What To Expect When Flipping Residential Homes

Flipping residential homes is one investment strategy in real estate

. Flipping happens when a real estate investor buys a home below market price, makes improvements and resells it as quickly as possible for a profit.

A real estate investor who wants to start flipping residential homes must know where to find the property to flip and have some indications that people are interested in buying it. Buying, improving and reselling the house must happen in a very short amount of time. This makes the flipping very risky but a very profitable business.

Before buying a home, a real estate investor who wants to flip the property must know the prices of houses in the neighborhood. This is to avoid overpaying for a house. It also prevents overpricing that makes getting a buyer in the shortest amount of time much harder. A delay in selling the property might lead to heavy losses or not being able to sell the property at all.

Shorts sales are one option for an investor who is looking for a residential property to flip. Short sales occur when homeowners are looking to avoid foreclosure. They are willing to sell their home for a loss and most likely want to find a buyer as quickly as possible. A short sale offers an investor a home that is in fairly good condition and at a good price. However, short sales depend on the approval of the lender. Therefore, the transaction may take longer than an investor wants. However, the investor may not have to make as many improvements.

Foreclosed properties are another option for flipping residential homes. Foreclosures are usually priced well below market value. However, they often are in need of more repairs and improvements. Most likely, neither the previous owner or lender helped maintain the property during and after the foreclosure process. If the foreclosure only has minimal improvements and repairs, then a real estate investor can quickly turnaround the property and sell it quickly.

The best way for flipping residential homes is to find and buy an undervalued property, do some less costly improvements on it and later resell it at a higher price to make a huge profit.

While flipping residential homes can be profitable with the right planning and financing, it is not very easy. A real estate investor must have enough financing to buy and repair any property. If he or she does not sell the property in a timely manner, he or she must figure out what to do in that situation. Not knowing when the house will be sold is why this strategy is so risky.

For all those willing to engage in flipping residential homes, they must understand the best times and places to do it. They must also understand the major risks involved in the strategy.

by: Greg Hughes

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