Investment Property Strategies for Flipping a Property
Fix and Flip:
This is the most common strategy employed, and generally what comes
to mind when people think about flipping a property. You buy a
property that needs repair, you take care of all the repairs, and you
sell it as retail for a profit. It is a reliable method that can
generate thousands of dollars on a single deal. Flippers run into
trouble when they pay too much for the property or underestimate the
cost of repairs. Be sure to account for all of these factors before
making a deal, and be smart (conservative) during repairs, or you will
spend all of your profit.
Refinance and Lease-Option:
This one starts out the same as the first strategy, except instead of
reselling the property for cash, consider reappraising the home at its
new value, and restructuring the financing associated with it.
That way, you can sell the home with a lease-option, whereby the tenant’s
rent will cover your mortgage (or should, at least), and if the tenant
decides to buy, then you won’t have to hire a realtor or go through
the process of marketing and selling the home again.
Wholesale: Rather than
selling the home as retail, consider passing it along to another flipper
trying to employ the first strategy (fix and flip). That is, wait
to buy until you’ve found a good enough deal in a good enough market,
where you can turn around and flip the property to another investor
without actually making any of the repairs. You will sell the
home “as isâ€, below market value (just what the other flipper is
looking for). You may only make a small profit as compared to
the rehabber, but you won’t do any work and could walk away with a
few thousand dollars.
The final strategy is a bit
riskier, only because it involves predicting the local economy.
If you find a real hot, booming real estate market, and are able to
get the timing just right, you can enter a contract for a house or condo
that’s under construction (or better yet, under planning). If
the situation is right, you can wait until the development is complete,
and then resell the home or condo at its retail market value for an
enormous profit. Be advised, if the local economy turns sour,
you will be stuck owning pre-construction property that is sure to deflate
in value.
InvestmentPropertyMadeEasy.com
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