If You Follow These 7 Critical Steps
As we continue to search for a bottom to this
real estate market, many if not most ‘Flippers’
are wondering whether flipping houses is a sucker’s
Who can blame them with Foreclosure signs popping
up in yards everywhere.
Gone are the days of easy money in flipping houses.
But like any business, if you revise your strategy
and tactics appropriately in tough times, you
can do very well.
The business of flipping homes is no different.
I heard recently (can’t remember where)
that more millionaires were made during the great
depression than any other time in US history.
Without further ado, below are 7 rules you MUST
follow to make great money flipping houses.
1. Buy dirt cheap, probably by purchasing a foreclosed
home. Remember, Donald Trump made most of his
money on the front end...when he bought, not just
when he sold.
2. Don’t buy a foreclosed home in a neighborhood
of foreclosed homes or a neighborhood with a heavy
concentration of workers from one big employer.
A big layoff from the employer can cause a tsunami
of For Sale Signs and Foreclosures.
3. Buy a cheap home in a great neighborhood with
No street appeal and create it. Street appeal
can not only get you top dollar but it can create
a flood of prospective buyers who will pay big
money for something they love (curb appeal) but
just don’t know how to create themselves.
4. Be sure you thoroughly inspect the home, particularly
the expensive items like HVAC. Not having to replace
these can go a long way toward pumping up your
5. Be aware of the type of buyers most likely
to be interested in buying your house, i.e. Will
it be a starter home, perfect school zone for
larger families, DINKS city living, or for Boomer
downsize or retirement home. Don’t buy a
home with that one negative that severely limits
your buyer pool. This could be a busy street corner
if your pool will likely have small children.
My neighbor is trying to flip a home and has done
a nice job renovating it but failed to consider
how the steep, double switchback driveway of a
home in a snowy mountain resort limits his buyer
pool who are mostly from Florida. Hence, 2 years
on the market and no sale.
6. Don’t throw money at the fix up. Buy
smart and don’t over improve for the neighborhood.
For example, granite countertops would be unnecessary
in some areas. Beautiful ceramic tile countertops
that you put over laminate countertops could work
7. Finally, to get a flood of prospective buyers
in this really tough mortgage market, you can
offer owner financing and then sell
a note or trust deed at in 3 to 6 months from
closing. While you will take a discount when selling
mortgage, you will:
a) Probably get top dollar for the home
b) Minimize or eliminate concessions such as a
credit for closing costs, etc.
c) Eliminate real estate commissions and
d) Sell the house quicker and minimize your carrying
costs. You can even increase the price you get
for the note by working with a professional note
buyer in structuring the note.
For more on what a notes buyer looks at when
pricing a note go to notes
So there you have it, seven rules for making
big money flipping houses in today’s crazy
real estate and mortgage markets.
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