Flipping Houses for Profit: Start with the Right House
by Jeanette Joy Fisher
Published on this site: June 10th, 2005 - See
more articles from this month...
Many real estate investors enjoy "flipping houses," or
buying and selling houses quickly for profit. Not all flips are
fixers; however rehabbers make millions turning ugly houses into
dollhouses. On the other hand, some inexperienced investors lose
money buying houses that just don't turn a profit.
If you're looking to get started investing in real estate by fixing
and flipping houses, you'll want to know what type of property to
buy.
Three Tips to Help You Find the Perfect Fixer
- Understand Your Market
Your first task, exploring your market, helps you know a
deal when you spot it. Look at houses for sale in your area.
Keep track of sales and how long the houses take to sell.
Ask the selling real estate agent about the terms of these
sales because this helps you understand how sellers market
their property (some of this information is public record).
For instance, if a seller paid closing costs for the buyer,
did the price rise from the listed price accordingly? Or,
did the seller come down on the price and also pay the buyer's
costs? Examine the sales that sell quickly. What home features
and financing options prompted the fast sale?
Also, look at model homes. Buyers often buy resale homes
because they can't wait for a new home to be finished. But
these buyers like the special features new homes offer.
Visit model homes and take notes on how details like a water
fountain or a new state-of-the-art appliance makes a house
sell itself. When you remodel your fixer, you'll know what
turns buyers on and you'll make smart makeover choices.
- Know When "Ugly" Means "Profit"
When you first start out in your real estate "flipping
fixers" business, you'll want to look for houses needing
only cosmetic work. Look for houses that just need cleaning
up, painting, and new flooring. Use your imagination when
viewing these homes. Try to visualize the finished dollhouse
as you look at structural features and the surrounding homes.
We like to buy the ugliest house in a decent neighborhood.
Don't be afraid of stinky houses that show horribly; look
for fixers with peeling paint, holes in the wall, stained
carpeting, and trash in the yard. Remember, these houses
won't look good to most buyers, but other investors see
them as gold mines.
- Know When "Ugly" Means "Pass"
When you're new to real estate investing, always remember
your limitations. Use caution when considering houses that
need structural repairs. Some rehabbers replace walls, plumbing,
structural beams, sub-flooring, and electrical systems,
but they acquired those skills after years of experience
or they have the money to pay a professional.
If you find a house with structural problems, get estimates
from reliable contractors to do the work. If the walls have
too many cracks and bumps, you may need to hang new sheet
rock or hire a professional plaster refinisher. Look for
signs of plumbing problems such as water stains under sinks
and loose flooring, and get estimates for professional repair.
Take professional estimates into account before deciding
whether or not to purchase an investment property. Any big
expense decreases your eventual profit.
Turn Yucks into Bucks
Why would anyone want to do this hard work? How much does the average
investor make? In Philadelphia, real estate investors buy houses
expecting a profit of about $30,000. In Southern California, many
investors make $50,000 to $100,000 on each house.
When you find a garbage-filled, flea-infested house in a family
neighborhood, take your bug spray, hold your nose, and get ready
to make a difference, in the neighborhood and in your bank account.
You can make a fortune fixing nasty houses. Learn your market.
Know when "ugly" means profit in your pocket, and when
to keep looking for the house with the hidden gold mine.
For more articles about finding, financing, fixing and flipping
houses, visit Jeanette Fisher’s Doghouse to Dollhouse
for Dollars. Learn about decorating to attract buyers. Professor
Fisher teaches Design Psychology college courses and professional
real estate seminars. She also writes books and articles on
home staging, credit for buying real estate, and other topics.
http://www.doghousetodollhousefordollars.com/
. Questions? http://doghousetodollars.blogspot.com/
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