Can You Still Make Big Money Flipping Houses?

Yes, 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 business.

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 profit potential.
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 quite well.
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 buyer.

So there you have it, seven rules for making big money flipping houses in today’s crazy real estate and mortgage markets.

For more real estate articles, visit our home page at sell my note.