Flipping Houses with Experience Real Estate Investors is the best place to start.
Flipping houses has been popular amongst real estate investors for nearly a decade. This type of real estate transaction involves purchasing low-cost homes and quickly reselling them for profit. Oftentimes, investors purchase distressed properties through foreclosure auctions or banks who offer real estate owned (REO) houses.
There are two ways to make money flipping houses. The most common is to purchase houses significantly under market value, make necessary repairs and renovations, than sell the home within a short timeframe. The majority of investors involved in house flipping generally attempt to complete deals within 90 days or less
Investing in distressed properties for the purpose of flipping requires considerable knowledge and hands-on involvement. It’s crucial to purchase properties in locations where people desire to live. Buying run-down properties located in high-crime or low-growth areas will not be nearly as profitable as purchasing houses in safe neighborhoods or areas with anticipated growth.
Many first-time real estate investors make the mistake of buying foreclosure or bank owned properties which require numerous repairs to return them to livable condition. Unless investors are able to make repairs on their own, labor and material costs can quickly escalate; significantly decreasing the anticipated profit margin.
While it may appear purchasing houses significantly under market value will yield the highest profit, oftentimes these homes turn into an endless money pit. This is not to say low-cost houses aren’t a bargain. However, investors must engage in due diligence and determine anticipated repair costs prior to making an offer on the property.
A lesser known way to make money flipping houses is to purchase them at wholesale cost and resell them to another investor or individual home buyer. Many people are seeking houses which require renovations for use as their primary residence. By purchasing "fixer-upper" houses, individuals who possess the ability to renovate the home on their own can save a significant amount of money.
Many professional investors engage in purchasing bank portfolios consisting of dozens of REO properties. Buying in bulk allows investors to purchase houses well below market value. They then sell these houses to investors or individuals at a savings of 20- to 30-percent.
Investors who engage in wholesale properties oftentimes sell the properties "as-is" and do not spend one dime on fixing the property. They simply locate properties, purchase them at wholesale and quickly resell them. While they generally do not make as much profit as investors who renovate properties prior to flipping them; they make up for it by selling multiple properties at lower prices.
Flipping houses can be lucrative for investors who take time to understand the tricks of the trade. Since the majority of homes purchased for flipping are distressed, it's crucial to possess knowledge about construction and renovation. Rarely, can one person complete home renovations on their own. Therefore, investors engaging in house flipping should have access to a team of reliable workers. Depending on the scope of work involved, subcontractors might be required.
Realestate investors who aren't interested in the hands-on approach prefer purchasing wholesale properties and flipping them to qualified buyers. Professional house flippers sell upwards of 100 homes per month. Even if they only make 5-percent profit, selling in quantity can yield a tidy return on investment.
Flipping houses can be a challenging, yet exceptionally rewarding experience. It can be the goose-that-laid-the-golden egg or a complete money pit. By taking time to learn the process, investors can avoid pitfalls, reduce expenses, provide exceptional deals to others and create a bulging real estate portfolio.
Published on August 26, 2008 at 08:54 AM
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