Real Estate Investing Blog - DiscountedProperties.com

Does the idea of flipping houses sound exciting and lucrative? For many individuals, the thought of flipping a home and making a mammoth profit for only a few months’ worth of work sounds too tempting. The problem is that if you don’t know what you are doing, you could easily lose in the house flipping game.

Regardless of what late-night infomercials want you to believe, there is no secret to house flipping, and it takes great skill to flip a house to make a tremendous profit. Flipping real estate takes time, patience and a great deal of knowledge about the business.

The first step to successfully flipping houses is to understand how much time, energy and money is involved. Once you have a firm grasp of what is needed for flipping real estate, you will want to know what NOT to do when flipping houses.

The following lists details the top five things to avoid when flipping houses:

1. Do not purchase a property if you haven’t first researched the neighborhood. It is important to remember that all neighborhoods are not created equal. In other words, just because a nearby community has seen an increase in property values doesn’t mean that the community in question has as well. You must research the neighborhood’s property values and its real estate market and trends, just to name a few, before flipping real estate there.

2. Do not purchase a property without having a budget in mind. Your budget will revolve around the financing you receive to purchase the property. Because of the recent real estate bust and credit crunch, do not expect to secure financing without a healthy down payment. Remember: the bigger the down payment, the lower your interest rate will be.

3. If you are new to flipping real estate, avoid homes that need extensive, structural repairs, as this can often get you in quickly over your head. Leave the major rehabs to the seasoned real estate flippers and instead look for homes that require cosmetic makeovers.

4. Don’t get emotional when flipping houses. One of the biggest mistakes real estate investors can make is not separating their emotions from their flips. Remember: at the end of the day, flipping real estate is just business!

5. Don’t expect the process to always go smoothly. Having high expectation when flipping houses will not prepare you to handle problems, chaos and budget overages, which frequently happen when flipping real estate.

Flipping real estate can be a lucrative endeavor, but it takes excellent business acumen, hard work, and excellent financial management.

While many of the houses on the market have the potential to be profitable investments, you’ll make much more money if you concentrate your efforts on finding a fixer upper for sale. There are a couple of good reasons for this: Most people in the market for a home would rather buy something that doesn’t need work – and properties that need work are often owned by people with a shortage of extra cash.

If you purchase a fixer upper for sale, you can pretty regularly make some quick and easy repairs to the property and turn it for a quick profit. It may seem hard to believe, but a quick coat of paint, new carpet, and a thorough cleaning can add thousands of dollars to the value of a fixer upper for sale.

Since most people are looking for a home that’s in move-in condition, there’s less demand for a fixer upper for sale. Less demand means that anyone willing to take the time to make a few repairs can turn a little effort into thousands of dollars in extra profit.

By concentrating your efforts on the fixer upper for sale real estate investing market, you can also avoid paying real estate commissions in many cases. The reason? There are so many homes for sale that are ready to be lived in that a lot of real estate brokers will insist that repairs be made before they’ll consider listing a property.

This leaves the door to greater profitability wide open for an investor to pick up a fixer upper for sale without having to pay real estate commissions – which means even more money you can put in your pocket.

Regardless of your experience level, you can generate a lot of cash in very little time – even in today’s troubled market – if you use your head when you flip real estate. That’s the easy part. The challenging aspect is knowing how to get property inexpensively enough that you can still turn a clear profit when you flip real estate.

By dealing only with highly motivated sellers with a clear need to sell quickly, you can negotiate terms that will allow you to buy low. You can then make any needed repairs on the property, mark up the price, and successfully flip real estate, while putting the profits into your pocket.

In order to flip real estate, you have to know what a property is actually worth, and a wild guess based upon outdated information isn’t good enough. Since the market is still declining in many parts of the country, getting recent comparables is critical. It’s also imperative that you remember that it’s possible for a property to lose value between the time you buy it and the time you re-sell it to someone else.

If you estimate that a property has an after repair value of $150,000, it’s always a good idea to factor in a buffer for human error as well as further depreciation. Targeting properties with owners willing to sell for roughly half of it’s value will protect your profit margin and increase the likelihood that you’ll generate fast cash when you flip real estate.

This can be challenging, but it’s not impossible. So have at it – and take charge of your future today.

