Flipping Houses in 2009
Just a couple of years ago, if you are in the business of flipping houses, it would have been near impossible to find great properties that you can buy and sell off quickly. Flipping houses is not a new business model. Many investors and real estate brokers have been involved in flipping houses to make a quick profit. In brief, here is how it works.
In order for this business model to work, you must first find a property that you know you can sell off quickly at a profit. How do you do that? You can do so when you have your key metrics at your finger tips. The key metrics are: market value of the property, the asking price of the property, and the potential selling price of the property. Let's take a look at each metric, and see how they come together to help you make the right decision.
1) The market value of the house.
Every house has a market value. The market value of a property is the dollar value of similar properties in the area. Not everybody knows the market value of a house. Sometimes, even the homeowners are not aware of the market value of their own homes. That's because they are not in the real estate industry, and they do not follow property trends. You can easily ascertain the market value of a property by having a qualified valuer value the house. Even without a proper valuation, you should have a good idea of how much the house is worth.
2) Asking price of the property.
When times are good, demand for property is high. Therefore, the asking price during such times may even be higher than the actual valuation. That's why it is difficult to find great deals while the economy is booming. It is not impossible though. It just takes more time and effort.
However, during a downturn, jobs are lost, and many homeowners may be forced to sell their properties at low prices just to meet their financial obligations. Now is the time to grab as many bargains as you possibly can.
Of course, as you acquire the properties, you should always keep in mind that since it's the downturn, there may be a lack of buyers. If you really want to flip houses in 2009, then you must be confident of the third point.
3) The potential selling price of the property.
This is what separates the professionals from the amateurs. The professionals already have a ready pool of customers. They are likely to be in the real estate business longer than most people, and they have a wide network of contacts. When they buy a property, it's very likely that they already know the potential selling price of the property. In other words, they have a few ready buyers in mind.
This helps to minimize risks. The pros are confident that they can flip the houses and make a quick profit. The amateurs may just buy, and hope to sell off quickly. When that doesn't happen, they get stuck with the property, and run into cash flow problems.
If you are serious about flipping houses, be sure to learn as much as you can about this trade.
Flipping in Housing Bubble or Slow Market
It has become quite evident over the past months that the housing market is experiencing a significant slowdown; in some parts of the country this has been more evident than in other areas. This change in the market has created wide speculation about what is happening as is always the case with everything that ever happens in any market, be it oil, stocks, commodities or housing.
I am sure by now that everyone has heard the speculation referring to the slowdown as a housing bubble, meaning that home prices are drastically inflated and that a “burst of the bubble” or drastic nationwide decline in home values is inevitable.
I personally do not believe that a bubble exists but I do think price adjustments are and will be occurring in some areas of the country based simply upon the supply and demand.
The current excess in supply comes not only from new construction but also from a record number of foreclosures happening as a result of rising mortgage payments “resets” on adjustable rate mortgages, making it impossible for some to pay for their home.
With all of this activity and uncertainty in the market it can be very discouraging and quite easy to join many others that have gone to the fence to sit and watch. My thoughts are that money is never made by sitting on the fence doing nothing; my experience has been that doing nothing has always got me nothing!
Flipping a house in slower market conditions does represent greater risks and requires more caution and due diligence to what housing prices are doing and what you can buy and sell for, it is definitely a time to be more selective and certain about the choices you make. House flipping always requires a good understanding of your market and what it is doing but the bargains can always be found no matter what conditions exist.
When housing prices are in decline it is a good idea to keep things more on the simple side, lean more toward the cosmetic fixers. Limit the scope of your makeovers and upgrades to what you know will add value, don’t over due things.
Have a solid plan before beginning your rehab projects and know exactly what improvements you plan to make to the house. The more work you can do yourself the better your profit potential will be. If you do hire work to be done be sure of your help, you don't want to be at the mercy of undependable hired help slowing you down. Keep your turn around time as short as possible so that the house is back on the market as quickly as possible. Don't flip out, keep flipping!
Joe Cabrera Flipnfix.com
Common Mistakes That You Should Avoid While Flipping Houses
Successfully flipping houses means that you should be aware of the mistakes that you may tend to make. There are certain rules that you need to keep in mind in order to avoid getting entangled in these mistakes.
It is a bad idea to fall in love with the house.
You have to remember that it is just a house made up of mortar, clay, bricks and wood. There are several more houses and you cannot afford to fall in love with each house that you see. If you are the kind of person who gets emotionally attached to homes then flipping houses is just not meant for you. Never forget that at the end of the day it is just business and keep it that way.
