Real Estate Investing: Flipping Properties for a Profit

Real Estate Investing: Flipping Properties for a Profit

With the financial markets falling out from below us and prices rising to all time highs, where can we turn to secure our financial futures? While many people struggle with the burden of how to keep up from month to month, a handful of smart investors have learned how to make sure that they continue to be able to pay the bills while the rest of the world falls apart. They have turned to the real estate market. The largest profit maker for the smart investor has become flipping homes.

The process of flipping homes is actually quite simple. The following is a brief overview of the basic steps to flipping a home:

STEP 1: FINDING THE DEAL

The most critical step to making money in real estate is finding the deals. If the home doesn't already have a profitable deal built into it, avoid it and move on to the next property! While upgrades can add value to a home, it can not make up for paying too much to begin with. When you go to look for homes to make a flip investment out of, spend time only on homes that are listed at least 20% below its "as-is" appraised value. If you see a home that is in a neighborhood of similar homes is listed at $95,000 and the other comparable homes are listed at $99,000, this home is not worth the time.

You can safely expect that the home is in perfect condition and that even with cosmetic and luxury upgrades, it will not sell for more enough of a markup to make a profit. On the other hand, if in that same neighborhood, there is a home listed at $74,900 you have something worth looking into. Now that you have found your deal, lets move on to the next step.

STEP 2: DEMOLITION

When taking on a flip project, it is expected that a major amount of demolition and reconstruction will be necessary. If you are going to get into this business, do not do it half way. If some part of the house is in need of a repair of replacement, tear it out and start from the base of it to avoid putting a gold plate over a rotted wall!