Flipping Houses For Profit
August 20th, 2008Flipping Houses - Find a cheap, bargain priced home in need of repair and updating, fix it up and either sit on it and let it appreciate while renting it out or try to sell it right away to turn a quick profit.
Can this be done in this tough market? Smart are making their moves right now and are buying up bargain properties across the USA. How do they find these properties? A current, up to date foreclosure list will give you an edge. Click on foreclosure listings in the right margin, select your area to see the current listings of foreclosures and homes for sale by owner and then sign up for the list that offers complete access to foreclosures, preforeclosures, FSBO’s, sheriff sales and bankruptcies across the USA.
Should you buy a home that is in preforeclosure or that has been foreclosed on by the bank? Do your homework. Don’t just buy any home that has been foreclosed upon…
- Check comps - what have other homes in the area recently sold for
- Inspect the home as much as possible to see what repairs and updates are needed
- Stick to areas and neighborhoods you know best
- Get advice from experienced house flippers and contractors
- Get pre-approved by your bank
- Don’t overextend yourself, don’t spend what you don’t have
FOR EXAMPLE:
I saw a house in the paper that was sold back to the bank. This house was on the street that I grew up on and I know the value of the house is $125K when in good condition.
It was sold back to the bank for $78,000. I immediately went to the county auditor site and found the bank by researching the address. I made a call and was given a contact name. I was told I would have to wait for the current occupants to be evicted and then the house would be reassesed and listed.
During the waiting period I went to the property and took a good look around the outside and looked through the windows to see what I could see and took notes.
I already had mentioned this home to a friend that had poor credit, he was willing to sign a rent to own contract until he got his credit back in order. I would then sell this home to him at a reduced price making it a win-win situation for the both of us.
The home needed about $25K in repairs, updates and appliances. My friend, myself and our friends can do all the repairs and updates needed saving us thousands. The home needed new carpet, flooring, paint, all appliances, counter tops, fixtures, baseboards, front screen door, new roof on house, new concrete driveway, patio and sidewalk and new siding on the garage. Sounds like a lot but when you have blue collar friends it’s not a problem.
The house finally listed at $79,000. and I immediately called to see the inside. Everything was as expected except the bathroom was much more outdated than anticipated. I always estimate to the high side so remodelling the entire bathroom would still keep us under $25, 000. in repairs.
I put in my offer for $70,000. and………… unfortunately they told me I needed to be pre-approved. Even with a credit score of 814 I was still shot down by the bank. Too much debt, not enough income so they say.
- It didn’t matter that I had never been late with a payment in my life
- it didn’t matter that I had never bounced a check
- it didn’t matter I had an 800+ credit score
- and it didn’t matter that I had two different people willing to live in the property
Due to the mortgage mess that was created by the mortgage companies and homeowners that got in over their heads, I lost out on an easy $25K to $30K in profit. A new lesson learned.
Do you homework and have everything in order and you can make a substantial profit by investing in foreclosures and bargain properties and flipping them for profit.