Real estate investing has many different ways to make money. One of these is fixing and flipping Real Estate Investing Strategy homes. It is a procedure of buying a home at less than its market value, fixing it to increase its
value, and then selling to book profit from it. This mode of real estate investing has become very
popular these days as it can be done easily in areas where there are available distressed
properties. And such homes are easy to locate in most places with reasons like death, divorce,
foreclosure, deferred maintenance, tax liens, and unpaid utility bills forcing owners to sell their
homes for less than market value.
Let us understand it with an example
For example, let us assume you identify a home in your area that you believe has a market value
of $200000. This is of course its ARV or after repair value as the house is currently in a bad
shape with the owner unable to meet his monthly obligations towards his lender. To avoid
foreclosure and to get hard money, homeowner agrees to sell the property to you for $150000.
Let us assume that it would cost you $20000 to repair the home and because of this deferred
maintenance, the owner readily agrees to sell the home to you.
You provide a service by adding value to the structure
You arrange the money and buy the home for $150000. You then spend another $20000 for the
rehab of the home. Even if you spend another $5000 in the form of holding and closing costs,
your total cost comes to around $175000. You are able to find a buyer in couple of months who