Making Money Flipping Houses
By Eric Hammer
Flipping houses for a living used to be extremely popular
before the recent meltdown in the home mortgage industry. Today,
it's still popular and still doable, however it requires a bit
more creativity. First of all, getting the second mortgage to
purchase the extra home to flip is a little harder in this economy.
Secondly, buyers are still skittish so you really need to make
a sweetheart of a deal on the house you intend to flip, fix it
up on the cheap and then sell it at a price that will make it
move off the market and into someone else’s hands.
The concept is not a new one. It’s basically the same
as with any other investment – buy low and sell high. Or
in this case, buy low and sell for higher than it cost you to
buy, but still low. The key to this business is really finding
the homes that are distressed (checking for lists of properties
which are about to be foreclosed on is a good bet since these
will be extremely motivated sellers who hope to salvage something
rather than lose everything). The other issue is that you need
to have an eye for homes that can be flipped. You need to be
able to see easily where a few thousand dollars of work on a
home will translate into the home being worth several tens of
thousands of dollars more than you pay for it initially.
Most people who engage in flipping houses for a living think
of it as part business decisions and part art form. You need
to have the imagination and time that the current owners may
lack to turn their home into a place you can profit from.
How Much Can You Make?
Before the recent downturn in the mortgage industry, house
flippers were all the rage. Given the easy mortgages that banks
were offering to anyone with a heartbeat, pretty much everyone
was getting into the business and many, many people were seeing
returns in the hundreds of thousands of dollars per year while
a handful were taking in millions per year flipping houses.
Even though the days of easy credit are behind us, it’s
still possible to see those kinds of numbers. However, you need
to work much harder and be much savvier than home flippers of
years past in order to do it. You need to gauge the market and
be able to know, almost in an oracle like fashion when a particular
neighborhood is ready to turn and become hot again. If you can
study the market and learn it well, you can still rake in those
hundreds of thousands or millions of dollars and at the very
least, you can earn a decent living from doing this.
Ways to Make More | Related Opportunities
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If you have a home sitting around that you are trying to flip,
but for whatever reason it’s just not going, another option
for people who are involved in this business is to offer a short
term lease to potential renters. Often, when a home is lived
in, it sells more easily because people tend to be able to picture
themselves enjoying the same cozy experiences that the people
who currently call the place home are enjoying.
Keep in mind that the key to flipping houses is improving
curb appeal (i.e. the way a home looks when you drive up and
see it from the street – so keeping the lawn neatly trimmed
and making sure the paint looks fresh is really important). Once
you get people in the door initially, then they can see the other
improvements you’ve made and hopefully make a purchase.
If you’re concerned about flipping homes given the uncertain
economy we’re in, another great idea is to help desperate
home owners to sell their homes. You can offer your services
as a consultant to help them figure out what it is they’re
doing wrong so they can fix up their homes the right way and
start attracting buyers willing to spend more money.
Qualifications / Requirements
There are no formal qualifications required to flip homes.
You will of course need good credit and some money to get started
so that you can purchase distressed homes. It also helps to be
handy and able to do basic jobs like painting and fixing leaky
faucets on your own so that when you try to flip a home you can
save money on costly repairs. However, the biggest qualification
by far is imagination – being able to see what something
could be rather than what something looks like right now.
First Steps
Start with plenty of research. Visit open house sales in your
area. Talk to real estate professionals about what the market
is like right now. Pay close attention to details in homes you
see and be ready to spring when you spot a true a bargain.
Resources
http://www.realisticflipping.com/
- Many excerpts from a book on flipping houses.
http://www.flipitrealestate.com/
- A blog about flipping houses.
http://www.flippinghomes.com
- Information and discussion forums.
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