Why Are Some People Hooked On Flipping Real Estate? - For The Quick Profit Potential
By John Ferreira
The key word here being “quick”. The only way for investing in real estate for real quick profits is property flipping, or flipping real estate. It does take time and resources to find the right deal . The deals are out there though, foreclosures, seized properties etc being the best places to look, and the person who finds them is the one that will cash in. Few people have the time or resources to find truly under market priced property. Buyers all want a good deal, so you just have to find a “great” deal in which you can give the buyer a “good” deal and still make a nice profit for yourself for your smart work.
The other way is to get a great deal on a dump and fix it up and make your money that way but this is not quick, will require some work and is not what is being talked about here in flipping real estate..
Property flipping is just buying low and selling high. You need to find a property that is at least 20% below market value. You can easily, without ever taking possession of it just flip the contract to your qualified buyer that is looking for what you have found.
What we re talking about here is reselling or flipping a contract and not the actual piece of property like a house or apartment building. By selling the contract you avoid all settlement expenses such as attorney fees and all the transfer costs that go along with it. This is the quickest way to profit when flipping real estate.
Two ways to flip a deal:
1. After settlement - more expensive
2. Assign the contract before settlement.
The second is the best and most profitable way because you re not paying any fees that will be involved with the settlement.
You can increase your cash profits by assigning the contract properly. The easiest and most obvious way is to use “and/or assigns” after your own name in the contract. Another way is to prepare a separate addendum and include an assignment clause saying something like “Buyer reserves the right to assign their interest in this contract to any person or entity.” Either method will leave you free to assign the contract to whomever you want.
Fifteen or 20 years ago there weren t as many people looking into foreclosed properties but over the last few years many realtors have used the term rather loosely. A true foreclosed property should be discounted much deeper than 5-10% of the fair market value. Anything above that just won t have enough profit potential for flipping real estate.
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