Flipping real estate can be a fun and exciting venture. You get to take a house that is nearly unsellable and quickly change it into a hot property. If you do it right, you can sell it for much more than you have invested in buying and fixing it up. There are several steps to take before you ever begin the process.
1. Find a potential buyer.
Believe it or not, it is a great idea to find possible buyers before you flip a property. Seeking people who may be interested in a certain type of home does not commit you in any way. You can still sell to the highest bidder. If you can create a list of people and the types of homes they are interested in, you will have a valuable database. From that, you can search for homes to flip that will suit their needs and tastes.
2. Be familiar with the local real estate market.
It does no good to know that sales are up in the state if you are not aware of the state of the market where you want to buy. Each town, and each neighborhood in every large city, has its own place in the real estate market. You cannot judge the possible value of the property you might buy unless you know how other real estate in that local area is doing currently. Investigate local sales figures and find out what is selling, how often and for how much.
3. Be ready if you plan to purchase at an auction.
Do not go to an auction unprepared. You should be able to get a listing of the homes that will be sold at the auction. Within that list will be descriptions of the properties that will help you determine whether it is a type of home that is in demand. If you get a chance, look at the property before the auction.
4. Decide who will do the work.
You may be handy. You may want to do the work yourself to flip the house. It is certainly the least expensive way to go and the most profitable if you are good at doing renovations. Even so, there is a time factor, and you will want to get the house ready as quickly as possible. If you need the work done better or more quickly than you can do it yourself, get familiar with the contractors in the area. Find out who is reputable and whose prices are the most reasonable.
5. Get pre-approved financing.
The best way to search out houses to flip is to get preapproval from a lender before you go. This is especially true when you go to auctions. If you are preapproved, you will be ready to make the deal as soon as you make your decision. Then, you can get on with the business of flipping the house.