Flipping Houses: 3 Ways to Make Money Investing in Real Estate
The term flipping seems to be everywhere nowadays, including in the titles of a number of television shows that have attracted loyal followings. That means lots of people are interested in buying houses and reselling them at a profit. That’s the good news. The bad news is that there’s considerably more competition for fixer-upper homes than there was before the concept became so popular among television viewers.
But that doesn’t mean there isn’t still a significant amount of money to be made buying and reselling homes. Here are three tried-and-true ways to succeed at becoming a successful home flipper.
Fixing and Flipping Houses
The first one is the most popular, and the concept is quite simple (at least on the surface): you find a home that’s in need of repair or upgrading, you go in and do whatever work is necessary, and then you put the home on the retail market. Depending upon where you live, how hot your market is, and how good of a bargain hunter you are, you can sometimes make $25,000 (or much more) on a single transaction.
There are some dangers involved in that strategy, of course, including paying too much for the property in the first place and then in underestimating how much the repairs or upgrades will cost. In fact, the latter situation provides one of the most common points of tension in the various television shows devoted to flipping houses, so it’s best to have a solid knowledge of home prices and repair costs before you attempt any flipping method.
Fix, Hold, and Sell Later
A second method that works well is to buy a rundown house, do whatever it takes to bring the property up to standard, and then to rent the home on a lease-option basis. There are some advantages to this method. First, you can get a potential buyer into your home without having to pay a real estate fee. Second, you’ll be getting a renter who genuinely wants to buy the home at the end of the lease, so they’ll take better care of the property. Finally, there may be some tax advantages to you if it takes more than a year for the lease option period to expire. Check with your tax advisor for more details on that.
Flipping Houses
A third method requires a greater knowledge of home prices and repair/upgrade costs, but it can make you a considerable amount of money without having to do any repairs yourself. That method involves finding properties and reselling them to other investors on an as-is basis. You won’t make as much money per transaction, since you’ll have to sell at a below-market price to the next investor, but depending upon your market and how good you are at finding bargains, you can flip those properties faster, since you won’t be doing any repairs or upgrades before you turn around and resell them.
Fixing and reselling homes has been an investment strategy for centuries, and will continue to be a popular investment option as long as folks still live in houses. You can get your piece of that pie if you shop hard, estimate carefully, and know your market!
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Categories: Flipping Real Estate Tags: Latter Situation, Money Investing, Retail Market
Flipping Real Estate Contracts – Did You Line Up Your Buyers?
Flipping real estate contracts can be a great way for new real estate investors to turn profits without assuming the typical risks associated with buying and selling real estate. You’re merely finding properties, locking in a sales price with the current owner and reselling that right to another investor to buy the property at the price you locked in.
By flipping real estate contracts you never own the physical property, so you don’t have to worry about rehabbing or holding costs. Of course this is attractive because you assume no risk.
How do you start out?
Keep in mind, when flipping real estate contracts the best place to start is with a buyer of your contract.
Finding a hot property with a motivated seller and NOT having a buyer or network of potential buyers for your contract will seriously delay or destroy your profit potential.
Lining up a good network of professionals that can quickly convert your deals into cash should be your first priority.
Finding Buyers
To flip real estate contracts you need to gain the confidence of investors whose goal is to quickly re-sell any property acquired via your contracts.
Newspaper ads – Look for these investors in the newspaper under ads like “we buy houses” or we buy ugly houses”.
Be honest and up front by letting them know you are looking for houses that need to be rehabbed. Also ask them if they would like to be contacted when you find a potential deal.
I assure you, if you establish a good relationship with these types of investors they will be very eager to work with you. The final investor usually does not want to do the initial legwork of sourcing properties so keep that in mind.
Also,
Ask your potential investor where they want to buy houses and what their price range is.
Location and price are critical to many investors, only willing to work in certain areas at predefined price ranges. Other investors may want you to contact them about any potential good deal.
Also ask if they are typically a cash buyer or will need time to arrange financing for the project.
Foreclosure Auction Sales- A great opportunity to meet investors is at foreclosure auctions. Most of these investors are cash buyers who prefer not to do the legwork of sourcing deals. To successfully flip real estate contracts make sure you visit these auctions regularly.
Come prepared with business cards in hand; introduce yourself prior to or after the auction (not during as investors may be annoyed by the distraction).
Let them know your business is locating and accurately evaluating properties that have profit potential for rehab investors.
Ask if they would like to be contacted when you have located properties that fit their location and price parameters.
Summary
Finding buyers for your contracts is critical to your success flipping real estate contracts.
Starting with these two sourcing methods above should get you started building your network of viable investors.
Having a buyer ready for your contract is just as critical as finding that great property. It may seem backwards but remember, time is the enemy when trying to close real estate deals
Find out what it takes to be successful flipping real estate contracts and how you can gain credibility with your investor network.
By: Leslie Collins
About the Author:
Leslie Collins has executed hundreds of preforeclosure deals in the last 5 years – which actually helped distressed homeowners as well as generating thousands of dollars in profits. Interested in learning about assigning realestate contracts for profit? – Visit: Find and Assign – beginners guide to real estate profits.
Categories: Flipping Real Estate Tags: Good Relationship, Profits, Real Estate Investors