Real Deal REInvestor Network

5 Keys to Identify Areas Ripe for Flips Flipping properties has become a very attractive strategy for beginners and experienced investors. If bought right, rehabbed right and sold fast you can really achieve a high annualized return. It definitely requires a lot more expertise and is more risky than many other strategies but done right can lead to big profits.

Here are 5 keys to identify areas ripe for flips.
1. High end blue collar areas – High end blue collar areas are ideal for finding prospects to flip. Warzones will not work and the nicer suburbs will have too much competition from owner occupants who are willing to outbid you and pay retail. These areas represent the largest portion of the population, thus you have the most houses to choose from and the most buyers.
 2. Big discount for distressed sales vs retail sales prices – Identify areas with a big difference between retail sales and distressed sales like REOs. You will find in suburbs that the discount for a foreclosure is not too high and the numbers usually don’t work. Certain areas though there is a huge gap in price between REOs and retail sales, this is your goldmine. For example, we have located 3 flips in a neighborhood where purchase is in the 30s and retail sold comps are 80-120K. That leaves plenty of room for big profits after rehab.
3. Number of sold comps vs for sale comps are close to even – This is very important, you may be getting a big discount but you may have 20 for sale properties in the neighborhood and only 5 sold comps. This means way more supply then demand, your flip could take forever and you may have to drop your price a lot to sell. Make sure there are close to as many sold comps and for sale comps. If more sold comps, even better.
4. Mostly home owners – Make sure the area is mostly home owners. Some renters are fine, but too many renters and the area could take a turn for the worse. Buyers will sense this and may not pull the trigger on an offer.
5. Pride of ownership – The owners in the neighborhood must take care of their property. Beat up houses scare people away, nice houses and recent improvement show pride and attract buyers.

These keys are very important to finding flips. It is highly recommended to do some research and find these areas to target then take massive action. You can easily set up a mailer campaign to foreclosures and other lists in these zip codes, use bandit signs, buy REOs, buy at the auctions, etc. This is all very targeted marketing, which will lead to much better results than doing this everywhere. Now, good real estate agents can help you identify these areas. You can also research yourself by analyzing sales from public records, use zillow and drive the neighborhoods yourself. The deals are out there. Identify these flip goldmines and you may be the next expert flipper in your city.

Sharing Article by
 Ryan Moeller.

Wholesaling involves 3 people.  You, a motivated seller, and a motivated buyer.  Last time i went over how to get motivated sellers contacting you...

Now that we know how to get motivated sellers begging you to buy their house...we need to know how to sell these deals for a profit.   (Be sure that you have a property under contract BEFORE you go shopping it around to your buyers or advertising it online or offline)

Here are a few great ways to get buyers for your deals (hint:  in todays market it's a great idea to speak with potential buyers first, find out their buying criteria and then go find them a house):

• Get a list of absentee owners from http://www.listsource.com or http://www.realquest.com or your local property valuation assessor.  Mail them a yellow 4 x 6 post card using http://www.click2mail.com . Have it say something like, "I want to buy your house at "property address".  I noticed you didn't live their, If you're interested in selling for cash i can pay all your closing costs and close in 2 weeks.  Call me at xxx-xxx-xxx."

• Bandit Signs - You can use the same 18x24 corrugated plastic signs that you used to get sellers, to get buyers.  Get them at http://www.signwarehouse.com . I like the yellow ones with black writing, but white with blue writing works good too.  It should say "Cheap House Handyman Special $19k.  and your phone number. "  or "Fixer Upper Must Sell! Cheap!  and your phone number."  If they call and ask for more info on the house for $19k, tell them that one is already sold and get their information and buying criteria so that when you do have a property under contract you can let them know, or tell them about a property you do have for sale.  

• Local REIA clubs:  Find your local real estate investing club and network with the investors there.  Have some business cards printed up at http://www.vistaprint.com and hand them out.  Everyone in that room should know that you wholesale cheap, good deals to rehabbers and landlords.  You can even get up in front of them and pitch any properties you have under contract.  Print up some flyers to hand out detailing the property.

