There are millions of questions that come to the mind when the process of flipping is thought about. Here we give you the basics of how to flip houses for a living.
Fixing up the goal:
Ultimately, becoming rich by earning profits is the final goal for any flipper. It is the dream of every person to be rich. The goals should be crystal clear and the path to be followed must be narrowed down with morals. All the tasks that are to done must be jotted down.
Learning about the process and its strategies:
All the people would want to follow the shortest path to success in minimal time. So, all the pros and cons have to known perfectly and there should be clarity in the path. In flipping, there could be difficulties like non paying tenants, slowly moving properties and over leveraged contracts.
It is basically taking the lead. All the vacant houses are to be covered and letters can be sent to the owners of vacant houses. Interested people will reply. Next, investor comes into play. Investor checks the house and makes an offer. If the deal is stuck, then the investor buys the house and the person who has taken the lead will be paid the finder’s fee.
This process basically deals with purchasing the house and selling it off as it is. If any major repairs are required, then the reselling price should be quoted less than the market value. The key in this process lies in estimating the costs of the repairs. The total value of the cost can be estimated by using the formula of maximum allowable price. Deals can be made if it works out and there is a margin for profit.
A Flipper must always make use of termination or escape clauses. Time is a constraint and only serious buyers are taken into consideration. Discounts should never be encouraged. It is always advisable to collect non refundable deposit from buyers to ensure that they do not drop out. The flippers will get an assignment fee from the title company even without shelling out any actual money of their own.
Rentals and rehabbing:
There is a risk in renting out places before sale. The people on rent might damage the property and this requires the flipper to pay extra out of his pockets. Rehabilitation can be done after some initial experience. Repairing costs, holding and selling costs are to be estimated accurately. Forums like bigger pockets help in knowing various scenarios. A business bank account is to be obtained if the person is setting up his own flipping company.
It is a very important strategy to be followed for successful business. Excellent spots for buyers are real estate investors meetings, we buy houses advertisers, contacting realtors, advertisements in papers and internet, contacting localities where there are rental signs etc.
Marketing for sellers is profitable in cases where owner of the house is bankrupt, who wants to relocate and people who want liquid cash. Such deals will fetch more profits.