If you're like most folks considering getting into real estate investing, you've probably got visions in your head of hooking up with a Realtor, paying pennies on the dollar for a cute little dollhouse in a great neighborhood that needs a few repairs and a little curb appeal, and flipping the house for a tidy profit- all while having fun getting paint on your overalls.
Flipping houses isn't a terrible way to get your feet wet in real estate, but it's not all fun and games and easy money, either. Unless you have a LOT of cash on hand and don't mind dealing with the many unknowns that come along with investing in real estate this way, flipping houses may not be for you.
First of all: how are you going to find the property? Contrary to what you may think, you're not likely to find that perfect little rehabber house through a Realtor. Rehab properties listed on the MLS are often bank-owned, and regardless of their condition, the bank has an amount they must get to satisfy the foreclosed mortgage against the house. So you're not going to find much opportunity for getting a bargain there. And since everyone and their brother is flipping houses these days, good deals that do end up on the MLS are gone in an instant.
Secondly: financing. Cash is king in the flipping houses business, and if you don't have a lot of it, you will probably miss out on the best deals. It's highly unlikely that you will be able to qualify for a mortgage on one of these properties, since banks generally require that a property be in good condition in order to loan on it.
If you ARE able to locate and purchase a property for cash, or however you're able to finance it, you're going to then need a lot MORE cash to fix it up. Please, don't make the mistake that many newbies do of underestimating the costs of the repairs the property will need. It never, ever ends up being just paint and a few new doorknobs.
Even so, if you're willing to hustle, invest a lot of time and money, and don't mind getting nice and dirty, it's not completely out of the realm of possibility that you'll be able to make a decent income flipping houses. After all, the old adage about being able to accomplish anything you set your mind to became an "old adage" for a reason!
But my question to you is: are you thinking about investing in real estate to try to work hard, long hours (oftentimes doing manual labor) to make a "decent" income, or are you thinking about investing in real estate because you want to work smarter, not harder, and make enough cash so that you and your family can live a life full of abundance? I'm guessing it's the latter.
Flipping houses may not be your ticket to big money, but real estate definitely is. There is a much better way to find unwanted properties (and if you REALLY have the bug to fix something up- you'll definitely find some fixer uppers), and for cheap enough that a profit- regardless of how much work is put in- is virtually guaranteed.
It's called "deedgrabbing," and it's a simple, proven way to get properties from owners who are about to lose their properties to the government because of unpaid back taxes ("tax delinquent properties") just BEFORE the property is lost. You will find lots of motivated sellers who can't wait to get rid of their properties, for cheaper than you have possibly imagined when contemplating flipping houses.
$20K? $30K? Nope. You'll often be able to get properties for $1000 or less, and sometimes people are so happy to see their property go to you instead of the "tax man" that they just give it to you outright... no joke!
It's easy- all it takes is knowing how to find these owners, when to contact them, and what to say to them when you get them on the phone. Compare that with competing with every contractor in town for the rehab properties in your area, and I think you'll agree with me that flipping houses may not be your ticket to big money in real estate.
Want to learn the secrets of deedgrabbing? Go to deedgrabber.info.
Olliver Kennedy is a successful entrepreneur and real estate expert.