You need to keep your mouth shut.
Do not reveal what deals you have made unless the contract or associated papers have been signed.
The first impressions are always the most important.
It is an extremely good idea to spend the most amount of money on the exterior and the landscaping in front of the house. It is the first impression that matters. It is the first 5 seconds that is the crucial time in which prospective buyers decide or make up their mind. If the exteriors are not up to par, prospective buyers will lose interest even before they view the house from the inside. Shiny and clean door knobs, coach lamps, door knockers and nicely done up address numbers will add to the impression. In fact if certain extra features do not gel cosmetically with the house then those should be removed at once.
It is not a good idea to go overboard
Flipping houses can bring in a decent profit by simple acts of replacing the paint, cleaning the house or getting a new carpet. A lot of flippers think that they need to invest thousands of dollars on a house to make it sell. This is the prime reason why complete renovation and remodeling of a house takes place. It also means that the price tag of the house goes higher in order to cover the amount spend on renovating it. Ultimately, the investor has to drop the price because the house ends up sitting in the market for too long a period. What you must remember while flipping houses is that you are not fighting for a spot on the cover of a real estate magazine but only trying to make some profit.
Do not be greedy.
Take the first offer that comes along if you have priced your home well. Do not be greedy and wait for months to get a better deal. At the end you might lose out on all prospective buyers and will have to eventually cut down your price. So greediness will not bring in profits but instead lead you to incur losses.
The above mentioned rules for flipping houses will help you in avoiding common mistakes.
James Klobasa, once broke with no job and $20,000 in debt made a choice that changed his life forever. That choice was investing in Real Estate. With the founder of, The Little Building Co. you too, can learn at Real-Real Estate Investing
10 Mistakes To Avoid In Property Flipping
Property flipping may not be for everyone. Sure, it’s tempting to get into the trend especially when everyone who’s been successful would say it’s a great way to earn quick money. But then again, some people believe that money earned quickly also vanishes like a bubble. So if getting quick buck is your only goal, better think many times before you try property flipping.
Not all people who’ve been successful in flipping homes have remained long in this kind of business. Some only had their days of euphoria for a short time while those who weren’t careful enough also experienced money troubles in their personal lives.
If you’re contemplating on trying it out, just remember that you need to study the housing market in your area. If home prices in your area are fast appreciating, good for you because you can make good money. However, in areas where the housing market is cooling, you really have to know your market.
To be successful in flipping homes, learn more about the experiences of other flippers including those who made it big and those who were not lucky enough. You need to avoid the mistakes they’ve made in order for you to reap good profits. Here are some common mistakes to avoid.
1. Financing the whole property through your personal funds. Keep in mind that using your own private money will not always guarantee big profits for any home that you flip. It’s best that you apply for loans to use in your home flipping venture.
2. Rushing things is never good for any endeavor. What you should do then is to decide everything including how you are going to proceed before you purchase a property you are planning to flip. Good planning helps.
3. Keeping the property for too long. Do remember that house flipping gives the best profits when the home concerned is resold at the shortest possible time. The longer you hold the property, the more costs you are accumulating.
4. Setting the selling price before buying the property. You should know that the housing market is never constant. Home prices fluctuate from time to time so avoid holding a fixed price for long before deciding to drop it. If your property is in a hot market, you can get a good price without even negotiating.
5. Paying too much for the house. Sometimes, home owners who need to sell their property quickly may still ask for financial assistance from their buyers. Some home flippers who are too eager to flip the house, in turn, are tempted to help the owners at their own expense.
6. Not having enough cash. You need to have your own money to pay for the monthly mortgage of the house you’re flipping. If you’ve spent your funds in renovating the home, you’re likely to encounter financial and credit troubles.
7. Quitting your job. Home flipping won’t guarantee you regular income. It might give you huge profits but then, it’s not always that you will earn the big buck quickly. It’s still best if you have a regular job that can provide you regular income for you and your family.
8. Hiring an unlicensed contractor. Before you have the house renovated, always check if the contractor you got is licensed. Otherwise, you will just be spending more for the work.
9. Not inspecting the house before buying. When buying a home, even if you’re not planning to live in it, make it a point to personally check the interior and exterior to see what repairs are needed.
10. Underestimating renovation costs. If you’re not sure about the repairs to be done, have someone you know estimate the costs together with you. Avoid doing all the work yourself. Two heads are better than one, remember?
This article is brought to you by Property Flipping Info Visit this site for free property flipping articles, like how to buy a flip, financing, and more.
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