All You Need To Know About Flip Properties
These are distressed, abandoned houses that may contain mould, warped floors and wood rot. Due to their tarnished look and situation, they are sold below current local market value. A house flipper purchases a flip property, remodels and resells at a profit.
Qualities Of A Good Flip Property
Desirable location. A good flip property should be in a good neighbourhood where people would actually want to live. Finding a flip property in a prime location is not easy but also not impossible.
Solid background structure. When you buy a flip property, the goal is normally not to tear it down and start from scratch. A good flip property should be structurally sound.
Good schools. Research has shown that homes in good school district are likely to sell faster.
Easily accessible. When you commit to a flip property, you will work on it daily for the next couple of weeks or months. Therefore, a flip property closer to you is most preferable.
Value must be below local market value. The goal is to spend less and sell at more. Therefore, a good purchase price will dictate the profit that you will make.
Smart Ways Of Finding The Best Flip Properties
Hunt for distressed and abandoned houses in prime locations and track down their owners. It’s not as hard as it sounds. Take a drive around your target area, talk to some locals to find out about abandoned houses in the neighbourhood then find the owner of the property found at the town clerk’s office.
Browse the MLS. Multiple listing services (MLS) is a database that contains all houses on sale usually posted by a broker.
Go through local foreclosure notices, found at the register of deeds or at the sheriff’s office.
Partner with attorneys. There are three types of attorneys that can help acquire potential flip property. They are probate, bankruptcy and divorce attorneys. Probate attorneys work with families to liquidate assets to distribute to heirs. Bankruptcy, divorce and probate attorneys have access to properties that need to be disposed fast and usually at low prices. Having a good network with the above attorneys can be a wealth generating opportunity with no completion whatsoever.
Locate home wholesalers. These are firms that acquire properties through short sales or tax sales and sell them to interested investors.
Join a real estate investment club .This is a good source of information about local properties from experienced real estate players.
How To Determine If A Flip Property Is Profitable
Now that you know how to find a good flip property, it is important to estimate the expected profit. The steps below will help calculate the expected profit:
1. Analyze similar properties in the neighbourhood to estimate the market value of the flip property after remodelling.
2. Come up with the total expense cost by adding the upfront costs, holding costs and remodelling costs.
3. Contact the owner or seller of the property and get the best purchase price.
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