In prior posts, we talked about the basics of flipping properties and some of the pro’s and con’s. Today we’ll review the important points and offer tips on how to look for properties that could be good to flip.
- Not Enough Money
- Not Enough Time
- Not Enough Skills
- Not Enough Knowledge
- Not Enough Patience
5 Must Haves
Also from Investopedia:
- A group of experts
- A handyman or knack for home improvement
- A good lay of the land
- A good estimator
- A dose of patience
Where Do You Begin?
The first step is to learn what the market value of the neighborhood is so you know how much you should pay and how much you should sell for. Then you need to look for motivated sellers.
Look for real estate investment clubs in your area. You’ll get to meet people who have been prospecting and monitoring home values for years. Here you may find some buyers of your flipped properties so take the time to get to know them, and help them get to know you.
Attend foreclosure auctions to get a feel for what happens and how much houses sell for relative to their worth. Again, look for investors. Let them know you will be “rehabbing” homes that could then become good investments.
Set up a spreadsheet or a file system where you track the people you’ve met and how frequently they call you, or you call them. You’ll quickly find your best customers and lead generators.
You can also use these contacts to build your team since you will need a good appraiser and title company.
So how do you find the houses?
There are as many methods as there are people. Some ideas are:
- Drive around your neighborhood with a 10-15 mile radius. Look for abandoned houses which could have tall grass or dried up grass. Then ask a neighbor how long the home has been abandoned. Also ask them the approximate size of the house, and see if they know what the condition is. Let them know you are interested in possibly buying it and leave your card. They may know of other properties around that are for sale.
- Use an online tool like Zillow.com or mls.com to find foreclosed homes in the neighborhood.
- Find out when the tax auctions are in your neighborhood. Homes often get sold here as well.
- Look for real estate wholesalers. They often buy homes from tax auctions and short sales and could be a great resource for finding houses to flip.
Once you find homes, you can use the county tax records to locate the owner and send them a letter.
Ask if they are interested in selling and get as many details about the house as possible. Some things you need to find out are:
- How many bedrooms, bathrooms, garages?
- What is the approximate square footage?
- How old is the house?
- Does it have central heat and air?
- Why did they move?
- Is there a mortgage on the house? If so, what is the approximate payoff?
- Are there any liens or judgements against the property?
- What repairs need to be done?
- Estimated costs?
- How long have they owned the house?
Before you buy, remember your five exit strategies:
- Wholesale to Another Investor
- Minor (or No) Rehab and Rent
- Minor Rehab and Sale to Investor
- Minor Rehab and Flip to Occupant
- Major Rehab and Flip to Occupant
And one last piece of advice. When the home is finished and you’re about to put it on the market, hire a professional stager to pull things together.
Next week, we’ll look at home staging in more detail.