Real Estate Investing: Flipping Properties
August 10th, 2009 | by Nutria |
A lot of people these days are preaching about the buying and holding method of gaining wealth with real estate. There indeed may come a time in your life or business when you’ll want to hang on to a piece of property, although you’ll only be interested in keeping certain types of property. If you’re just starting out, flipping a house may be an ideal way to get started.
Basically, there are three ways that you can flip a house, although each one has its own terms, motivation, and type of property. The first method is known as retailing. What this means, is that you buy a house in bad shape, do the repairs to fix it up, then turn around and sell it. There are a variety of houses in need of repairs out there, and several ways that you can quickly flip a house to net profit. All you need to know are the techniques that will get you the most money in the least amount of time.
The second way you can flip a house is though wholesaling. Wholesaling involves finding a home for sale then flipping it to an investor for a fast, yet small profit. To do this, you’ll need to know the real estate investors in your area, the types of homes that flip the best, and how to fund your property so you can flip it to them. If you live in a big area or a city, you’ll find that using the wholesaling method of flipping houses is actually easier to accomplish.
The third way to flip a house is by assigning the purchase. Using this method, you’ll commit to buy the house. Instead of closing the deal yourself, you’ll assign it to a real estate investor – of course for a small fee. The investor will take the contract over and close the purchase themselves – flipping the house. This can be very profitable, especially if you invest in the right home. You don’t need to have your contract worded any special way to be legal, although you will need to determine the assignment fee.
If you’re looking to break into the real estate market and make big bucks, you’ll need to learn all about flipping houses. Flipping houses is very profitable, especially once you have learned the basics. The first and third methods are the best, although they will both take quite a bit of work on your part. Restoring homes isn’t easy, and you’ll need to have a team qualified to handle any repairs. Assigning the purchase may be difficult when you first start out, although it will get easier with time. If you stay at it and do your best to make a profit – you’ll be an expert at flipping homes in no time at all.
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Help answer the question about real estate investing
What does it take to get into real estate investing?
I am 19 years old and i am trying to figure out my career. I have a big interest in getting into Real Estate investing. But I don't know how to get into it. Everybody tells me to find a mentor, but they are either so expensive or theres the decision if its worth the money or people tell me you have to be rich to start. There has to be a way around that. What does it take? Whats the best way? How do you start out? What are the steps?
16 Responses to “Real Estate Investing: Flipping Properties”
By Home Improvement on Aug 10, 2009 | Reply
So he’s a crook because his fishing resort biz is having financial problems IN THE MIDDLE OF A MAJOR FINANCIAL RECESSION? That makes him a crook?
Sure he could just keep losing money but if a BUSINESS isn’t profitable you make an appropriate BUSINESS decision which in this case is Ch11. Doors are still open, what’s the big deal?
By Anonymous on Aug 10, 2009 | Reply
Stonecoldjason- he is a smart one- just look at his spelling! Sixpack- You are basing your claim about this man because you say he filed Chpt. 11 on one of his properties- What do you call Donald Trump- he has filed 5 times? Do you know what Chpt. 11 is?
By NEWBIE INVESTOR on Aug 10, 2009 | Reply
Talk to your CPA again.
An LLC is a disregarded entity. If you did not incorporate and you did not file a form 2553 or 8832, you are a sole proprietor and file a schedule C.
If you did incorporate or file a form, you are a corporation (S if you filed 2553, C otherwise) and corporations must pay a reasonable salary–even if there is no income. (Yes, you can show income on the W-2 even if the corporation has a loss.)
By toanlysd on Aug 10, 2009 | Reply
the gains will be split up and each of you will report your share of the gains on your personal tax return in the year of sale.
By Home Improvement on Aug 10, 2009 | Reply
I agree for sure with you Donnie. This guy is good.
By Home Improvement on Aug 10, 2009 | Reply
How exactly do you know this info and is it fact or fiction? WHy do you say he is crook.Let me in on the secret.
By Home Improvement on Aug 11, 2009 | Reply
This guy is like all the others now getting in trouble with this couching scame whre they will hold your hand threw deals
By Home Improvement on Aug 11, 2009 | Reply
This fellow is good, Not a bad facilitator.I loved it please more. thank you .
