There have been television shows and self help books and infomercials all claiming to have the secret to helping people get rich quick in this manner. All someone had to do was buy a house for cheap, put a few dollars into rehabbing it, and then turn around and sell it for a huge profit. Everyone wanted a piece of the action. Bulgarian Houses
The mortgage companies wanted in on the housing boom, and they were willing to give home loans to people that were definitely questionable as far as a credit risk went. Banks also wanted their share of the action and they gave credit cards and lines of credit to people that were already over extended. Construction contractors, swimming pool companies, landscapers, everyone wanted a chance to make the quick buck.
Many novice Flippers had taken an Adjustable Rate Mortgage to purchase their rehab project. They used these monies to pay for the supplies and the appliances and the labor. They knew that the interest rate on their ARM would skyrocket in a short amount of time, but they were convinced they would have the house sold by then. The television shows and the newspapers and the magazines all said this was an easy way to get rich quick!
And for many of these novice Flippers things just did not go as they had planned. Their project took longer and cost far more than they could have ever of guessed. Unfortunately, in the meantime the entire housing market took a dive. And then the housing boom went flat. Ouch!
Do not fear though, because many of these Flippers are true entrepreneurs. They were not looking to make the quick and easy almighty dollar.
These professional Flippers are turning their unsold rehabbed projects into rental properties. The monthly rental fee that this Flipper turned landlord receives from their tenants is used to cover the amount of the mortgage until the unit can be sold.
These experienced Flippers know that having someone actually living in the rental property is good for several reasons. The rental occupant can keep the grass mowed and the gutters free of leaves and the flowerbeds colorful. The rental occupant knows immediately if there is a faucet dripping in the kitchen sink or if the heater is not working properly or if the stove needs to be replaced. The rental occupant can keep both unwanted critters and squatters away from the rental property. And the monthly rental check from the tenant can be used to pay the monthly mortgage. In most areas of the country rental rates are higher than mortgage rates, so this is a win win situation for the opportunistic Flipper. And an added bonus for the Flipper is that a rental unit with a tenant actually living in it is much easier to show, and eventually sell on online auctions to a prospective buyer. People want to see beds and dining room tables and refrigerators when they are looking at a house. They do not want to see empty rooms and bare walls and a blank space where the refrigerator should be. A boarder actually lives in the rental space, so they make it looked lived in to any prospective buyer.
When you find a property that you want to flip, it is important to do the research. Make sure you buy property that mainly needs cosmetic repairs. Avoid costly structural repairs. In making repairs and improvements, you will want to look at ways you can get the job done as cheaply and efficiently as possible. Doing this will save you a lot of money in the end, allowing you to make a higher profit for yourself.
After you have found the property and have done the research, now it is time to buy it. Make sure you buy homes at a much cheaper price than you will be selling it. One way this can be done is by purchasing HUD homes at cheap rates, and then fixing them up to be sold at higher prices. You will have to own the home for at least six months before you can sell it. Many lenders will not want to deal with you if you have had the home for any lesser amount of time. Some investors and lenders will even require that you own the home for nine months.
Now that things are set in place, it is time to start planning the sale of the house. Here are some tips as to how this can be done effectively allowing you to maximize your potential for profits:
1. Usually, the longer you wait, the more you can sell the house for but you also have to consider how soon you need to recover your investment.
2. Get the house appraised after you have made all of the necessary repairs so you know how much to ask for it.
3. If you do not have to get your investment back immediately and can afford to wait, wait until the market comes to a peak. The market tends to rise and fall, and obviously, you want to sell when the prices of homes are higher.
4. If you can sell the house yourself, you can cut out the realtor fee but if you cannot sell yourself and use a realtor, be sure you deal with someone with experience and a high sales record. Try to keep the sales commission at no more than six percent.
It is also important to know who you will be targeting and how you will need to target them. People you can target are lawyers, mortgage brokers, CPAs, notary publics, and title representatives. You can get a list of such individuals from a mailing broker and mail them postcards and news letters letting them know you are in the business of buying up foreclosed properties as well as properties that are sold in the process of a divorce. You can also tell them that you purchase probate and distressed properties. As they see your cards, they can pass them along to their clients so they can get in touch with you. You may be able to get some good prices on properties to fix up and flip this way.
Both Auctionsdir & Beth Campbell are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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