Real estate flipping is a term used to refer to the practice of acquiring a property for the purpose of generating profit. When you flip a property, you do a purchase transaction and aim to sell the asset at a much higher price when the market is very supporting an upturn.

As you see, it is a usual practice of capitalists and investors to buy real estate with the aim of selling the property at a much significant price in the future. Valuation almost always rises. The only question and uncertainty at hand would be when this rise would happen. Property investors are always on the lookout for market up-ticks. When such price hikes occur, investors take the queue to divest and monetize their profits.

What is most exciting about real estate flipping is that investment returns and profits can go uncontrollable. In other words, profitability can be easily achieved and can be bounded by no limits. You can easily double, triple or quadruple your investments if you would only be appropriately strategic about your investment. Here are some tips that would help you make the most out of flipping.

o Do your homework by researching about the asset you are considering. It would also be advisable if you would know what you should know about the venue, the location and the overall market situation of the real estate asset’s site. Failing to do so would not spare you from any market fluctuation and dips that may arise.

o Tour the property long before you finally implement and execute the flip transaction. Assess if the property is strategically located or if it is potentially ideal for your investment. Some real estate assets are obviously inappropriately priced. If you think an asset is overpriced, stay away from it if the seller or broker is not willing to adjust prices. If the asset is priced too low for its actual valuation, grab it.

o Have a working business plan upon buying the asset. Set your goals and schedule a working plan that you would do about the property. Check the calendar and set strategic and practical schedules for any activity involving the asset.

o Consult professionals or experts. Before putting up and taking the transaction, it would be better if you would touch base with accountants, realtors, tax officers, property inspectors, lawyers and contractors to check if the real estate is sound and safe in all possible aspects. This is not being difficult and tedious, but being practical and cautious.

o Set your mindset that the real estate investment is actually a long-term investment. While it is possible that you may generate income or profits in the short to middle term, depending on market influences, most real estate flippers are prepared to treat the investment as a long term one. Do not worry because you can actually use your property productively. You can live in it, lease it or develop it while you wait for the right timing to sell and generate investment returns.

By: Julia Vakulenko

About the Author:
Julia Vakulenko is a licensed broker associate with Tampa4U.com Realty. She has one of the hardest working Tampa Real Estate team in Florida specializing in Tampa Condos and also in2Va Team for Northern Virginia Real Estate

If you’ve been in the real estate investing business, or more specifically been flipping real estate, for more than a few days, you’ve inevitably gotten an email that reads something like this:

“Investor’s Dream. This property will go QUICK.

- Property Address: 1234 Main Street

- Asking Price: $100,000 (Add or subtract zeros!)

- After Repair Value: $150,000

- Repairs: $15,000

- Profit: $35,000

- Details: Needs paint, carpet, tile, new kitchen, update bathroom, some roof damage.

- Tenant occupied. Need to evict!”

STOP! Before you read on… Take a guess at what you think the “real” profit’s going to be on this real estate investment…

If you haven’t ever gotten an email or fax broadcast like this, then rest assured, you will! I’m about to probably tick off all of the late night infomercials and pitchmen out there! Sure, I understand that when you’ve got 30 minutes (or 90 minutes, for that matter), that you’ve to sell what’s sexy… not what’s real!

Now it’s my turn to expose the real deal on real estate investing! This goes for flipping real estate itself (i.e. properties) or simply flipping the contract (also known as assigning the contract). When you’re flipping real estate, you need to be able to calculate the “real” bottom line and if your assigning the contract, you need to know your numbers so you don’t get blacklisted from investors! This one piece of information will keep you from getting into trouble because of any “real estate bubble”!

Purchase Costs

Here goes… Have you EVER purchased and sold a piece of real estate for FREE? If you’re not sure what the answer is… It’s an emphatic NO… You are going to have costs to buy, costs to hold and costs to sell. This holds true even if you are buying a property for all cash. (Think title fees, attorney’s fees, recording fees, etc.)

If you’re not getting a mortgage, your purchase costs are obviously much lower, but nonetheless, there are costs associated with any real estate transaction. Plus, more than likely, if you’re relatively new, you’re probably not paying all cash for property anyways. You’re probably going to be using a hard money investor for your initial real estate investing financing!

For a quick calculation, you can estimate anywhere between 3% – 5% for closing costs to just acquire the property. That’s 3%-5% of the purchase price.

Holding Costs

How much is it going to cost you each and every day to own this piece of real estate? See, if you’re making money in real estate, you’d better believe that there are a lot of other people that are going to expect to get paid and they get paid in the form of mortgage interest, property taxes, utilities, property insurance, etc. Each of these is an expense each and every day that you own the property. Here’s an example… A hard money loan on a bread and butter type piece of real estate might run you 15%. Let’s say you got the property for $100,000. Every month, you are paying $1250 in interest alone. Let’s say that taxes and insurance are another $200/month and then utilities at $100. Right there, the property is costing you $1550/month – or roughly $50/day. See, why it’s important to know your not only your holding costs on a real estate investment, but also how long it’s going to be on the market before you can flip the property.

Selling Costs

Here’s the third part of the real estate investing puzzle. When you want to turn around and sell this piece of real estate, it’s going to cost you yet again! Are you going to use a real estate agent and pay a commission or 3-4-5% or even more? On $150,000, that’s anywhere from $4500 to $7500 chopped of the top. Then, you can figure 1-2% in closing fees.

If you can remember this… and apply what you’ve just learned to each and every real estate deal that you do, you’ll be safe flipping real estate in any market. You see, if it’s a hot market, you can calculate less time for holding cost. But, in a slower market, make your offer based on 6 months or 9 months of holding costs. It’s really simple math! And real estate really is a numbers game…

By: Heather Seitz

About the Author:
Heather Seitz, the co-creator of Fixing and Flipping software, takes the guesswork out of estimating repairs. Learn how to estimate repairs and calculate profits in seconds. Click below for your free video and mini-course: http://www.fixingandflipping.com