By Home Improvement on Aug 11, 2009 | Reply
440 Sipack how do you kmow this info. Is that fact or fiction?
By afraidofsharks on Aug 11, 2009 | Reply
There are a number of sites available that will provide some guidance. I do not suggest that you sign up for any of the "GET RICH QUICK" scams out there. Try these
http://www.flippinghomes.com/education
http://www.flippinghomesmadeeasy.com
Be careful, if you do it wrong you can loose a lot.pp
By JordanP on Aug 11, 2009 | Reply
1. Finding the right properties below current market values and as you locate this / theses properties have an idea of what it will cost you to rehab ( fix up ) these properties
2. Finding a lender that meet and exceed your needs (if you are going to flip these properties it would be best to find a true hard money lender to finance these or if you are going to hold these properties find a local lender that you can build a strong relationship with) Either way the most important thing when it comes to financing investment properties is to have a very good working relationship with your lender(s)
3. Advertise your property. Determine what you are going to do with these properties and advertise them accordingly. If you are going to owner finance them then make sure to put that in your advertisement. If you are going to retail them on the open market then find a realtor that will list them on the MLS for a flat fee to keep your cost down. If your going to flip them to another investor then the best thing to do is check and see if there is a local real estate investors association that you can join and check out yahoo groups for real estate investors groups. Make you some points of contact for flipping houses to other investors and find out what it is that they are looking for just in case you run across that very thing that they want. CH CHING$$$$$
email me at uspropsc@yahoo.com and I can send you plenty of links to some of the best real estate investors groups on yahoo
By david m on Aug 12, 2009 | Reply
Go to who ever has financed you in the past and see it they will accommodate your needs. They know you and already have a relationship established.
By cjr_mamamia on Aug 12, 2009 | Reply
yeah you should do it….. it's good money….
By wes f on Aug 12, 2009 | Reply
You should start by wholesaling and assigning contracts. That would fit what you are looking for exactly. Check out some real estate forums and search for both terms to learn me. One website is http://www.reiplace.com. Another is http://www.biggerpockets.com.
Good luck!
By Monstblitz on Aug 12, 2009 | Reply
I wasn't going to answer this just because there are libraries written about this subject. However, I noticed that the first two posts are smoke and mirrors. I'm a real estate investor, and I hope these thoughts help.
The first post is a search engine organizer advertising itself. Waste of time.
The second post is a lead generation or instruction group who wants you to fill out some information in hopes of selling it to people who want your business. There is an enormous market out there for selling products or instruction regarding real estate investing, and it is very difficult to sort out what is good and bad. Most of it is overpriced and leads to dead ends. Most of the people who come to a forum like this will offer you direct answers, be weary of somebody telling you to go look somewhere else for the information. It is not what this forum was designed for.
A couple thoughts to get you started with your question:
1) You already have a map to start with. It is a strategy (buy and hold) that I personally employ and have been successful with, but it takes more patience to see the returns. Stay the course and you will see success.
2) In the recent weeks the lending market has changed so that banks are far more careful about lending 100% of the value of a home. Even 5% down is difficult to find. The banks that do offer this financing will want to see impeccable credit as well as documentable income, a stable employment history and at least some assets. Interview a number of lenders as well as your local bank, and if you need to prepare a little longer, you will at least have the information to set a goal.
3) Spend time searching. Lots of it. Sellers know that there are new investors out there who just want to own a property. Don't be that guy. Search many properties through classifieds, foreclosures, real estate agents, etc. before making a decision.
4) After searching hard for the right property, search the property itself. New investors often forget that what looks rosy on the outside can be filled with problems. It is very difficult to sue a previous owner of a property. Find an inspector who is willing to give you an honest opinion, and when they find problems, work out the numbers to see if the property still makes sense. When the numbers don't make sense, don't be afraid to walk away quickly. You will be holding the property for years, and old roofs, bad brick, old electrical, old plumbing, and items out of code can come back to haunt you.
4) Set aside some money for any disasters. You can't check everything, and even a quality property can give you problems. Set aside the money.
5) Have fun with it. Don't be afraid to be creative and make your own map. I encourage you to read and study about real estate investing, because there have been so many before us that have been successful. However, you will find you have your own ideas along the way. Real estate is incredible forgiving, and I enjoy the hands on aspect of it. I take a lot of pride in the success I've had with my own ideas, and I've been safe when some of my ideas of been sour apples.
Finally, my favorite literature for a new real estate investor is a book called "Real Estate Riches" by Dolf De Roos. De Roos employs the exact method of investing that you've talked about, and his writing is easy to read. You can find it at your local bookstore or on line. I recommend the 2nd edition.
Best of luck! Real estate investing is a lot of work, but I don't think I need to tell you how many people have been made wealthy by doing so.
By Chuck Z on Aug 12, 2009 | Reply
There are investment advisors who specialize in real estate investing. You might also consider contacting a specialist who does Real Estate Investment Trusts (REITs). They can advise you on how to do this properly. You might also ask them about a "1031 exchange", which is a type of real estate transaction where you sell a rental property, only to reinvest the sales proceeds into another rental property.