There are a lot of property investors in the world that make an incredible amount of money flipping a house. The art of flipping as they call it, really just means purchasing a house that is in dilapidated condition, or the owner is in a financial pinch wanting to sell the house for cheap, turning around and putting a few thousand dollars worth of remodeling work into it, and then selling the house quickly for a substantial profit. This is a practice that has only within the last few years been making headlines, although there are investors who have used this strategy since houses began being built. If you have the money to invest, this is a perfect investment strategy for you, as long as the real estate market is in the position of being able to help provide you with a quick sale of the property.

When you first begin looking for properties, you are going to want to seek out an agent who also deals in flipping houses to ensure that you are only viewing prospective properties that can actually be worth your time and money. A normal real estate broker is going to want to show you their most fancy, highest priced houses. If they even have any lower quality houses they probably aren’t going to want to start showing them to you knowing that you have the money to pay for something higher end.

Look at the properties with the mindset of thinking about how much money it is going to cost to get the property ready to list back on the market. Once you have determined this, you have a better idea of the type of work you are really going to have to put into the property to make a return on your investment. If there are serious issues, or problems that you see that may lead to structural issues, you might want to reconsider the property as these types of problems are best left to contractors that have high amounts of insurance, and the repairs are often expensive. You are really wanting to find fixer-uppers that need some landscaping, paint, trim, and some new fixtures. These are going to be the properties you make the highest return on your initial investment.

If you’ve selected a property to purchase, or even a few properties for that matter, you are going to want to find a quality contracting company that you can build a solid relationship with. You want to sit down and eat dinner with the owners of the contracting company, because you are going to be putting a lot of trust into them and their crews, as well as investing a lot of your money with their company. It is a win win situation for both parties involved, as long as the projects get completed smoothly, with no hiccups throughout the life of the business partnership, you will both be earning a lot of money in the long run. If you take care of your contractor, your contractor is going to take care of you. Now go sell a house.

By: Mark P Knowles

About the Author:
Despite the recent credit crisis, buying investment properties is still an attractive proposition. At least for those in a position to qualify for an investment property loan, which is only a small segment of the population at the moment.

Flipping real estate can be a lot fun, challenging and profitable. Many people from all over the country have been flipping houses for years, wanting to cash in on the gold mine. The reality, however, is that whenever you do something that makes profit, you likely have to pay taxes on it – even when it is involving real estate.

Taxes do have to be paid on any profit you make from flipping a house. The taxes owed will vary from state to state, so it is important to research this so you have an idea of the percentage you will need to take out. Flipping real estate can be a lot about numbers, and you want to find a project that will allow for decent profits while still paying your taxes. It is very important to pay these taxes so that the IRS does not catch up to you and you end up paying interest and penalties for years to come.

Usually the taxes paid in flipping real estate will be a self-employment tax or capital gains. Self-employment taxes can be and will likely be as high as business taxes. Flipping too many houses and too quickly will end up classifying it as your job or business; therefore, the high tax rates will then have to start being paid.

Individuals who do not know what they are getting into when flipping real estate may end up owing a lot of taxes and not having the money if they spend their profits on another home. Most can expect to pay anywhere from 15% to 35% interest on the profits. If $100,000 was profited from a flip, then be prepared to give the IRS up to $35,000 of that.

There are a few ways to save on the taxes that have to be paid when flipping real estate. One way is to hang onto the property for over a year. This way you are only paying capital gain taxes on it. Another option is to move into the house. Establish it as your primary residence and live there for two years. After this you can sell it, and any profits up to $250,000 can not be taxed. However, if you were to make $300,000 in profits, then be ready to pay tax on $50,000 of that. This is the best way to keep as much of the profit as possible. Most house flippers do not want to move every two years, as they want a fast turn-around and to sell it.

The bottom line is that taxes do have to be paid on all of the profits made from a real estate flip. This is the only way to do it honestly and keep the eyes of the IRS off of you. A good house flipper understands this and takes into account the taxes that will have to be paid when he or she is looking at a property to potentially flip. Find out what your state requirements will be as far as the percentage that will need to be paid, and keep that information in mind when it is time to price the house to sell.

By: Jennifer Minge

About the Author:
Flipping real estate can be the quickest way to wealth in real estate investing. If you are considering using this strategy, make sure you have a solid business plan. You can purchase the business plan I used to build a multi-million dollar real estate business.