House Flipping the Right Way

By: Joe Cline

Bringing in money from buying homes and reselling them is an idea that many people have. The main concept here is buying at a low price and then turning around and selling for a higher price. The most commonly used term for this is house flipping. The terminology refers to the flip of the home from buyer to seller and right back to selling again. As such this is hardly a new practice and has been in play for many years.

The idea is simple for most people. They see a home that is for sale, usually under duress from foreclosure or tax issues, that has a low price. The reason why the price is well below market is the desire of the seller to get out from under an expense that they do not need. So the misfortune of others can be the fortune of some. A house flipper will then purchase the home, make some minor adjustments and repairs, and then sell the home to a new buyer at an inflated rate.

The real trick here is to find the properties that you can flip without a problem. There is a danger that you could buy a home and find out that some serious problem exists necessitating expensive repairs and time consuming issues that could cost you all the profit that you would make. So you have to be sure that you are making every effort in properly researching each and every home that you intend to purchase. To make this easier we have provided some valuable advice below to aid in this process.

Inspections

Each and every home that you look to purchase should be inspected by a qualified home inspector or home inspection service. This can get expensive which is the reason why most house flippers will befriend a person in this field and pay them outside of the normal procedures or under the table for the inspections to be performed. This will ensure that you are getting the most information that you can use to determine the price you should pay.

Legal Documents

Most often a person that is involved with house flipping will be buying homes without mortgages attached to them. This is a money saving and time saving effort for the most part. This will mean that you have to get legal documents drawn up for the purchase of every home. Most often you can get a single set and copy them for further use with future transactions. Many states require that such documents bare the signature and seal of a notary as well.

Tax Considerations

Finally you have to be concerned with the taxes on the homes that you buy. Most house flippers do not like to hold onto homes so long that they would have to pay taxes but it can happen. There are times when you have no choice but to hold the home over due to repairs and such so the taxes will come due. Factor this into your pricing when you are looking to buy.

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