It seems like a lot of people nowadays are interested in getting into real estate as a means of investing. There are many ways to do this including flipping houses, buying fixer upper houses, wholesaling houses or purchasing an investment house to name a few. For someone who wants to start off or for those who simply want one particular type of investment, purchasing a single investment house may be the best way to go. It can be a good start to get your feet wet in the real estate industry. Also, having one solid investment house that turns a tidy profit each month because of rents is a highly lucrative plan.

Before purchasing an investment house there are a few things you should consider. You’re in this to make a profit, right? So, you need to calculate how much of a profit you will actually be making based on the particular investment house you are considering. The first thing to think about is your initial investment. If you are buying an investment house to make money off of rental income, the basic questions you need to have answered are:

• How much will it take to purchase the investment house?
• What will be the monthly mortgage price?
• Are there any repairs or maintenance that need to be performed immediately?
• What is the potential sale price of he home?
• How is the rental market where the house is? How long should I anticipate before the house is rented or how long will it potentially stay vacant?
• What are current rental rates in the area?

Before committing to an investment house make sure that first you are purchasing the home so that in case you have to sell it you will make a profit on the sale whether that is thirty days from now or thirty years. Next, make sure your monthly expenditures on the investment house will be less than the monthly income. As a landlord you will be responsible for the maintenance of the home and you should factor in those expenses each month. You won’t likely have monthly maintenance expenses but over time if you have to have a large purchase, that amount was factored in to the overall profit.

Being well informed and unemotional about the business transaction is the key to finding the ideal investment house. Be patient when looking for an investment house. You want to maximize your profit potential, not get into the first house you find. Most importantly, know when to walk away from a deal. If in your calculations, the investment starts to creep a little too close to earning potential for comfort, reconsider the deal. You want a solid cushion between income and expenses with your income well exceeding the expenses in the long run.

Buying an investment house can be a great deal and a perfect long term investment for those willing to deal with being a landlord. But be aware that, as with all investments there are risks. You can never guarantee your investment house will be rented the entire time you own the home. Make sure to have an exit strategy that accounts for the sale of the investment house at a profit if you need to get out of the deal or if you simply get tired of dealing with rental properties.

The decision as to whether to form a corporation or LLC for flipping houses is one that you’ll have to make based upon sound advice given to you by a professional. The best people to help you make this decision are your lawyer or a CPA – preferably one that concentrates on real estate.

The factors that they’ll probably be most interested in discussing with you will be how many properties you intend to flip and how frequently you intend to do it. Your answer to that question will determine whether they’ll advise you that you’re better off having a corporation or LLC for flipping houses.

There are legal and tax advantages to both forms of ownership, but there can also be substantial drawbacks. For instance, an off the cuff decision about forming a corporation or LLC for flipping houses will determine whether the IRS classifies you as a dealer. If they do, you’ll face substantially higher taxes.

So should you form a corporation or LLC for flipping houses? That depends upon your goals. One thing is for sure. Sound advice about whether you should form a corporation or LLC for flipping houses can mean the difference between being an investor – and one that actually makes money.

Are you thinking about how to invest in real estate? Congratulations and welcome to a fun and potentially lucrative industry. But before you jump into how to invest in real estate, make sure you know what exactly you want to do within the industry. There are plenty of choices and some of you will want to specialize in a particular niche while others may want to explore a variety of ways in how to invest in real estate.

Let’s discuss a few options:

• Flipping Houses – One of the most popular ways on how to invest in real estate is to flip houses. This basically means you are purchasing a home at a low cost and then selling it for a profit. There are three main ways this is done. First, you find a house for a bargain because the seller is highly motivated to get rid of the house quickly. This could be for an impending move or because of personal financial issues. Another option is to find foreclosure properties. Often the bank will let a house go for under market value to make themselves whole. The third option is to find a house that needs fixing up.

• Fixer Upper Homes – This brings us to one of the other most popular ways on how to invest in real estate. Fixer upper homes are usually thought of under the same umbrella as flipping houses but because it is a specialized niche, we should discuss it separately as it has its own unique issues. If you are considering fixer upper homes as how to invest in real estate, make sure you have the skills, capital and means to get the job done quickly, efficiently and at the lowest cost available. You need to consider your initial sales price as well as the additional money and time it will take to get the house improved and livable. Then, you need to be sure you can sell the property in a short amount of time and at a profit from your total investment.

