investors can aim to resell the house quickly and lucratively, maximizing their profits from the house-flipping endeavor.

How To Find Houses To Flip In South Dakota

Once you learn how to flip houses in South Dakota, you’ll need to know how to find your next deal. Here’s a list of some of the most tried and true methods for finding a house to flip in South Dakota:

• Real Estate Listings: Investigate local MLS listings for homes on the market for an extended duration.
• Foreclosure Auctions: Participate in foreclosure auctions to bid on potentially profitable properties.
• Wholesalers: Collaborate with wholesalers who specialize in identifying distressed properties.
• Direct Mail Campaigns: Execute direct mail initiatives directed at homeowners undergoing financial hardship or foreclosure.
• Online Real Estate Platforms: Utilize digital platforms such as Zillow, Redfin, and Realtor.com to identify suitable properties.
• Networking Events: Engage in local real estate networking events to connect with prospective sellers.
• Drive For Dollars: Drive through neighborhoods to identify distressed owner-occupied homes owned by owners who may be more inclined to sell.
• Bandit Signs: Strategically place "We Buy Houses" signs to attract motivated clients.
• Real Estate Agents: Forge alliances with real estate agents who possess insights into off-market listings.
• Probate Listings: Investigate probate listings for properties available due to inheritance circumstances.
• Social Media: Leverage social media platforms to communicate with homeowners contemplating property sales.
• Online Auctions: Engage in virtual property auctions to unearth potential flipping opportunities.
• Property Tax Delinquencies: Research properties facing tax delinquencies or liens.
• Local Newspapers: Peruse local newspapers for properties offered directly by owners.
• Networking Groups: Join regional real estate investment groups to connect with potential property sellers.
• Property Managers: Property management companies may have news of owners looking to sell their rental properties.

Read Also: 11 Best Platforms For Your Real Estate Social Network

Do You Need A License To Flip Houses In South Dakota?

In South Dakota, investors looking to flip homes are not required to hold a real estate license. However, obtaining a real estate license can offer several advantages. With a license, investors gain access to the Multiple Listing Service, a comprehensive database of property listings that can provide valuable insights and investment opportunities for potential deals.

Additionally, having a license grants investors entry into a broader network of real estate professionals, fostering connections with agents, brokers, and other investors, which can prove invaluable for sourcing properties, partnerships, and market insights.

Read Also: How To Get MLS Access: The (Ultimate) Guide

How To Flip A House In South Dakota With No Money?

One of the notable aspects of flipping homes in South Dakota is that investors don't necessarily have to rely on their funds to finance deals. Instead, they can tap into various external funding sources, primarily hard money lenders and private money lenders. These lenders provide quick and short-term financing for real estate investment projects.

These financing options can prove crucial for investors who may not have substantial capital but still want to participate in the lucrative house-flipping business. Moreover, those new to house flipping can use these funding sources to learn the ropes and build their portfolios.

Additionally, wholesaling presents a compelling opportunity for investors seeking ways to flip houses without using their capital. Wholesaling involves entering into contracts to purchase investment properties, and then assigning or selling those contracts to other buyers at a higher price. This approach allows investors to earn a fee for facilitating the transaction, acting as intermediaries between sellers and buyers.

Best Cities To Flip Houses In South Dakota

The best cities to learn how to flip houses in South Dakota are those with the best opportunities for new investors. As a result, we’ve created a list of some of the best cities for new investors to flip houses in South Dakota:

• Sioux Falls: Investors in Sioux Falls should find a lot of demand for their projects from single-family homebuyers. With a median home value of $314,113, the average sale price of a home is higher than the state average, but the listing prices don’t scare away buyers. As a result, there’s plenty of demand and room for profits.
• Rapid City: Rapid City also boasts a median home value above the state’s average. However, Rapid City’s unemployment rate facilitates plenty of demand for investors to make a lucrative career.

Final Thoughts On Flipping Homes In South Dakota

Learning how to flip houses in South Dakota looks like a smart move in 2023. Following the comprehensive steps outlined above, aspiring house flippers in South Dakota can position themselves for success while minimizing risks. A strategic approach can enhance their chances of achieving profitable outcomes in the competitive real estate market.

Are you eager to learn how to flip houses in South Dakota? Don't navigate the complexities of the real estate market alone. Reach out to Real Estate Skills today for expert guidance and support. Our experienced team will provide the knowledge and tools you need to flip houses successfully in South Dakota. Contact us now to embark on your flipping journey with confidence and purpose.