Can You Profit from Foreclosures? How Flipping Homes Works.

We’ve all turned on the TV and watched programs about flipping houses for fun and profit: but is this a realistic goal for real estate investors who are new to the game? If you are curious about flipping houses and maximizing your investment dollar in a way that is quick and affordable, here are some tips that will allow you to understand the risks and potential, so that you can make an intelligent, informed decision about this type of investment:

  • Flipping Houses: What It Is And How It Works: If you buy a house that is a “project” and needs updating and refurbishing, and you intend to do these repairs on your own, and then re-market the property at a higher price, you are “flipping” the house. Your goal is to realize a quick return on your initial investment. Houses that require work, but have a lot of market potential once the needed updates and repairs are complete, can net you great profits, if you approach the task professionally and realistically.
  • What Work Is Needed To Flip A House?: You need careful research and inspections of your chosen property to really understand how much money it will take to get the property back out in the marketplace at a higher price point. If major repairs such as rewiring and new roofs are involved, you may not be looking at the right place. You need to find a property that can stand on its own, except for dated finishings, cabinets, etc. If you can stick with mainly cosmetic updates to the property, and do some of the work yourself instead of contracting out, you will have a much better chance of realizing a healthy return on your investment dollars.
  • What Do Experts Recommend: Here are some tips from ”flipping” pros. If you take their advice, you can feel confident about your decisions. These experts have learned from experience: their words of wisdom are valuable and they can guide your choices when refurbishing a property as a real estate investment.
  1. Do it on the side until you’ve built some equity: this advice comes from real estate lawyer Neil Garfinkel: "I know plenty of guys who do two, three, four houses a year, keep their health insurance and do this on the side," he says. "Many times, they can double their salary."
  2. Understand the goal of the project: "In a traditional house flip, you're buying at wholesale and selling at retail; it's simple," says Ralph Roberts, a flipping expert and the author of Flipping Houses for Dummies.
  3. Which Renovations Of Your Property Will Really Pay Off? Charles Bilash, a noted sales agent from Canada, has some views on which renovations will reap the best returns during the flipping process: "Kitchens, bathrooms and flooring are the biggest return for your money."

Like any other real estate investment opportunity, the best returns will go to the most prepared, organized, and market-savvy individuals. If you think you’ve got what it takes to enter into such an investment and maximize your returns, then flipping may be for you.

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Posted on Nov 19, 2008