Real Estate

How to flip that house the EZ way

I can pretty much summarize most of the real estate investing methods currently in use into two different methods. One is a wholesale flip. It’s very popular right now, and it works, if you want to jump through all the hoops involved. People make money selling properties wholesale. The other is retail using a method Subject to or rehabilitation.

Here’s the problem, with selling properties using these older methods of wholesale, subject to, short sale, or rehab. One obviously everyone and their mothers are teaching these methods. So what you have is a lot of competition for houses that are on the market that you can really work with.

To have a very attractive property that a rehabber/wholesaler can flip, you need to buy a property for 50 cents on the dollar or less. They must have room to fix it, invest money and make a profit on top of that. That forces you, the investor, to locate very few homes that come up each month that meet the criteria, and on top of that, you have a ton of competition looking for the same deal.

That’s why when you go into wholesale… right off the bat, the first thing you learn is that you have to look at basically pre-foreclosure properties, and they have to be around 50 cents on the dollar in order to so it works. So that’s the biggest problem with wholesale flipping. Again, there is good money in getting a system like television advertising or other expensive promotional media to spot these deals before other investors find them. For me, that’s a lot of work.

Now, I have taught foreclosures. I have taught flipping wholesale. I’ve taught all of these methods over the years, but when you compare it to something where you can date any salesperson who’s even halfway motivated and still make the same amount that you would, actually much more than you’ll do for wholesale. Major: $20,000, $30,000, $40,000, well there’s no comparison.

Using a method called Reverse Buyout will allow you to buy homes for up to 95% of full market value and still earn thousands of dollars. The Reverse Purchase method also eliminates the “Title Seasoning” problem that prevents a simultaneous closing with regular lenders. It is not a subject to type transaction, so there is no breach of the Expiration Clause at the time of sale. You simply earn all the difference between what the owner will sell you for the house and what you will resell at full market value. You take advantage of the new buyer’s loan to make the purchase without making a simultaneous closing.

To do a Reverse Buy, simply create a transaction with three contracts involved. The first contract creates the agreement for you to buy the house at a lower price. You then promote the home to your buyers list and complete a second sales contract between you and the ultimate buyer once you’ve found a pre-qualified buyer. Now cancel the first two contracts in exchange for a purchase from the seller. This is the profit paid to you at closing. The seller and the buyer now enter into the third contract. This contract is delivered along with your payment request to the title company. Just wait for your check.

Dealing with nice houses in nice areas with nice owners is a much better way to turn houses around. And there is a much better way to turn houses than to wholesale, fasten, or rehab.

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