How to Find A House to Flip *6 Smart Steps
Although there are plenty of distressed houses out there, it can be very difficult to find the right house to flip for you. Below are the best tips and techniques for successful house hunting that our flipping customers have used. Use these techniques to find a house to flip that will also be a smart property investment.
1) Hire a Real Estate Agent That Specializes in REO
“REO” stands for Real Estate Owned and generally means property that is held by a lender as a result of a defaulted loan. Most of these homes will have gone through an extensive foreclosure and perhaps an eviction process if the owner wouldn’t leave.
It’s likely that the last occupants did very little maintenance of the property during the pendency of their mortgage default, foreclosure and eviction period. As a result of their neglected condition, many of these properties will be priced well below market value. That’s good news for you.
Many lenders and loan servicers align themselves with a small group of realtors that specialize in selling these types of properties. The key to finding these neglected but bargain-priced properties is to work with one of the realtors who have an inside track on real estate listings and new rehab homes on the market. You can generally find them by doing specific internet searches for “REO real estate agents” and “REO brokers” within a specific geographic area. The will know how to find the best houses to flip in their area.
2) Join Real Estate Investment Groups
Many areas have local investment groups that meet on a regular basis to provide educational and networking opportunities for their members. Frequently, they will have real estate listings on their website or in monthly newsletters, etc. and give you access to property investment advice. They might even have a referral network of flippers that help each other find houses to flip. One of the best ways to find investing groups is via NationalReia.org, which provides a transparent list of investing groups in each state.
Groups that we at RFG are most familiar with include Connecticut Real Estate Investors Association (CTREIA) in Connecticut and Diversified Investment Group (DIG) in Southeastern Pennsylvania. These are just a few, but it will become clear when you start searching just how simple finding one near you really is. Such groups also offer educational seminars, online question and answer resources and newsletters to help you more fully understand the business and maximize opportunities in your area.
It is well worth joining a group and attending regularly no matter your level of experience in real estate investing — plus you’ll be the first to know about new houses to flip on the market.
3) Align Yourself with a Wholesaler
Wholesalers are people in the business of finding rehab properties, putting them under contract and then finding an immediate buyer who will essentially perform under the original contract in the wholesaler’s place, paying a fee to the wholesaler for being the middleman. Although this is not the most cost effective method of finding a house to flip, it may be very time efficient and save you money in the long run.
Many of these wholesalers find houses to flip as their full time job and are well connected in certain neighborhoods and to certain agents and sellers. You can generally find these wholesalers at real estate investments groups and through internet searches.
4) Find Lists on the Internet
There are a multitude of lists available on the internet that list distressed properties, foreclosures and short sales. Depending on the list, they may be sorted by city, town or even zip code. These lists are a great resource when looking for a house to flip. Many of these lists are available for free and some must be purchased.
Start with the free lists as you may find what you need. Especially with today’s media vehicles, it is becoming much more convenient to find listings that would make profitable house flipping projects. BankForeclosedListings.com, ClassicProperties.com, and BankForeclosureSale.com are just a few of the many available to an investor.
5) Review Foreclosure Sale Lists
If you have the ability to pay cash for an investment property, you could do very well buying a property at a sheriff’s foreclosure sale. The lists are published by counties several weeks before the sales and you have the opportunity to scope out the properties beforehand.
Be advised, however, that while you can see the property from the street, you may not inspect them or trespass on the subject property to get a better look. There is a great deal of risk in buying the property without the opportunity to see the whole thing, but there is often great potential for profit in these properties. Most counties require that you put 10% of the purchase price down at the sale, in cash or certified funds, and that you settle within 30 days. If you do not settle, you lose your deposit, so this method of buying properties is not for the faint of heart!
6) Drive around the Neighborhood You Want to Buy In
Many buyers drive around the neighborhood in which they want to find a house to flip and identify potential properties to purchase. Generally, they pick properties that are typical in construction style for the neighborhood but show signs of neglect and deferred maintenance. They then search land records to identify the owners of the property and reach out to them by mail or telephone with an offer to purchase the property.
Our customers report a decent rate of success with this method and even though the owner might not want to sell now, they may want to sell in the future.
Being smart in your property investing can be very challenging and you will need to employ several methods to find the right one for you. Putting in a little extra effort when trying to find a house to flip will be worth it in the end. You will make a lot of offers that will be rejected, but ultimately, if you keep at it and stay disciplined, you will be successful in finding just the right property.
Want more info on how to tell if a property it right for you? Check out Chapter Two: Finding a Property for the House Flip | Flipping Houses 101.
Happy House Hunting!
Originally published at rehabfinancial.com on May 17, 2016.