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Fixing and Flipping: A Very Good Real Estate Investing Strategy

Posted by snowgolden on July 17, 2017
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fixing and flipping Real Estate Investing Strategy
fixing and flipping Real Estate Investing Strategy
  • 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
    is ready to buy the home for $225000. This means you make a net profit of $50000 in this mode
    of real estate investing called fixing and flipping.
    You become a service provider in this business of rehabbing and flipping. You pocket money
    because you added value to the structure. This profit is because of your time and effort that goes
    into fixing and flipping a property. Anyone can become real estate investor by fixing and flipping
    homes. However, you must educate yourself on all aspects of financing, rehabbing, and flipping
    before taking a plunge. There are many wealthy investors who can help you with money for
    carrying out this kind of real estate business. There is also the option of securing hard money
    loan for buying and fixing a property.
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