Many beginning real estate investors get started by flipping real estate to make quick cash. If you would like to make more money by investing in real estate, you need to know a few essentials.
What is the definition of real estate flipping?
Simple definition: Buying property and reselling quickly, hopefully for a great profit. Usually, people think of flipping houses, or the buying and selling of a home fast, as the only way to make money flipping real estate. However, some investors specialize in other types of real estate such as land or strip centers.
Some confusion arises over the process of making money flipping property. People who specialize in finding bargain real estate, obtain a purchase contract, and then sell the contract before taking title to the property are known as “Bird Dogs.” These beginning real estate investors get started with no money down by: Finding a seller under stress with a bargain property Securing a sales contractSelling their contract for roughly $500 to $5,000 to a seasoned real estate investor
Isn’t real estate flipping illegal?
Flipping real estate isn’t illegal. However, many unscrupulous investors committed mortgage fraud to make fast money. Some of these investors, working with mortgage brokers and appraisers, resold houses to unqualified buyers inflating the property value and home buyer’s qualifications. Often these home purchases had no money or little money down. When these new home owners defaulted on the mortgage payment, the mortgage lenders lost money because the house wasn’t worth the inflated purchase price.
To avoid legal problems in real estate flipping, don’t commit mortgage fraud.
To make money real estate flipping:
1. Prepare your financing so you can close on a deal quickly.
2. Learn your market so you know what makes a good deal.
3. Find a bargain property owned by a seller under stress to sell.
4. Secure a purchase contract in your favor.
5. During escrow, plan your selling actions.
6. Close on the property on time.
7. Immediately set your selling plan into action. If the property needs fixing, be prepared to get this done right away.
8. Market your property to your target market. Don’t just list the property and hope for the best.
9. Find a qualified buyer. Have a loan officer check to make sure your buyer meets all the mortgage requirements.
10. Stay legal. Don’t use an inflated appraisal. Don’t gift your buyer the down payment. Don’t help your buyer create false W2s, write phony credit letters, or prepare any false documents. You can pay many of your buyer’s closing costs to make the purchase easier.
You can make money flipping real estate. Buy low, sell for full-market value, avoid mortgage fraud, and enjoy your profits!
Archive for ◊ September, 2010 ◊
Real estate experts go by a few different names, although the distinction
shouldn’t matter for you as a first time home buyer. Important is to make certain
the broker or agent you chouse is a licensed real estate professional. All real
estate brokers or agents are licensed and regulated by each state.
To the average home buyer or seller, the difference isn’t much. To become a real
estate agent, an individual must complete the required number of classes and
pass the agent’s exam. To become a broker the agent must than take additional
classes, have a specified amount of experience in the field (normally 1 year), and
pass another exam.
Having a real estate broker license confers certain privileges, including the right
to open, run, and own a real estate office, and to work independently without an
office. A real estate agent must work for a broker, who is responsible for that
Work With a Broker Instead of an Agent?
Not necessary! Although it would seem that a broker may have more experience
or be more knowledgeable than an agent, it is not always the case. A lot of
excellent real estates agents have choose not to become brokers because they
have no intention of ever running their own office. The experience and
knowledge of a real estate agent who has been working in an area for ten years
will far surpass that of a brand new broker.
Realtors vs. Non-Realtors
A realtor is a broker or agent who belongs to the National Association of Realtors
(NAR), and subscribes to that organization’s code of ethics and conduct. There
are about 2 million real estates agents and brokers in the US, of which around
800,000 belong to the NAR.
Is it better to work with a realtor than a broker or agent who is not a realtor? Not
necessarily, because when you look for an agent or broker you must look for the
best, most knowledgeable, and most reliable agent or broker. Don’t worry about
titles, designations, and how many diplomas he or she has.
Finding a Real Estate Agent or Broker
Finding a broker or agent who meets your needs and is compatible with your
personality can be tougher than it sounds. Buyers who have the worst
experiences are often those who just walk into or call a neighborhood shop and
ask for anyone at random.
But how can you find a good agent or broker? Here are three valuable
a. Open your local newspaper to the real estate section and see who runs
the biggest ads, week in and week out
b. You can ask your parents, relatives, or friends for referrals. But before
taking any decision, make sure they had a great experience with the agent
c. Call your local board of realtors and ask for the names of agents who sold
the most property last year.
Choosing the Right Agent or Broker
In addition to looking for an experienced agent, try to find one who suits your
personality. Working with a real estate is a little like a short-term marriage. Even in the best of circumstances, the pressure will mount and you may not always
like what’s happening, or how a situation is being handled, or how a situation is
being handled. You’ll be in close proximity for an undetermined amount of time –
at least 3 to 6 months from start to closing–so it’s a good idea to find someone
with whom you’re compatible.
To ensure you’re working with the right person, take on the responsibility of
interviewing several agents or brokers before you take your final decision. If you
simply take a friend’s or relative’s suggestion, you may find yourself working with
the wrong agent or broker, looking in the wrong neighborhoods, and touring
homes that are too expensive.
Here are the most important sixteen questions you should ask the agent or
broker when you’re making the interview:
1. How many years have you been in the real estate business?
2. How many years have you been with this company?
3. How many residential real estate transactions have you complete in each of the past three years?
4. What percentage of your home business is with home buyers?
5. How old are your clients in average? Do they have children?
6. What was the price range of the homes you helped people buy and sell last year?
7. What was the average price of the homes you helped your clients buy and sell? If you want to buy the home of your dreams in less time with less money, than click on the link bellow to discover the most powerful home-buying strategies real estate companies don’t want you to know and save at least $13,000 in additional fees & taxes guaranteed.
8. Are you an exclusive buyer broker? Do you ask home buyers to sign an exclusivity contract?
9. Do you charge an up-front fee that is later applied to the commission?
10. What are the primary neighborhoods or communities in which you work?
11. How familiar are you with the schools, crime statistics, and demographics of the various neighborhoods.
12. What style of home do you most frequently work with?
13. Are you a smoker or nonsmoker? (if this is important for you)
14. How many home buyers or sellers do you work with at a given time?
15. How do I reach you? Can I e-mail you? Or phone you at home?
16. Do you work with an assistant? Will I be working with an assistant or with you?
You can find out a lot about agents just by the way they answer these questions.
If they bristle and seem reluctant to share information with you, that may be a
sign of things to come. If they’re open and friendly, and you develop a connection
on the phone, you may have found someone with whom you’ll enjoy working.