Im thinking of starting to flip propertys for a profit. What are some dangers or tips i can get?

Answer 1

Depending on your local market, house flipping (buying a home, fixing it, and reselling it) may still be profitable. I am a realtor in Las Vegas and I know of people successfully doing this today. I have done this myself in the past and made a lot of money. The key is finding the right property at the right price in the right area. The best way to know if you can make money flipping is to start at the eventual sales price and work backwards.

First, determine what price homes are still selling. Let’s say for example that homes in XXX area selling for $250,000 are still selling well. Then, you need to locate a property in that area such that once you buy the property, rehab the property and sell the property for $250,000 you still made a profit. I am oversimplifying the elements below but hopefully the following will give you an idea.

Eventual Sale Price: $250,000 – be pessimistic as to what the home will sell for. This is a soft market.

Now subtract all the cost elements:

Profit: $20,000

Cost to Sell property: Use 7% or 8% (agent charges, state taxes, etc.) or .07 x $250,000 = $17,500

Improvement Cost. This will be different for each home. Use $40,000 as a typical number.

Holding costs (it takes time to repair a home and to sell the home and you have to make the payments during this time): $10,000

Acquisition costs: Use 3% of the purchase price or about $5,000

$250,000 - $20,000 - $17,500 - $40,000 – $10,000 - $5,000 = $160,000

Thus, the MAXIMUM you can pay for the property is about $160,000. And, this has to be a property that once restored will sell for $250,000.

When you look at all the costs I listed above, the only one you can really control is the improvement cost. It is critical that you do not over rehab the home. If homes in the area with 5 year old stoves sell well, you do not need to install a new stove; a used stove that looks nice and is in good repair is the right answer.

I hope the above gives you some ideas.

Eric Fernwood
[e-mail]

Answer 2

You need a strong working knowledge of your real estate market in order to successfully 'buy and flip'. Many times flippers overpay, overimprove, and end up with a property which sells for less than they have invested.

I strongly encourage you to research this concept carefully before you make any moves. "Flipping' is not a proper avenue for those who are not fully knowledgeable about the market in which they propose to engage in the practice.

Answer 3

I recommend you get the book by Thomas Lucier. called Pre Foreclosure Property Investors Kit. It is packed with no nonsense approach to buying and reselling homes and what to look out for while doing it. I think it is about 20-25 dollars
Good luck
Bob Laibach
www.gogreedy.com

Answer 4

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Answer 6

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