Submitted by Naomi M on Thu, 10/04/2007 - 02:45.
Flipping Homes for Real Estate Investing
FYI: Check out Quick-Turn Real Estate
One of the best ways to make money in real estate investing is by house flipping or flipping real estate. What you are doing is buying property at a discount and flipping it or reselling it quickly for fast profit.
I have outlined 7 property sources to target for buying at a discount. I recommend you target each property source one at a time until you've mastered the methods unique to each property type. It's more productive and profitable to specialize.
#1- Pre-foreclosures or properties in foreclosure
When a homeowner defaults on their home mortgage loan (or any other type of real estate property), the lender begins a process known as foreclosure to sell the property at public auction or trustee's sale in order to take ownership of the property to resell in an effort to recoup the amount left in debt on the loan. Until the property is sold at auction the homeowner still controls the property and can bring the loan current or sell the property to settle the debt.
For the real estate investor, buying a pre-foreclosure can be a money-making property flip, because the homeowner only needs to sell the home for the amount owed in debt, and not its full value. By contacting the owner of pre-foreclosure property and making an offer, you can often end up buying pre-foreclosure homes for as much as 50% off their actual market value! That discount amount is your gross profit potential.
#2 - Fixer-upper, handyman special, ugly house, rehab
Buying properties that need some renovation gives you a great potential for high return on your investment. Fixer uppers or handyman specials are great opportunities because of their low purchase price. The lower your initial purchase price, the easier it is to make a profit. The need for repairs often gives you an advantage in negotiating the price.
Not all ugly houses are ideal money makers to flip for quick profits. A house that needs major repairs and has structural problems is not the property you want to target, especially if you are just starting out and have a limited budget. Your target ugly house should be one that needs cosmetic repairs like cleaning up, painting, new carpet or other flooring, kitchen and bathroom updating, or spruced up landscaping. These cosmetic repairs can be done quickly and cost effectively.
#3 - Assigning the Contract
A twist to fixer-upper method, is to assign the contract you have on the property to another investor for a fast profit. Your profit will be smaller than completing the rehab for resell, but still lucrative, without needing any cash or credit and without any repair headaches or holding costs.
#4 - Probate Real Estate
The country is aging, and consequently, there will be a greater number of estates going into probate. According to a New York Times article, the sum is about 1 million a year.
Basically, probate real estate becomes available when someone dies. Typically, the heirs who inherit the property really don't want the house, they want cash and decide to sell the property. People who sell probate homes are motivated sellers, especially if the probate property is located far away from them or needs repairs. Investors who are buying probate real estate are buying at discounts up to 30% or more off and with a lot less competition than foreclosures, REOs, etc.
The discount price is your property flipping profit potential. You can choose to fix up the property to resell for maximum profit or resell "as is" for a smaller, but still significant profit, to a developer or someone willing to take on the fix up work.
And while you may have heard horror stories of long, dragged out probates lasting years in some cases, there are a number of states that do not require court confirmation. You can buy the property directly from the executor or administrator without court confirmation.
#5 - Attorneys or Lawyers
Attorneys deal with people in divorce, probate, foreclosure and bankruptcy. They consult with motivated sellers on a daily basis who, due to personal and financial pressure, need to sell their home. You'll have access to all the motivated sellers you will ever need.
You can systematically target attorneys who deal with these motivated sellers to buy their property at a discount and with very little, if any, competition and flip the house for fast profit.
There are only a few select attorneys that you need to focus your efforts on. There are strategies you need to learn that are simple and dignified to get attorneys to swamp you with motivated sellers and well worth learning to exploit this source of real estate to flip.
#6 - Tax Lien and Tax Deed Auctions
When a homeowner or any real property owner fails to pay their property taxes, the county where the property is located will place a lien on the property for the unpaid back taxes.
Investors can purchase the liened real estate for the back taxes plus interest at auction. Herein lies your profit potential for flipping the house or real estate. You could end up buying homes for just a few hundred dollars.
How you purchase tax liens varies from state to state and whether the state is a tax deed or tax lien state and the redemption laws. While you're holding the property through the redemption period, you're making interest income upwards of 50% depending on the state.
#7 - Seized Real Estate
Property, both real and personal are seized by government agencies such local authorities like the police and sheriff's departments, the IRS for unpaid taxes, Customs and DEA federal agencies for criminal violations. These properties are sold at auction to the highest bidder and provide another resource for buying discount property to flip and resell for profit. Get yourself on the mailing lists in the areas you want to target or subscribe to a list service.
Select a mentor to shorten the learning curve and avoid costly mistakes. Whether you are a new to real estate investing or have some experience, to be successful in pre-foreclosure property investing, it's always advisable to work with a mentor. You may not have anyone in your immediate area willing to teach you how to be successful and that's where using a "virtual mentor" comes into play.
The Recommended Real Estate Courses in this website are written by investors who "walk the walk" and have developed highly successful investing systems. You can shorten your learning curve and avoid many costly mistakes by using a "virtual mentor." Review each recommendation, make a choice and get started in this very lucrative niche of real estate investing in flipping houses or properties.
