Flipping Houses: Real Estate Investing for Beginners

Flipping Houses: Real Estate Investing for Beginners

If you're looking for a method of real estate investing for beginners, it has got to be flipping houses. This is actually a term used to refer to at least two forms of short-term investing in real estate. The common thing about these methods is that they all concern the "flip" or quick sale of a property. The duration of a flip can range from a few days to a few months, depending on what method you use.

The first method of flipping houses is called wholesaling. Simply defined, it is putting properties under an assignable contract between the investor and the homeowner. Under the contract, the homeowner, or the seller, agrees to grant the right to purchase the house to the holder of the contract, which in this case is the investor. The real estate investor within a few days or weeks, must then find a buyer for the property. He will assign the contract, and the right to purchase the house to the buyer for a fee, which is simply called an assignment fee.

This is considered a method of real estate investing for beginners because there is no risk and almost no money needed to start such business. When you place a property under a contract, you won't need to purchase the house. You will only give the owner some earnest money deposit to make your contract valid. An earnest money deposit can be as little as a $10, depending on local regulations and on what you and the seller agreed on. You need to find a buyer, right? That buyer will purchase the property and thus is the one who needs to pay the seller price of the property.

The other method of flipping houses that is also considered good real estate investing for beginners is called rehabbing. This involves huge capital because you need to purchase a house and then carry out improvements and repair so you can sell it for a higher amount. The good thing is, the money does not have to come from your own pocket. Ever heard about hard money lenders? They are willing to finance rehabbing projects. These lenders impose high interest rates but with the profit investors earn in this business, you won't even notice the interest. How long should you take when flipping rehabs? A few weeks to a few months is common.

They may sound simple on paper but these methods of investing in real estate are a bit complicated. Don't be lost in the woods. Educate yourself first by going to REIWired.com, the information haven of neophyte real estate investors.

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