Introduction to Real Estate Investment - Flipping, Part2

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In any situation, involving the purchase of real estate, the old saying holds true. You need money to make money. It is no different here.

I cant count how many real estate courses I have purchased and read, that stated you can buy properties for no money down. While this is possible, it is not the norm. In most situations involving no money down, the owner of the property must be holding the note. In order to do so, he must own the property outright. Now, how many people do you know that you flat out own there property free and clear? Out of those people that do, how many will sell you the property at a large discounted rate? The percentages arent very high.

With this in mind, you need to have money to buy properties. You can borrow the money through a bank, hard money lender, investors, relatives or use your own money. You will have a hard time getting money from a bank to do this, even if your credit is good. Hard money lenders usually want very high interest in upwards of 15-20% monthly. Your best avenues to utilize are a equity line of credit on your own home, investors or family. These options will usually allow you a reasonable interest rate, therefore keeping your profits at a manageable level.

Once you have your funds available, your next step is finding a reliable real estate agent that you can work with. You will be surprised how hard it may be to accomplish this, especially if they know you are a newbie. Ask them if they service any other investors. If they do, steer clear of them, cause you will only get the table scraps of what the others do not take. Look for an agent thats just starting out. They will do alot of legwork for you. Ask them for daily emails of new available properties within your price range. Ask them for a market analysis on the ones your interested in. Do a drive by on each house, talk to the neighbors, ask them about the neighborhood and what condition they think the house is in. Many neighbors have been in that property, so find out as much information as you can.

When you decide to go and view a property with an agent, make sure you have all your ducks in a row. While it is an agents job to service you, that doesnt mean you need to run them around needlessly. If you make an appointment to see a house, make sure its one you intend to buy, depending on the inside condition. When looking for a property to flip, you want to try to buy it at a 50-75% discount of the market value. If it doesnt meet this simple requirement, then there is no need to even view the home. At times you can make an offer on a house thats been sitting for awhile, that they will accept, but this is not a normal condition to how it works.

Remember, you are not the only one that will be interested in a property, if its at the right price. There could be as many as 10 other investors, that will be interested in that property. Timing is everything in this market. Most homes that I have purchased in the past, I have had an offer into the sellers withing 4 hrs of it hitting the market. Being ahead of the crowd, always gets you the best deals.

In my next post, we will discuss what to look for during the showing and how to calculate if a home is worth buying to make a profit.

Till then………

John

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