Flipping a home was relatively easy years ago, when the housing market was soaring and people were buying up homes left and right. Banks were opening up their vaults to anyone with decent credit and a signature, and homes were being flipped ridiculously fast – sometimes in a matter of days.

Now, flipping homes is more difficult. Banks have tightened their purse-strings, and plummeting prices means there is more of a risk for investors and home-flippers. But, it is still very much a possibility. In fact, flipping houses can deliver more upside potential in the long run than it did 7-10 years ago because housing values have fallen so far.

If you want to make a profit with flipping homes, though, it is all about cutting costs and saving money whenever possible. Here are two ways to do exactly that.

Saving Money through Smart Home Research Before You Buy

Half of the battle in real estate is choosing the right property. The other half – finding someone to buy it – is made infinitely easier if the first half is done correctly.

The most important factor in your investment property is to buy a home that is in good condition. In this market, fixer-uppers and ‘handyman specials’ aren’t the ideal targets for investors unless they either own their own renovation company or are in partnerships with others with significant investment capital.

In other words, individual home-flippers or couples getting into the market should choose homes that will not require a lot of repair work in order to sell.

Location is still key; just remember everything is relative. Would you rather try to flip the best home in a bad neighborhood, or the worst property in a good neighborhood? The answer may seem counter-intuitive, but you the second home – the “bad” property in a strong neighborhood – is the correct one.

Why? Surrounding homes have an impact on the eventual price, so if other neighborhood homes are in good shape and have stable values, your home has a lot of upside potential. Choosing even the best home in a bad neighborhood is limiting yourself and putting yourself in a hole from the beginning.

To put it simply, you are looking for a property that:

• Is in a good location
• Is in relatively good shape
• Is significantly below fair market value

This last point is particularly important because that difference in the home’s current value and fair market value is your profit (minus expenses). Online directories, like ForeclosureDataBank.com, can help you find foreclosure properties and other discounted properties that meet all three conditions – making them ideal candidates for your search.

Saving Money by Hiring the Right Workers

Once you find the right home, you will probably have to do some work on it before you can put it on the market.

Hopefully, you found a good home in a good location and only have to do some minor repairs and some aesthetic touches. More than likely, your home will have a few minor things to tweak and perhaps a major issue that needs addressed, especially if you bought a foreclosure.

One way to cut costs is to hire the right people to do the work for you (if you can’t do it yourself). Try to find a private contractor in your local area, versus a company. These local contractors can be terrific partners because you can establish strong working relationships with them and get good service and rates in return for work – especially in a tight market.

Another way to cut costs is to prioritize your to-do list. Consult with your contractor. What in the home needs to be fixed now and what can wait until later? If you can make the biggest repairs, you might be able to resell the home, bank a profit, and let the buyer make the rest of the repairs as needed.

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Written by Alex Rolim.