Fix and Flip Real Estate

Welcome to Fix and Flip Real Estate. Fix and flip to the practice of buying an asset and quickly reselling “flipping” it for profit. Though this buy low, fix or add value, and resell – can apply to any asset, the term is most often applied to real estate. Fix and flip real estate has become a proven way to build wealth, and has become so popular in the United States that do it yourself television programs like Arts and Entertainment – “Flip This House” have chronicled the process.

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Under the fix and flip scenario, an investor will purchase a house at a considerable discount from market value. The discount may be due to the house’s condition or due to the owner needing to sell a house quickly. The investor will then perform necessary renovations and repairs, and attempt to make a profit by selling the house quickly at a price nearer to full market value.

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Flipping Houses

Flipping Houses – 10 Steps To Huge Profits While Minimizing Risk

People always need a place to live. As a real estate investor, you can provide this service by buying a distressed property, fixing it and selling it for a profit.

Flipping houses, otherwise known as Fix and Flip, is usually a short-term real estate investment strategy involving a quick turn-around and quick money. You will usually make the most profit flipping houses as you hold the highest risk, unlike wholesalers.

Time is the most important element to flipping houses because the clock is ticking and time eats money. You need the initial time to find properties and contract for repairs. You need time to market and oversee the marketing of the properties.

Part 1: The Purpose of Fix and Flips

Successful real estate investing is a balancing act. On one side, you need a business model providing you lump sums of cash. Flipping houses is great for that as you can make big chunks of money in a relatively short amount of time. However, you will keep working and working with no end in sight unless you also focus on the other side, which is long-term wealth through rentals, passive income, etc.

You take your big chunks of money inside your business and put that into long-term passive income real estate investments giving you the best of both worlds.

There are some advantages to doing Fix and Flips besides the monetary considerations. There are many real estate related deductions that are possible, the neighbors could love you for improving the neighborhood, you can provide jobs to friends and family and you could possibly start real estate related satellite businesses.

Part 2: The Process

In simple terms, you buy a house with equity at a low price. Depending on the market, you might have to buy even lower to make the numbers work. Then you fund the house, you fix it up and finally sell it at ARV (After Repair Value) or at market rate for a profit.

Then you just repeat the process again and again, but you must always be aware of market conditions so you can adapt quickly to changes and remain profitable.

Part 3: Research/Pre-Acquisition

You want to identify your target property, but it’s critical to know your criteria. You need to identify positive factors and situations that should be avoided. There are three main property types – good, bad and ugly.

You want to always get photographs of the property. Investors need to know and understand cost estimating. New investors frequently under or over estimate the cost of repairs.

As a rule of thumb, the worst looking house in the neighborhood should be the one you want for flipping houses.

Part 4: Financing and Funding

This is where it gets interesting, especially depending on the economy that you’re currently in right now. No matter what economy, these are the general types of financing that investors use.

* Hard Money
* Conventional
* Non-Conventional
* Seller
* Credit Cards

Hard money is probably the most popular for flipping houses, but understand that hard money is a short-term funding not to exceed a 6-month term.

Part 5: Acquisition

Meeting with the seller is a critical move, unless it’s a bank owned house or a property bought at auction. This will allow you to assess and discuss the property condition.

Always have at least 3 methods to acquire the property in case your first method isn’t possible. Having skills in negotiations will reap huge monetary rewards for you. Furthermore, nothing gets done unless the property is under contract. Have your contracts ready to go. Be sure to get advice and counsel from an appropriate real estate attorney.

Part 6: Escrow

Escrow is an agreement between two or more parties providing that certain documents or money be placed with a disinterested third party for safekeeping while carrying out instructions of the purchase contract.

Part 7: You Own It. Now What?

You want to get insurance, warranty and security. You own the property and it should be in the name of your entity, not your personal name. First thing to do is to insure the structure.

You may also want to look into getting a home warranty plan to see what it would cover vs. the cost.

Finally look at the security and determine if you need to change the locks and/or replace or install a security alarm system.

Part 8: Repair Concerns

Repair concerns generally involve money, time, doing it yourself vs. using contractors, and what team should be assembled. Money is a limited resource even if credit cards and miscellaneous cash are available.

Remember every dollar overspent is one less in final profit. Steps to completing flipping houses do not include gutting the house. Also, return all new items that aren’t used and save all your receipts.

If you are going to use contractors, always obtain 3 estimates. It pays to shop around and compare/contrast services. Offer repeat business and ask for lowest possible prices.

Part 9: Marketing and Selling

The important aspects of marketing and selling the house are advertising, incentives, staging, open house, and sales technique.

With technology today, there are great listing services, such as sellpoint, which allows you to upload your property to one site and the listing service will automatically put your house in multiple places where people can search for and buy your property.

A cool tip is to buy a basket of safe toys and books for the house. The toys and books will enchant the children and keep them occupied, allowing the parents to “shop” the house.

Part 10: Other Issues

This is the time to analyze the process and ask what worked and what didn’t work. Look at all possible factors and make changes if necessary for your next house flip.

Make sure you address all seller disclosures.

Final Thoughts

GET EDUCATED AND STAY EDUCATED!! It’s imperative to get educated first so you have a working knowledge of what to do before you get started. You will minimize your exposure and risk and definitely maximize your results. Not getting educated will work exactly the opposite.

Find a community of like-minded investors and mentors who are already “walking the walk” and associate yourself with them asap. Take advantage of your local library and all the free seminars.

Network all the time with other investors, at investment clubs, home improvement stores, neighbors, etc.

At the end of the day, flipping houses is a people business. The more you can effectively communicate with people and the more you can solve their problems, the more lives you will change and the more money you will make. The more you give, the more you shall …

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Tips for Flipping Houses successfully

Flipping houses is a profitable business in real estate and every investor worth his or her mettle is getting into this. You can make the most out of house flips by taking into account certain points.

The most important point that you should keep in mind is that you must thoroughly know all the different aspects of the house that you buy. Try to focus on one particular locality or area rather than looking for potential houses all over the town. This will give you the advantage of knowing your market well. You could also put in some more research to find out more information on real estate values and options that will help you in getting a better deal. Find out what features buyers typically look for in that area. You must also know the average costs of homes in that area. The more you research the easier it will be to make decisions when the time comes to sell.

When you actually get to the stage of flipping houses, you should focus on only those houses that have cosmetic problems such as chipping paint or an old and faded look. Also keep an eye out for houses whose yards and landscaping is in a mess and needs serious attention. These problems can be fixed rather easily and inexpensively. Do not get disillusioned by houses that emit bad smells, have stains on the carpet or holes in the wall etc. These are nothing but cosmetic blemishes that can be fixed easily with quick remedies that will make an incredible difference to the eye appeal of the home.

Stay away from houses that have major structural and remodeling problems. For example, it is quite difficult and expensive to replace an entire roof. You should also steer clear from houses with problems with foundation, electrical issues or heavy duty plumbing. You should get into these only when you have been in this line for a number of years and gained adequate experience or expertise.

It is a bonus if you have a high personal credit score that is without blemishes when you get into the business of flipping houses. This will ensure that you get the best financing possible for each project. You might have to pay high fees if you buy real estate investment properties with poor credit. Therefore, keep your credit in good shape with a high score in order to qualify for the best loan terms and rates.

As you begin flipping houses, every single project will teach you something new. You will gain more confidence in your abilities after every successful flip. And with more profits and experience you might even want to get into the other a

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