The Secret To Successfully Flipping Real Estate
Buying a home and reselling it quickly for a profit, known as flipping, can be very lucrative. But if it is not done correctly you could end up losing your shirt. Learn the secret to successfully flipping real estate.
There has been a belief in the past that the act of flipping a home was unethical, or even illegal. But the truth is, it’s just business. This misconception probably comes from the theory that flipping a home will artificially inflate a real estate market or that it is some kind scheme used to try to deceive a buyer. However a proper flip will take a property and make improvements to it thus adding more value to the home. It can then be sold for a higher price.
In order to flip a home you need two things. First you need to find a home that either needs some degree of fixing or renovating or a property that you can get from an eager seller that you can buy for under the current market value. Second you need to quickly fix, repair or renovate that property as quickly as possible so that you can put it back on the market for a quick sale.
The key to finding a property with the potential to flip is to be resourceful. Use your network of friends, relatives and co-workers. Use the resources of a real estate agent. Look for “for sale by owner” listings on-line, in the paper or by driving through neighbourhoods.
Another creative way to find properties is to run ads of your own. Gear the ads towards those people who have missed a few mortgage payments and are facing foreclosure. They would be better off selling to you rather than giving up control of their home to banks. This way they may still be able to keep some of their homes equity.
Sometimes you can flip a home before your deal even closes. This can be done by purchasing a property for a significant discount will a long closing. During this time you find another buyer and resell the contract to the new buyer. When the deal closes it essentially gets passed over twice and you collect the difference as a profit. This can be risky and usually works best in a rapidly rising real estate market.
To be successful at flipping you will need to be a “jack of all trades” in the sense that you will need to know a little of everything. You should have an understanding of different kinds of repairs that you will likely need to make such as, plumbing, electrical, flooring and others. You will also need to be able to quickly evaluate a property to determine if the cost of making these repairs will be worth the expense and if you can still turn a profit. Experience will be the key.
Flipping can be very rewarding both personally and financially. But remember that you will need to put together you own network of contractors, lawyers and real estate professionals that you can use as your guide and to get the job done. It’s not easily but the returns can be well worth it.
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ABOUT THE AUTHOR
Stefan Hyross writes on topics that include real estate in Toronto and market information. For more information about the Toronto area, related real estate articles or to search for Toronto homes please feel free to visit the site.