Answer to email question: In
what ways can you make money flipping houses? I thought
"flipping houses" meant that you find a deal and sell
the contract to an investor. But, "Flipping Houses" on
TV shows people fixing and selling.
How to Make Money Flipping
Houses
By Jeanette Joy Fisher
The term flipping seems to be
everywhere nowadays, including in the titles of a number
of television shows that have attracted loyal
followings. That means lots of people are interested in
buying houses and reselling them at a profit. That's the
good news. The bad news is that there's considerably
more competition for fixer-upper homes than there was
before the concept became so popular among television
viewers.
But that doesn't mean there isn't still a significant
amount of money to be made buying and reselling homes.
3 Ways to Make Money Flipping
Houses
1. Fixing and Flipping Houses
The first one is the most popular, and the concept is
quite simple (at least on the surface): you find a home
that's in need of repair or upgrading, you go in and do
whatever work is necessary, and then you put the home on
the retail market. Depending upon where you live, how
hot your market is, and how good of a bargain hunter you
are, you can sometimes make $25,000 (or much more) on a
single transaction.
There are some dangers involved in that strategy, of
course, including paying too much for the property in
the first place and then in underestimating how much the
repairs or upgrades will cost. In fact, the latter
situation provides one of the most common points of
tension in the various television shows devoted to
flipping houses, so it's best to have a solid knowledge
of home prices and repair costs before you attempt any
flipping method.
2. Fix, Hold, and Sell
A second method that works well is to buy a rundown
house, do whatever it takes to bring the property up to
standard, and then to rent the home on a lease-option
basis. There are some advantages to this method. First,
you can get a potential buyer into your home without
having to pay a real estate fee. Second, you'll be
getting a renter who genuinely wants to buy the home at
the end of the lease, so they'll take better care of the
property. Finally, there may be some tax advantages to
you if it takes more than a year for the lease option
period to expire. Check with your tax advisor for more
details on that.
If the tenants do not purchase
the home, often you can keep renting the home and borrow
your profit by refinancing and use the money to purchase
another home.
3. Traditional Method of Flipping Houses
A third method requires a greater knowledge of home
prices and repair/upgrade costs, but it can make you a
considerable amount of money without having to do any
repairs yourself. That method involves finding
properties and reselling them to other investors on an
as-is basis. You won't make as much money per
transaction, since you'll have to sell at a below-market
price to the next investor, but depending upon your
market and how good you are at finding bargains, you can
flip those properties faster, since you won't be doing
any repairs or upgrades before you turn around and
resell them.
Fixing and reselling homes has been an investment
strategy for centuries, and will continue to be a
popular investment option as long as folks still live in
houses. You can get your piece of that pie if you shop
hard, estimate carefully, and know your market!
Learn how to fix and flip houses! Free ebook:
"The Truth about Making Money Flipping Houses"
50 page ebook for
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investing newsletter readers.
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Copyright © 2006 Jeanette J.
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