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| House Flipping Basics |
Many people are dreaming about making money in real estate. For
most people this will forever stay a dream, but some individuals
are able to make their dreams come true. Fact is - even the less
experienced individual can make money in real estate if
following some basic rules. One way to make good money in real
estate is to "flip houses". What is house flipping? Can you
actually learn to flip houses?
We all have read stories about of someone that made millions in
real estate. But how have they done it? Here is a quick guide
how to make good money real estate. It is easy to follow and you
can verify each step if you spend additional time to research it
and to verify it for accuracy. Let's assume you live in an
apartment or your own house and your income allows carrying an
additional mortgage payment for a few months. Keep in mind - you
do not plan on keeping the objects you deal with forever. 5-year
mortgage terms or ARM's with 1-3 year terms will work for our
advantage.
A good way to start is to buy so-called HUD houses. These houses
are sold or auctioned off by a mortgage lender. The HUD houses
usually require some fix up work, but the sales price is way
below normal market values for comparable houses that are in
excellent shape. HUD houses can often be bought with no or just
a little money |
down - of course depending on your personal
credit history. Once the HUD object has been purchased you start
fixing the problems on the house and to bring it into a
condition where it looks well maintained.
If you are good in doing stuff yourself - perfect. If not you
need to look for the low-cost repair people in your area. Choose
the sole proprietors that often advertise with flyers or low
cost classified ads. Work out a deal with them and promise them
more business if they work with you. The next step is important.
Depending on market conditions you will sell the house yourself
and that way save money that you usually would have to spend on
the real estate agent. If you act carefully enough you should be
able to produce a 20%-40% profit from the overall transaction of
buying and selling the HUD object.
Important: Make sure to put some of that profit into a savings
account to cover your income tax liability.
With the remaining profit you turn around and do the same thing
again. Find the right HUD house and buy it. Fix it up following
the same procedure as shown above and sell it. Again - put money
aside to cover your income tax liabilities.
Depending on your skills and the market conditions you should be
able to go through this process at least twice in |
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your first
year. With a little luck you will be able to purchase the 3rd
object with cash alone or only need a small mortgage. By now you
probably have streamlined certain steps and eventually build up
a network of suppliers that help you to cut down the turnaround
time from the moment you buy the house and sell it again.
Important: When selecting HUD houses to fix up, concentrate on
those that need mainly cosmetic work. New inside and outside
paint, new carpets and things like that. Stay away from houses
that need structural work. Even with no experience you can do
work like painting the inside walls. This is really easy to do
as no furniture is blocking your way and if you are going to
replace the carpet anyway.
Keep in mind that friends and family might try to talk you out
of the idea of house flipping. They are afraid of the risk and
of course they have never done this before. Most people avoid
risk in life at all cost. Don't listen if you feel confident
enough you can do it. Sometimes you have to ignore advice to
find your own luck. Keep in mind - you are buying real estate.
It is not a risky stock that loses 50% value in one day. Yes,
you might hit the market at a slow point, but time is on your
side. As long as you can carry the additional mortgage payment
for 6-12 months (worst-case |
scenario) you should be fine.
House flipping is a simple way to make a fortune in real estate.
Plan each step appropriately. Work with a mortgage broker and
explain that you only plan on keeping the house for a short
time. Ask for loan programs that allow to buy with no or only
small money down.
Important: When fixing up the house let psychology drive you.
It's not you who has to like the house. The potential buyer has
to like it. Find out what current trends for new houses and
their interior is. Choose the right colors for paint and carpet.
Model homes can give you a good hint and many ideas.
There is almost no other business that allows you to make money
with almost no money down in such a short time. In fact, more
millionaires made their fortunes in real estate than in any
other business according to statistics on the Internet. So, why
should you not be the next millionaire who did it with real
estate?
About the author:
About the Author Christoph Puetz is a successful
entrepreneur and international book author. Christoph operates a
successful Pregnancy
and Parenting Website. One of the other websites he
maintains can be found at Credit Repair Help.
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