One of the best ways to make money in real estate investing is by house flipping or flipping real estate. What you are doing is buying property at a discount and flipping it or reselling it quickly for fast profit.
I have outlined 7 property sources to target for buying at a discount. I recommend you target each property source one at a time until you've mastered the methods unique to each property type. It's more productive and profitable to specialize.
#1- Pre-foreclosures or properties in foreclosure
When a homeowner defaults on their home mortgage loan (or any other type of real estate property), the lender begins a process known as foreclosure to sell the property at public auction or trustee's sale in order to take ownership of the property to resell in an effort to recoup the amount left in debt on the loan. Until the property is sold at auction the homeowner still controls the property and can bring the loan current or sell the property to settle the debt.
For the real estate investor, buying a pre-foreclosure can be a money-making property flip, because the homeowner only needs to sell the home for the amount owed in debt, and not its full value. By contacting the owner of pre-foreclosure property and making an offer, you can often end up buying pre-foreclosure homes for as much as 50% off their actual market value! That discount amount is your gross profit potential.
#2 - Fixer-upper, handyman special, ugly house, rehab
Buying properties that need some renovation gives you a great potential for high return on your investment. Fixer uppers or handyman specials are great opportunities because of their low purchase price. The lower your initial purchase price, the easier it is to make a profit. The need for repairs often gives you an advantage in negotiating the price.
Not all ugly houses are ideal money makers to flip for quick profits. A house that needs major repairs and has structural problems is not the property you want to target, especially if you are just starting out and have a limited budget. Your target ugly house should be one that needs cosmetic repairs like cleaning up, painting, new carpet or other flooring, kitchen and bathroom updating, or spruced up landscaping. These cosmetic repairs can be done quickly and cost effectively.
#3 - Assigning the Contract
A twist to fixer-upper method, is to assign the contract you have on the property to another investor for a fast profit. Your profit will be smaller than completing the rehab for resell, but still lucrative, without needing any cash or credit and without any repair headaches or holding costs.
#4 - Probate Real Estate
The country is aging, and consequently, there will be a greater number of estates going into probate. According to a New York Times article, the sum is about 1 million a year.
Basically, probate real estate becomes available when someone dies. Typically, the heirs who inherit the property really don't want the house, they want cash and decide to sell the property. People who sell probate homes are motivated sellers, especially if the probate property is located far away from them or needs repairs. Investors who are buying probate real estate are buying at discounts up to 30% or more off and with a lot less competition than foreclosures, REOs, etc.
The discount price is your property flipping profit potential. You can choose to fix up the property to resell for maximum profit or resell "as is" for a smaller, but still significant profit, to a developer or someone willing to take on the fix up work.
And while you may have heard horror stories of long, dragged out probates lasting years in some cases, there are a number of states that do not require court confirmation. You can buy the property directly from the executor or administrator without court confirmation.
#5 - Attorneys or Lawyers
Attorneys deal with people in divorce, probate, foreclosure and bankruptcy. They consult with motivated sellers on a daily basis who, due to personal and financial pressure, need to sell their home. You'll have access to all the motivated sellers you will ever need.
You can systematically target attorneys who deal with these motivated sellers to buy their property at a discount and with very little, if any, competition and flip the house for fast profit.
There are only a few select attorneys that you need to focus your efforts on. There are strategies you need to learn that are simple and dignified to get attorneys to swamp you with motivated sellers and well worth learning to exploit this source of real estate to flip.
#6 - Tax Lien and Tax Deed Auctions
When a homeowner or any real property owner fails to pay their property taxes, the county where the property is located will place a lien on the property for the unpaid back taxes.
Investors can purchase the liened real estate for the back taxes plus interest at auction. Herein lies your profit potential for flipping the house or real estate. You could end up buying homes for just a few hundred dollars.
How you purchase tax liens varies from state to state and whether the state is a tax deed or tax lien state and the redemption laws. While you're holding the property through the redemption period, you're making interest income upwards of 50% depending on the state.
#7 - Seized Real Estate
Property, both real and personal are seized by government agencies such local authorities like the police and sheriff's departments, the IRS for unpaid taxes, Customs and DEA federal agencies for criminal violations. These properties are sold at auction to the highest bidder and provide another resource for buying discount property to flip and resell for profit. Get yourself on the mailing lists in the areas you want to target or subscribe to a list service.
Select a mentor to shorten the learning curve and avoid costly mistakes. Whether you are a new to real estate investing or have some experience, to be successful in pre-foreclosure property investing, it's always advisable to work with a mentor. You may not have anyone in your immediate area willing to teach you how to be successful and that's where using a "virtual mentor" comes into play.
The Recommended Real Estate Courses in this website are written by investors who "walk the walk" and have developed highly successful investing systems. You can shorten your learning curve and avoid many costly mistakes by using a "virtual mentor." Review each recommendation, make a choice and get started in this very lucrative niche of real estate investing in flipping houses or properties.
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