How to Flip a House and Key Points
You should not think that that you are going to do something illegal when you decide on how to flip a house. It basically gets a bad name due to dishonest investors who use unscrupulous ways to make some quick money. However, you should not fall in this trap. Honesty pays in the long run especially if you are planning to make a long term business out of it.
Before starting with any project make sure that you have plenty of credit or cash available to complete a project. You could think about using the option of rehab financing. This covers the costs for purchase or remodeling. It also does not put undue pressure on you.
You could also find home owners who want to get rid of their property quickly. A sales contract can be created which in turn can be resold to a real estate investor or developer. Another thing you could do is buy a house that needs to be fixed up and repair it accordingly and then sell it at a price above its original market value.
You should familiarize yourself with the different aspects of the property you are purchasing. Always focus on one targeted locality instead of many. This will give you added advantages, the primary reason being getting a better knowledge about your market. You could also put in some more research to find out more information on real estate values and options that will help you in getting a better deal. Find out what features buyers typically look for in that area. You must also know the average costs of homes in that area. The more you research the easier it will be to make decisions when the time comes to sell.
It is an extremely good idea to spend the most amount of money on the exterior and the landscaping in front of the house. It is the first impression that matters. If your buyer does not like the appearance in the first few seconds, then in all probability he has decided against buying the house. Therefore the exteriors have to be immaculate otherwise prospective buyers will lose interest even before they view the house from the inside. Shiny and clean door knobs, coach lamps, door knockers and nicely done up address numbers will add to the impression. In fact if certain extra features do not match cosmetically with the house then those should be removed at once.
If you want to make house flipping into a long term venture then you should think about acquiring two or three properties simultaneously. The potential income is limitless if you have more than one house in the remodel stage and one or more houses that have already entered the process of sales.
If you want to be successful in this business then take time to understand the basics of how to flip a house.
James Klobasa
http://www.articlesbase.com/non-fiction-articles/how-to-flip-a-house-and-key-points-136039.html
Does this house flipping technique work?
Person A with good credit (680) gets a loan for 3 properties. Person B (agent or broker) pays mortgage on properties for a year, makes repairs and upgrades to raise equity. We then either sell properties, or refi at which point houses are no longer in person A's name, and person B pays person A 20% of the profits. What are the risks? What are the tax ramifications? How would a refi work to person A's advantage after the year?
So basically the repairs and upgrades raises the equity of the home, Person A sells to Person B at the original purchase price so Person B makes his money by then selling the house at a higher price?
I guess my question is how does Person B benefit from actually buying the property from Person A in a year after paying mortgage, making repairs & upgrades?
There are many risks. Person A is risking his or her good credit. If B fails to pay then person A would have to pay the remaining debts, or take a huge credit hit.
Taxes shaxes, who knows?
Refinancing wouldn't be right. IF you want to take it out of person As name, then the house needs to be sold to person B.
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Jordan is correct
person b is hopefull that he property will rise in value and then he'll sell
but the current housing slump and looming recession cause by the overinflating of home prices person b will lose in the end, only person a makes off, but then he too is at risk like Jordan says, and person A is a fool to risk a primo credit rating
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The question is pretty complex. There are a lot of details which can change the outcome.
As a general principal the process does work and many investors do make money. Others lose money as they made mistakes or were betting on a rising market.
It is best to focus on situations where person B can make improvements for little money which really do improve the value. I say little money as anyone can over improve a property by spending more than they should.
I suggest you spend some time checking some books. Head to a large bookstore with a RE section and camp out reading the books right there in the store. Buy the ones that seem the most on topic for what you are considering.
One suggestions is an author named Bronchick. He has a number of books but one on Flipping. As he is a lawyer the book stays away from some of the illegal ideas that a few authors sometimes promote. Finkel & Conti also have a few books on the topic with some great advice.
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http://johncorey.wordpress.com
As a RE investor for over 20 years (multiple states & countries) I enjoy helping others with their RE questions. The link about takes you to my blog where I am running an Frequently Asked Questions dialog. Please ask questions if you want to know something specific. Or just add comments as to your experience as a real estate investor.
But if the properties are in A's name, A is going to have the tax liability for the property…. And 680 isn't that great credit. What kind of income does A have to support the purchase of so many properties, particularly if they wont be generating rental income?
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