When you buy real estate to sell for a profit, it’s tricky
Flip real estate for profit Seminars, advertising and marketing are happening in my city and all over the Internet and television. Since I have experience in long-term real estate investing and have friends who have tried investing for profit, I would like to share some of our experiences.
Me and some of my friend’s properties are out of state and we constantly get letters from people wanting to buy our properties? We receive letters, cards, brochures and everything else.
Some of the letters almost beg us to sell our property to them. Some claim they have everything in cash and others claim they are immediately qualified to buy. These are many of the problems fins have with those properties, so you may want to think long and hard before answering. ads to attend a flipping seminar that makes money selling tapes and books after the seminar, that doesn’t work.
It’s hard to find properties that aren’t bulldozer ready
Many so-called flippers go to public records to find out-of-state owners, and therefore their reasoning is that they should want to sell. Many of the properties have relatives who care for the properties, live in them, and paying the rent. When you buy real estate to flip the most difficult task is to find a property that’s nowhere near damnation.
The fact that dozens of flippers are going to public records to find sellers tells me how difficult they are having to find quality properties to buy and sell. Many of the properties that are readily available are in disrepair, so after renovation there would be no profit. Properties that are in the hands of real estate agents are already priced for today’s market. Those that are auctioned off in foreclosure are usually bid too high to make a profit after renewal.
The surprises, especially for hobby flippers, are huge.. Missed surprises include hidden dry rot in the floor, dry rot in the floor and wall, rotten plumbing pipes buried under a slab, large holes in the roof, gas leaks outside, damaged foundations, electrical junction boxes defects in the wall or under the house, clogged main drain, asbestos on the exterior shingles or inside the walls and mold. These are real life issues I have seen others have when buying a fixer or remodeling home.
Any of these problems can cost anywhere from $2,000 to $20,000 or more to fix each.
Flippers real estate agent offers that generate profit for the Flipper
Flippers contact owners and write ridiculously low offers, so they have money to make a profit after fixing up the property. Most offers are turned down, even if the house is in disrepair. If the house is in an area with properties that sell fast and resale is high, they are constantly asking for below appraisal offers. This process is easier in areas where homes have low sales value or with homes that remain on the market for a long time.
These houses tend to have more hidden disasters since they have been on the market longer. What happens is that the desperate pinball takes the best offer he can get and after finding it he buys a house in poor condition. they will hide existing problems or get a fake appraisal that is too big.
Most Flippers are forced to get funding from investors
To buy real estate to freak out you must have financing. Banks don’t want to do business with most flippers who have no assets, little experience, and may not sell the house before they run out of money for renovation, post-renovation maintenance, and mortgage payments until for the property to be sold.
After the pinball discovers that the house was overpriced for profit and discovers that the house is in much worse shape than he originally thought, he later discovers that after sharing his profit with his investor or pricing the house for the market, they don’t have much left after sales, sometimes nothing. So this is where the flip starts to become a dud. Due to these problems, most flips are not profitable and many pinballers are constantly in serious financial trouble.
Before you think you can buy real estate to invest, you should have some understanding of both buying and selling real estate, the construction process, and the tax consequences when you have to pay taxes in the short term. Read the FHA rules to flip properties.
There are many more facts to consider that you will have the privilege of reading when my new eBook on real estate investing comes out.
You can get my sample of “The The Ultimate Guide to Great Money Compensation” and 7 other eBooks along with expert help with my course.