• Free Online Ads:  Of course the interet is a great place to find buyers for your deals.  Here's a short list of places to advertise properties for sale or to place an ad looking for more buyers:  http://www.craigslist.org , http://www.backpage.com , http://www.flippinghomes.com , http://www.rehablist.com , http://www.steveshotlist.com , http://www.facebook.com (you do have a facebook account don't you?  No?!  STOP EVERYTHING AND MAKE ONE NOW!!!)

• For Rent Signs:  Call the For Rent signs in your area.  Ask the owner if they are looking to buy more property and get their buying criteria.  

• Your Realtor:  Ask your realtor if they have any investor clients that are looking for wholesale deals. 

• Your own website/squeeze page.  Bring in buyer leads by having a website or squeeze page that directs people to give you their information.  get one at http://www.realfreedomwebsites.com or http://www.realeflow.com

These are just a few ways to get buyers screaming at you to sell them your deals.  Remember, mark them up anywhere from $2k to $20k + depending on the deal, but ALWAYS leave room for the other investor to make money...that way you continue to build a solid relationship with your buyers and they will keep coming back to you for more deals.

Once you find a buyer for your deal, simply Assign the original contract with you and your seller over to they buyer.  You can do this by using a....drum roll please......."Assignment of Contract" contract.

When i closed my first wholesale deal i said, "This is so Easy!  What have i been so scared of?"  Get out there and make a difference and you'll feel good about making the world a prettier place.

Take Action..Be Free.

-Adam Walker
Millionaire in Training
www.MMMChallenge.com
www.TheKingofTheCity.com
www.RealDealLouisville.com

The decision to choose one method over another should be part of the strategy of the investor's overall goals, as well as the opportunities presented by the existing market.

Some investors focus on flipping, rather than keeping them long term. Holding property generates more long-term wealth for you than flipping. In some cases you may consider flipping some properties and holding others, in the other hand, you may consider using the flipping strategy for  a while and hold properties later. The question is, “When should you hold versus when should you flip?”

Flipping

The most apparent advantage to flipping property is the ability to immediately realize gains and to have capital tied up for the least amount of time possible.
For many people, the certainty of getting a paycheck right away is highly appealing.
You make money when you buy the property, not when you sell.
If you buy a property correctly, at the right price, whether the market is rising or falling is almost irrelevant, except for how long you will take to resell the property. Of course, if you buy cheap in a soft market, you can afford to hold a property longer.

For most investors, flipping properties should be considered more of a tactical strategy than a long-term investment strategy and because transaction costs are very high on both sides - buyer and seller, it can significantly affect profits.

Investors can focus on distressed properties identifying homeowners who can no longer manage or sustain their properties or find properties that are overleveraged and are at risk of going into default. Others will focus  on rundown properties, wich they will remodel  so that it works better for homeowners or is more efficient for apartment tenants. Using this tactic, the buyer is relying on investing capital to increase values as opposed to just buying property for a low basis in order to create high investment returns.


Holding

It is a well-known fact that buying and holding real estate is a recipe for amassing great wealth over the long term.
You can use properties with equity as collateral. You can provide rental income for your retirement years, and you can pass property down to the next generation. Once your rental properties are owned “free and clear,” you have passive income from rents paid that gives you an income even when you’re not working.

Equity investors must have the skills to analyze a particular market, a particular company and management's ability to execute its business strategies. A long-term real estate investor needs the same skills but has the added responsibility of creating and executing those business strategies for his or her properties. Real estate ownership is a management-intensive endeavor that is outside the skill set of many investors. Specially first-time rental property owners who are not very well prepared or equipped to deal with the responsibilities that come with managing a rental property. The process of finding quality tenants and servicing their needs, maintenance, etc... can be a stressful and time-intensive , but an efficient property management is necessary for ensuring success on this investment.

The risks that comes with long-term real estate ownership are great, but if done right the investor is well compensated for assuming them. The problem for most investors is that real estate is so capital-intensive that the amount needed to purchase enough property to diversify these risks is outside of their abilities.


What’s Right for You?

The question isn’t which one is better or worse, but which strategy is right for you. So ask yourself:

    * Do I need additional income now or in the future?
    * Does my local real estate market present opportunities to acquire bargains?
    * Will the rent cover my expenses if I need to hold on to the propertiy?
    * Do I have another soure of income that I could use in case my rental property become vacant or need major repairs?
    * Is the local real estate market rising or falling at this time?
    * Does bringing in income now or later fit into my short-term and long-term financial goals?

