When you want to up the ante on your real estate game, you may want to settle for more than just buying and selling real estate. In fact, sometimes it helps if you get a bit more creative in the craft – such as dabbling into real estate investment. Interestingly, flipping houses appears to be one of the more profitable ventures inside this aspect of the industry – and it’s not as difficult as people make it out to be. In fact, if you believe to have developed an eye for good property, then you’re essentially on the right track to succeed in flipping houses.
Flipping Houses? What Is This?
It may help to learn the basics of flipping houses first. Flipping actually stands for wholesale real estate investing. Flipping has become something similar to day trading, but a lot of people tend to fail in the process because of the rush to make a profit. This is because lipping is a kind of investment strategy wherein a real estate investor will purchase properties – not for use but for selling.
Profits from house flipping are often derived from price appreciation, especially when it comes to capital improvements and/or a good market condition. For instance, fixer-uppers in good neighborhoods with substantial renovations can be sold for a much higher price. Naturally, when an investor buys a good property or a series of good properties, flipping can potentially make profits come.
Real Estate Investing: Making Money Out Of Flipping Houses
If you’ve read the above, the concept of flipping houses may either be new to you or something you’ve never really taken too seriously. After all, real estate techniques and methods do vary depending on your needs and your personal “approach” towards the profession. If you want to try out something new, like flipping houses, you might be surprised that many real estate houses sold this way may actually give you profit. Here are just some of the things you should expect going into this:
Make sure you know your kind of market
Real estate investing isn’t just one market, it’s comprised of a lot of markets that need properties to function. Knowing this is essential, as while there are indeed a lot of hot markets right now, it might not be in the location where you want to flip a property. The goal here is to make sure you’re aware where cash buyers are actually placing their money. It helps if you have a system that helps you identify what a good market is, as it can make the difference between just having idle property and something you can actually flip. Remember, if you take on a house purchase contract but can’t flip it to a cash buyer, you’re going to be liable for the purchase. And that’s the first mistake that can turn to many more mistakes when investing in real estate investment.
Get the right prices
Another important aspect of making money with flipping houses is to actually get properties at the right place. This isn’t just identifying the price you want to pay for when talking about the property, but the price buyers will want to pay you to obtain the property. Just what’s the right price for you? You can actually try punching in addresses to RedFin, Trulia, and Zillow to check the average selling price of cash-based transactions for a block or neighborhood. If you average all the differences, you’ve got the gap or average markup for any given property. Use that gap to estimate the price that buyers may be willing to pay for that property. A good way to sell is to make sure homes you secure are lower than the gap. Also be sure that you consider closing costs when selling the house – as you don’t want to be left with unexpected expenses.
Get the right sellers for your flipping contracts
Of course, while finding properties is easy, finding properties for flipping isn’t exactly the easiest thing to do. Try to look for terms in the description of the listing, such as “below market value” or “for immediate possession.” This means the property owners may more or less be open to the idea of you flipping the property for them. Try to inspect homes and check for vacant properties. You can even ask agents who may have insider knowledge about the neighborhood.
Choose the right property you want to flip
Now that you have the gap with you, get the right property – one that you can actually sell. This is tricky, as there are a ton of homes available at your disposal. See if you can search online through various channels, look for vacant or distressed homes, look for homes you can flip without renovating, or even look for homes on the verge of being sold. You can even talk to neighbors or friends. Try to get your intentions out there and try to build a system that will lead you to properties you think are practical options for flipping.
See if you can get the right buyers
When you have a contract secured for a home, you most likely have a month or so to close it. This means it’s best you actually have people prepared to flip those contracts to. Without the existence of cash buyers prepared for this, you’re going to have to do the primary legwork yourself. If you’ve just started, make sure you take note of buyers who you’ve relied on so you can communicate with them much better in the future. Develop relationships with them through calls so you can add “value” to your exchange.
The Takeaway: Making Money From Flipping Houses Is Possible
Taking your real estate investment experience to the next level can be made possible thanks to flipping houses. It may come as a surprise, but investing in flipping houses can actually help you make more profit than you’d expect in real estate. Not to mention you can actually use your technical acumen in identifying houses that are worth the investment, especially if you want to resell them to clients who are looking for good places to stay. It’s important that you always consider the perks of flipping houses but also consider the kind of risks that accompany it.