Flipping a Property – 7 Options

Published by julia | Filed under Buyer / Seller Tips, Miscellaneous, Real Estate, Shout Outs, Uncategorized

“Flipping” is the in thing in the  real estate market  seen in flipping articles, flipping books, on TV and in newspapers. Flipping refers to purchasing property and then putting it up for sale again within a short time, unlike keeping property for a long time for rental purposes. There are different types of flipping, many of them profitable and others not.

Flip Method 1: Purchase, Remodel and Flip

“Fix ‘n flip” is a strategy that involves the buying of property that requires working on it and retailing it to a person who will make it a residential place. The strategy has been known to be successful and you stand to make $15-$50k per deal depending on your ability to find bargains and the market. The strategy’s only dangers are underestimating repairs or paying much money. Be conservative in the selling duration and fix-up costs. Additionally, ensure the real estate agent’s cost included in the analysis.

Flip Approach 2: Purchase, Refi and Lease/ Option

Instead of selling the remodeled property for cash, sell it for terms. After the rehab, refinance the property at the appraised value. According to calculations, you should have no or little money in this deal. Sell the asset on lease with a choice to buy.

Flip Method 3: Purchase& Flip “As Is”

Do not like fixing? Think of selling the asset as a not heavy fixer upper. If locally, the real estate market is vibrant, you can sell the asset in a poor condition below the market. This especially goes for property in “transitioning” neighborhoods. Ensure what you pay for the property is sufficiently cheap for selling below the market for a profit.

Flip Approach 4:  Wholesale

Since the first approach is very popular many investors are seeking rehabs. Without much work, you can purchase the property cheaply and sell the same property for more to the next investor. Your profit returns will come quickly but it will not be as much as that of the rehabber.

Flip Approach 5: Pre-Construction

In vibrant real estate markets, prices appreciate by about 2% every month. With proper timing, you can contract a condominium or pre-construction house then flip the property to another person after it has been developed. You could get more than $100 000 yearly on a $500 000 property if it takes a year for development to be complete.

Flip Strategy 6: Scouting

A scout is a gatherer of information and a “bird dog” tasked with finding potential deals and selling other investors the information. The scout gets property on sale, gathers relevant information and furnishes the investors with it at a fee. The fee varies according to profit potential and the property’s price.

Flip Approach 7: Illegal Flipping

This approach is illegal and is carried out by unscrupulous investors buying cheap houses in bad condition in low-income neighborhoods. They then repair the properties shoddily and sell them to unsuspecting buyers at higher prices. In most instances, the mortgage broker,   appraiser and investor conspire to submit fake loan documents and appraisal. This results in the buyer paying much of the house and cannot pay for the loan. Since most of the loans in question are federally insured authorities have probed the practice and arrested many people arrested leading to the illegal perception of flipping by the public. Flipping is legal, loan fraud in flipping process is what is illegal.