• Rental Properties – While this can be a great way on how to invest in real estate, it also has its share of headaches. The initial investment calculations should take into consideration the difference between your investment in the property and your potential income from rentals. But, bear in mind that when using rental property as how to invest in real estate, you have certain responsibilities and hands-on concerns to deal with. You may not be able to rent the home immediately. You will have to deal with advertising the rental. You will have to screen potential renters. You will have to spend money on any major repairs or maintenance in the home. You may have to deal with the nightmare of eviction proceedings if the tenants default on the lease. This can either be done by you personally or via a property management company that charges a fee.

Regardless of what you decide on how to invest in real estate there are pros and cons. You just need to decide which ones you find most appealing. You also need to consider which ones will be most profitable for you and often that is taken on a case by case basis.

Whether you are looking to renovate a home or looking to build a new home, it is necessary to get a contractor to assist in the planning and building stages. Before conducting a contractor search there are many questions that should be answered and steps that should be made before hiring anyone. These are important in finding the perfect contractor for your job to ensure you get a quality result and have a reliable contractor. Conducting a contractor search is not difficult but ensuring you have the right one will take a little effort.

The first step in conducting a contractor search is to get the word out that you need one. The first place to start is in your local telephone directory. Call a few places and ask for proposals. Next, look in your local newspaper or community paper. A contractor search can also be done on our site for local contractors. Also check with friends and family in case they have a referral which is a great way of finding a reliable contractor.

When conducting a contractor search, there are questions that should be asked. Ask how long the contractor has been in business and if the company was ever run under a different name. Ask if there are any lawsuits against the company. Find out who he subcontracts with and make sure they are paid in a timely manner and happy to work with the contractor. You should do a thorough contractor search and get at least three proposals but five would be better and check the references of all the contractors. Make sure the references listed are not related to the contractor in any way. The more references supplied the better.

There are requirements for being a contractor and you should ensure each candidate meets the necessary requirements. A license to work is usually needed. You should verify the contractor’s license with the state agency before hiring. Also check out their insurance policy for worker’s comp and liability. Verify their status with the Better Business Bureau and you should have a successful contractor search.

We’ve all heard about investing to flip real estate. But, what if you want to get into that? How do you start? Is it really as good as it seems? The answer to that is, it depends. For people who flip real estate it can be very lucrative. However, to flip real estate does not necessarily mean you will make a profit, either.

As with every other type of investment there are risks involved. There are ways to mitigate those risks and they primarily center around making sure you know what you are doing and are making sound financial decisions.

First, you need to remember that to flip real estate does not guarantee a profit. There are many factors that go into the decision and not all properties will be worth the investment. You need to be able to accurately determine when a property is worth investing in and when to walk away. Keep in mind before deciding to flip real estate the key considerations:

* Current market conditions nationwide
* Number of vacant houses available in the area
* Amount of time houses are staying vacant in the area
* Condition of the house
* Dollar amount it will take to repair or improve the home
* Amount of time it will take to repair or improve the home
* Asking price of the home or minimum amount to purchase it after negotiating the price
* Fair market value of comparable homes in the area that do not fixing up

Not everyone who decides to flip real estate gets into it to find fixer upper homes. Some people simply look around for good deals on houses in good condition, the buy cheaply and sell more expensively. Most of the time, the reason they can buy inexpensively is because of a foreclosure or because a seller is highly motivated to sell to get out from under the house. The seller may be willing to take just enough to make them whole or even may be willing to take a loss.

You should never get personally invested in the process to flip real estate or get emotionally attached to a home. Instead, think of it solely as a financial transaction designed to make you money. If you feel the deal isn’t going to make you money, though, it is time to walk away and look elsewhere. There are plenty of houses available and finding the perfect one is the key to turning a profit.

You need to be able to accurately assess the amount of money needed to get into the house and make it ready for sale. This will mean different things for each property you consider to flip real estate. Some homes may need minor cosmetic repairs and some will need more significant work. You will need to calculate the costs in both time and money to get the job done and how much you estimate being able to sell it for.

Anyone who wants to flip real estate and has never done it before should start small and get their feet wet before taking on more extreme projects. Once you gain experience, you can expand into more complicated investments. To flip real estate can be lucrative but there are risks involved. If you use your head, though, you can be very successful.