| Real Estate Investing – How to Quickly "Flip" an Investment Property |
What is Real Estate Flipping?
Real estate "flipping" quickly gained popularity with investors who were willing to
invest a little capital and some hard work to turn a profit. Then, just as quickly, it seems to have lost popularity. Despite the headlines and the changes in the market, though, smart investors are still making profits. The goal is to purchase a property at a low price -- ands there are many reeasons homes are underpriced these days -- and then sell the property for a profit.
Although real estate flipping sounds like a simple way to turn a quick profit, there are some things that you need to know before jumping into the real estate flipping scene, especially these days. The most important thing to know is the ways that an investor
can quickly turn a piece of real estate for profit, and in the process, provide a home for someone who needs it in the difficult market situation of the times. |
Renovation and Sale
The most common way to flip a piece of real estate is to purchase a piece of property that is in need of rehabbing, renovating it, and selling it to another buyer for a profit.
This is the method that works best for many investors.
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| The average profit to be gained from this type of property flipping is between $15K and $30K per property, depending on the neighborhood in which the property is located and the amount of work required prior to selling the property. Some investors get into trouble using this method because they underestimate the cost of the repairs to the property or pay too much for the initial purchase price. |
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As-is Sale
Another option for flipping real estate involves to purchase a piece of property at a very low price and then trying to quickly sell it in "as-is" condition. Many individuals that do not want to spend a lot of time on the property choose to go this route. In order to make a decent profit, the property must be purchased well below market value and then resold just under market value because no repairs have been made and the property may still be in a distressed condition. In this scenario you are matching your estimate of the value against that of other interested parties. This can be because you have a skilled eye for a bargain, or you know something other people don't know -- such as how to market the property or an upcoming external event that will increase property values.
Many times houses that have been through a foreclosure proceeding are bought by real estate investors who have the cash to invest in purchasing properties at auction. The investors then list the properties for sale at a higher price, and wait for the right buyer to come along. By keeping the price somewhat below market value, a quick sale (and profit) can often be realized.
In some cases, it can be difficult to resell a piece of distressed real estate and the investor may be stuck with the property for a long period of time if the market isn't right. The consequences of poor judgment make careful research more vital to the process than luck.
Lease to Own
Some real estate investors also choose to invest in distressed or below-market value properties with the intent of entering into lease-to-own agreements with buyers. In many cases, it can be easier to find a renter or someone who would like a lease to own option than it is to find someone to purchase the home outright. Instead of selling the property for a one-time payment, the investor can receive smaller payments over a longer period of time. Then if they choose they can sell it to the consumer upon the exercise a lease to own option.
The biggest problem that occurs with this type of real estate investment is that that people who enter into lease to own agreements might not always choose to exercise their options to buy. However, in such a case, the investor can always list the property for outright sale or find another lease-to-own tenant.
Flipping real estate can be very profitable if you have the right information and are
willing to learn how to make the right choices.
Contributing author -- Aurora real estate company of Colorado, Automated Homefinder. |
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| Denny Horner |
| 703-629-8455 |
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