The right choice between the two strategies depends on your particular financial situation and investment goals. The long-term holding strategy is more appropriate for those using real estate as the main focus of their investment portfolios and wishing to amass wealth and to generate  income from their real estate investments, using the equity built into the portfolio to finance other investment opportunities, with the potential of eventually selling the properties in an up market; flipping properties is a tactic that is best suited for investors wishing to acquire  short-term capital gains for as long as the present market will allow.

"Flipping Properties" by William Bronchick and Robert Dahlstrom is one of the other books I always recommend to beginning real estate investors.  

Bill Bronchick is a Colorado attorney who is also a very active investor and heads the Colorado Association of Real Estate Investors.  And Bobby Dahlstrom is an investor and a contractor in Colorado.  He's very experienced and approachable.  As a matter of fact, he has a booth at all of the CAREI meetings.  I had met him before I realized that he had co-authored this book with Bill, though I had read the book long before.

The book gives you an excellent overview of the process.  It takes you through what a flip is and through the mechanics of real estate transactions.  It shows you how to find deals, and gives you examples of ads that have worked for them.  

It tells you how to analyze a deal and teaches you how to negotiate it.  It gives you the legal forms you need, and tells you how to find money to buy the properties.  It takes you through the closing process.  Then it gives you information on estimating repairs even including  a list of repairs and their average costs.

In addition to the deal process itself, the book covers liability and tax issues.  It teaches you how to get started, how to build a team, who you should talk to and how to really succeed at this business.

This is a book that you can find on Amazon.com or just about anywhere.  I think it's one of the best books on flipping properties, if not the best.

Now, go buy a house! 

America is a society on wheels and in a well oiled marketing machine, you must follow your customers’ living habits. This is the reason why outdoor signs are a necessary component of every marketing plan. Signs create multiple points of contact with prospective customers and they are a cost effective method of establishing awareness for your services in the marketplace. This is a sure way to bring in quality leads to your business. Let’s discuss some basic signage options perfect for beginning investors!

When evaluating types of signs available to your business, there is one option that is a no-brainer. A cheap, silent and inconspicuous seller… What I am referring to here are street signs, also known to some as bandit signs. They come printed in a variety of sizes 6" x 18", 6" x 24", 12" x 18", 24" x 36" with the most common size being 18" x 24". Bandit signs should be one of the first methods of marketing employed. They are among the least expensive forms of advertising available to a real estate entrepreneur and at the same time one of the most effective tools out there. I use Banditsigns.com

Street signs are our best marketing tool. Currently, bandit signs account for nearly 60% of incoming leads. For this reason alone, this tool is an absolute must for every serious investor.

What signs can do for your business is promote awareness and multiple points of “contact” with your customer at a very low cost. This is especially true if you are diligent and systematic in your efforts to put them up. As discussed, repetition of a message is what gets the phone ringing, so the more signs you can get it in front of your prospect the more leads you can generate.

Good Places for Your Signs:

Properties you own. Make sure to place a large sign on the properties that you own. The activity on the site will draw attention, so you always want people to know that you are in the business of buying and renovating homes. You may face an issue with the city if the sign is too large, so always check city ordinances before putting one up. Some towns have restrictions on how big the signs can be, so call and ask.

Friends, relatives, and others. If you have friends in the areas where you typically buy, ask to put a sign in their front yard. Many people are willing to do it for political office candidates, so they may do the same for you. The same goes for relatives. These are just a few more places where your message can be seen by potential customers, especially if their properties are located in high traffic areas. You can even offer a small monthly fee, or possibly a referral fee for every house you buy as a
result of a lead you get from the sign on their property.

