How to Start Flipping Houses for Cash and Get Rich Doing it
One of the trendiest real estate investing techniques around today is called “flipping or wholesaling real estate”. This technique is so popular because it requires no real investment money, no credit requirements and pretty much, no real estate investing experience. It’s the age-old process of buying something at wholesale cost and selling it retail, but with a slight twist, you actually sell the product without ever owning it. Once you complete the sale the investor can walk away from the closing table with anywhere from 10 to 50 thousand dollars on average.
By now I’m sure you can see why this method might be so well liked especially among beginning real estate investors. There are several so-called real estate gurus out there selling books, cd’s and tapes on the subject for hundreds of dollars but this is one the easiest investing techniques to do.
Let’s explore what flipping houses entails.
An investor locates an under valued house, preferably a property that needs only cosmetic repairs or what we like to call a “sugar coat deal”. This means a house that will only need paint, carpet windows or some other very minor repairs, definitely no structural issues or roof replacement deals. You really want a house that has been neglected a bit, one that the seller hasn’t kept up very well. These types of properties can be spotted very easily because they stick out like a sore thumb in a well-kept neighborhood. The paint’s peeling, the grass is uncut, it needs replacement windows, etc.
Plus you will make the most profit from finding the worst house in the best neighborhood, if that makes since. You want to do this because when it comes time to sell, you want to be able to get the highest value, make your profit, while leaving some equity on the table for the homebuyer.
Once you’ve found this type of property, then you need to put it under contract and lock up the deal. There’s a couple of ways this can be done.
1. You can put an option on it.
(What’s an option?)
A unilateral agreement binding the seller to selling a property to you exclusively, for a predetermined price, but at a later date sometime in the future.
2. Have the seller sign a purchase agreement that gives you say, 90 days to close. This is called a buyer favorable purchase agreement. It is designed to help you, the buyer.
3. Land contract or contract for deed.
(What’s a land contact?)
A contract used in a sale of real property whereby title to the property remains vested in the seller until the buyer who receives the right to possession has paid in installments over a long period of time a preset amount or all of the purchase price and upon default by the buyer all payments may be forfeited. Also known as a Conditional sales contract, an Installment sales contract and a Real property sales contract.
There’s a few other ways to lock up a deal also, just make sure you don’t spend any money until you have the deal secured but let’s move on.
When you have secured the deal, then you start making the necessary repairs to bring the property back up to the neighborhood standard. That’s when I like to start looking for a buyer, while I’m actually making the repairs, just to get a head start. This makes the transaction go a little smoother.
Now remember, when you bought the house, you paid a discounted price because the home needed repairs. But now you’ve the repairs and the home can be sold on the retail market to a retail buyer. This is where you make your profit!
Categories: Flipping for Cash Tags: land contract, options, purchase agreement
Hiring Home Remodeling Contractor Wise or Not?
In this day where every homeowner in the country have saddened about some big loss on the equity of their abode, it just seemed wise to either keep it or rent it until the housing market goes back to normal. When? No one can say. But the situation is not all that bad if you where to stay in it, of course, as long as you can keep up with paying the higher mortgage interest, and just make it a future investment. Price may not be as it used to be when you first bought it, but 5 to 10 years from now, price should pick-up and you gain substantial amount of equity out of it.
Whether you decide to keep it to live on or get it rented, one thing is sure. You want to keep your place as nice looking as it should. If you are staying, this of course if you have some money to spare, you might want to consider home remodeling, re-decorating or re-arranging for a different look and feel. You can do this on your own or with the help of your family member and friends. Maybe repainting the living room and re-arranging the furniture. Taking the clutter out and make it homier organized kind of house. Re-decorating your house not only will give you this “oh I like it” feeling, but it also gives you the sense of pride and relief that you might say to yourself, yeah, I’m glad I did not sell it. You maybe even say, well, it’s not all that bad after all. Your friends might even like it and have you do the re-decorating of their house for a fee! That’s just a thought.
However, if you really do need some cash to help you pay the increased payment in mortgage, in lieu of selling (first of all you cannot sell as the housing inventory is too high up), consider get it rented. But how can you compete with what’s available in the rental market in your neighborhood with the same layout, square footage, number of bedrooms and bath, etc? Mind you, a lot of them if they look old, rundown or even just the ordinary bare looking with no accent whatsoever take a lot longer to get a rented. Once again, think about home remodeling or home improvement. Home remodeling does not need to be very pricey. You just need to have a clear picture of what you want done, check out the prices of materials you need, how many days it will take and so on. If you are thinking of doing it yourself and you’re crunching with the time, then take a few days leave if you have some. But for those who doesn’t and cannot for whatever reason, you might want to consider hiring a home remodeling or home improvement contractor.
Hiring a home improvement contractor does not necessarily mean getting someone just down the street because “maybe” you will save some money. The average carpenter Jose down the street can probably do the job and he’s cheaper. I don’t necessarily agree. Regardless if you’re hiring Jose down the street, or hiring a licensed contractor, there should be a few things you need to consider before deciding who to hire to get the job done and do it right with a lot less money. I say, look around, local yellow pages or Google it and look for home remodeling resource network. Most of these companies can connect you to the right candidate in your area with the following credentials: 1) they are licensed and bonded; 2) they have liability and workers compensation insurance, and 3) highest approval rating from Better Business Bureau (BBB). Most of the time, they would send you up to 3 pre-screened contractors and on top of that, this service along with the job quote is FREE for you. They will not charge you a dime as they deal directly with the contractor for whatever fee they charge. By doing this, the expense is within your affordability, the job is done to your instruction and specification and more importantly, in a timely manner.
In closing, I say whatever you decide, keep in mind some, if not all the pointers I shared with you. You ultimately decide what’s best for you. Just a hope that it is one wise and intelligent decision so it makes a long lasting productive effect for the future!
This article is an original copyright of Claire Schaper, online media specialist for All Around Home Remodeling. You can also visit http://www.allaroundhomeremodeling.com.
Categories: Dealing With Contractors Tags: Neighborhood, Rundown