One of the easiest ways to get involved in real estate investing is to buy a property and sell it within a relatively short amount of time for a profit. “Flipping,” as this practice is known, lets you bypass the hassles of dealing with tenants. And, since you are buying and selling at basically the same time, you’ll avoid the potential of the bottom falling out of the market and taking your profit potential with it. Due to the short time span, your return on investment, as a percentage, can be higher than almost any other form of investment.
Finding a House to Flip
Finding a good property to flip is one of the most difficult tasks you will face if you intend to do a quick-turn investment. You definitely will not be the only prospective purchaser of a property that shows good profit potential. Not only will you have other investors to compete with, more and more first-time buyers are competing for the same properties—not to fix up and sell, but to repair and live in. In addition to your own efforts, you may want to enlist the help of a good Indianapolis Realtor—one who has experience working with investors—to aid in your search.
The Team Approach to House Flipping
You will also need to develop a “team” of professionals that is willing to give you top priority. When you rehab a house, things must be done in a certain order. For example, any inner wall plumbing repairs must be done prior to any sheetrock work, which must be done prior to any painting or wallpapering. A plumber who makes you wait three weeks before getting to the work can not only hold up the entire project, but can also cut heavily into your profit potential.
Besides the obvious monetary cost of holding the property while you wait for repairs to be completed, a holdup can push you from a good real estate market time (for example, early October) to a lousy one (for example, the time between Thanksgiving and Christmas) and severely limit your pool of potential buyers.
Use Angie’s List to locate quality professionals in Indianapolis.
Strategies to Maximize Flipping Profit
There are a couple of different strategies to maximize your profit potential in flipping property. One of the best we have seen is detailed in Kevin Myer’s book on real estate investing: Buy It, Fix It, Sell It: Profit!
Myer’s philosophy is pretty simple and straightforward:
“Purchase distressed or otherwise undervalued property that has considerable profit potential, sell it quickly for a small profit or renovate it and sell it for a larger profit.”
President of StreetSmart Real Estate, Inc., a diversified group of companies specializing in real estate appraisal, rehab projects, private mortgage lending and real estate education, Myer has rehabbed numerous investment properties during his 20-plus real estate career. He specializes in single-family homes and small income units. His approach is refreshingly straightforward—none of the “pie in the sky” that seems to be so prevalent with real estate investment information providers.
Continue reading through this section for more expert advice on real estate investing:
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