Telephone poles. This is a great place for signs. These may be a bit smaller than property signs but they serve a good purpose and should bring you consistent leads. The best locations are a busy intersection that gets a lot of traffic and highway exit ramps. These locations are excellent, since when traffic is heavy and cars have to wait on a traffic light or an intersection, the drivers have time to look around and notice your sign. Another good place could be outside busy parking lots, especially those of home improvement stores and grocery stores. Make sure to use a hard plastic and be sure it is tightly secured to the poll high enough so every car can see it and it’s difficult for someone to reach and pull it off. Again, be aware of town ordinances and local utility regulations against putting up signs on telephone polls and follow the rules explained earlier if you happen to run into problems.

One important thing to remember about getting the most results out of your signs is to actually put them up. This is one type of marketing that you don’t want to overanalyze and simply take action in implementing. Never get lazy about putting them up as they are well worth the hassle. Remember that they can not be effective sitting in the back of your car or at the office. Also, putting up of signs is a job that can be very easily outsourced for a low labor cost, so there is no excuse for not getting
them up. However, as always I am a strong proponent of doing it yourself first for a period of time, so you can offer proper guidance for the person you hire to take on the project.

Flipping House Tactics

We all hear about "Flipping" all the time. It is the HOT strategy of the year in real estate: Flipping books, flipping articles in the newspaper, and even flipping shows on TV! What is flipping, how does it work, and how you can profit?

Flipping Real Estate simply means buying a property and reselling it quickly, as opposed to holding on to a property long term as a rental. Flipping comes in several varieties, most of which are legal and profitable, some of which are not.

Flipping Tactic: Wholesale
The fix and flip, is very popular, which means there are a lot of investors looking for rehabs. You can buy the property cheap and sell it for just a few thousand dollars more to another investor without doing any work. You won't make nearly as much as the rehabber, but you will realize your profit quickly.

Check under wholesaling section of training link at website for our recommendation on this one to learn all the skinny on how to make fat bucks with wholesaling properties.

Danny Welsh
Director, The Greatest Real Estate Giveaway

http://www.hisrealestatenetwork.com

Flipping properties Strategy: Buy, fix, and sell retail

This is probably the most common form--the good, old "fix ‘n flip." Also sometimes called rehab and retail or even “quick turning”.

 

This involves buying a property that needs work, fixing it up, then selling on the "retail" market, that is, to a person who will live in the house.

This method is tried and true and works very well. You can easily make $15,000 to $50,000 on one deal, depending on your market and how good you are at finding bargains.

The danger in fix and flips is either paying too much or underestimating repairs. Be very conservative in your fix-up costs and length of time it may take to resell. Also, make sure you consider the cost of paying a real estate agent to sell the property if you intend to use a real estate agent.

 

Is that by any means the only way of flipping properties? No way! It’s just one way.

Rather than sell the fixed up property for all cash, sell for terms. Once you have completed the rehab, refinance the property at its new appraised value. If you did the math correctly, you should have little or no money in the deal. Sell the property on a lease with option to buy.

The rent payment from your tenant/buyer should cover your mortgage payment. (If not, consider an interest-only or adjustable rate loan that is fixed for three years.)

When your tenant exercises his option, you reap a larger profit, since you don't have to pay a broker's fee. If the tenant exercises his option after twelve months, you benefit from a lower capital gains tax rate.

Danny Welsh
http://www.hisrealestatenetwork.com

Flipping Houses Strategy #3: Buy and flip "as is"

Don't like to do fix-up work? Consider selling the property "as is" as a light fixer upper. If the local real estate market is hot, you should be able to sell the property in poor condition just a little below market.

This is especially the case with houses in "transitioning" neighborhoods. Make sure, of course, that you acquire the property cheap enough that you can sell it below market quickly and still profit.

Flip Houses Strategy with Pre-construction Contracts

In very hot real estate markets, prices can appreciating as much as 2% per month. If you time things right, you can put a contract on a pre-construction house or condominium, then flip it to someone else when the development is complete.

If it takes 12 months for the development to be complete, and the condo price is $500,000, you could make $100,000 or more in one year! Of course, the opposite is also true. You could end up losing money if the local economy tanks and you end up with a worthless condo that you can't sell for more than you paid. Use this approach very carefully…and make sure to BALANCE YOUR PORTFOLIO. For more information on how to limit your risk in these high-risk type scenarios by offsetting the risk with other investments that bring CASH FLOW check out our website under Select Members at http://www.hisrealestatenetwork.com