Know What You're Doing When Flipping Houses

There's still money to be made when flipping houses

, but if you don't know what you're doing if you charge straight into flipping real estate without educating yourself first you can wind up with a major liability rather than an asset. Before starting out to flip real estate for profit, you need to do your due diligence first.

What Does "Flipping Houses" Mean?

Although there is a great deal to know about flipping real estate, it is at its core nothing more than the old market practice of buying low and selling at a markup. There are two ways to flip real estate profitably; one is to find run-down properties in need of rehabilitation and repair that you can renovate before turning around to sell. The other is foreclosure flipping; this is when you locate a "distressed property" that has either been repossessed by a bank or mortgage company, or is on the verge of foreclosure in which case the seller is very motivated and will generally offer you a good deal.

Finding Ideal Properties

The best candidates for flipping houses will be the ones that you can sell quickly will a minimal out-of-pocket investment on your part. One of the best house flipping tips is to visit a local bank or mortgage company that keeps listings of properties on which they have foreclosed. These institutions have to pay for maintenance and property taxes on these properties and are usually willing to offer you a deal.

Another option is a real estate auction. However, if you plan to start flipping real estate this way, avoid the online auctions. The reason is that online auctions are open to virtually anyone in the world, so the competition and the bidding can get very heated very quickly and you may not get a good deal in the end.

Another way to spot a decent foreclosure flipping deal is to find a "For Sale By Owner" sign. Although this is not always the case, chances are good that the owner is "motivated" by financial problems and you will be able to get a good price on the property.

Financing the Investment

After you've done it successfully a few times, you will have enough ready cash to flip real estate with your own funds. In the beginning however, you'll need to take out a short-term mortgage, which is likely to have a substantially higher mortgage rate. However, provided you have a ready buyer, this should not be a problem. It is important to have one however, or else you'll wind up with an albatros around your neck. This is perhaps one of the most important house flipping tips of all if you plan to make flipping houses profitable.

by: Wayne Hemrick

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