Changing the house is easy
Flipping Houses is the absolute best way to build wealth in real estate investing. It is said that 90% of the world’s millionaires made their money selling houses. But how can an ordinary person sell houses and earn a substantial amount of money in today’s real estate market? What are the main things you need to understand before flipping a house? And why is it important to find out before changing a house? In this article, I’ll go over 6 tips that will help you in your home remodeling business.
Tip #1: Find Motivated Sellers
To make money selling houses, you need to understand that working with motivated sellers is the way to go. What is a motivated seller? A motivated seller can be anyone who is in financial or physical distress. An example of a motivated seller is someone who is getting divorced, going into foreclosure, paying off 2 mortgages, needs to rehab her property but doesn’t have the cash, files for bankruptcy, etc. So, to get a good deal on home investing, you need to find someone who falls into this category. You can find these sellers using various forms of advertising.
Tip number 2: Get the information
When your advertising is working and motivated sellers are calling, in order to get a good buying opportunity, you want to get as much information from the seller as possible. You can do this by asking the seller for information about his property. You want to find out what kind of condition the house is in, as well as the sale price of the property, but the most important question to ask is why the seller is determined to get rid of your property.
Tip #3: Run the Comps
Once you have all the information you need from the motivated seller, the next thing to do is run comparable sales to see if the deal will be a good move. You can do this by going to sites like realquest.com, zillow.com, Bank of America has a home value estimator and you can find it by going to Google.com and entering Bank of America Home Value Estimator. You can also use sites like Investorcomps.com or consult with a real estate agent. There are many ways to make comparable sales when you’re looking to find out how much a home is really worth.
Tip number 4: Work the numbers
After getting the offsets for the house, the next thing to do to flip a house is to work with the numbers. You can do this by purchasing the understanding of the MAO formula. The MAO formula goes like this: You take the ARV (After Repair Value) and multiply it by 70%, and that leaves you with the amount you’re willing to pay for the house. Then you subtract the rehab cost, closing cost, and overhead, and that leaves you with the MAO or (Maximum Allowable Offer) you can make for the home.
Tip number 5: Make offers
Once you have the maximum bid allowed, the next thing to do is place the bid. Your bid must be less than your maximum allowed bid. The best thing to do in this case is to subtract an additional 10% from the MAO and start bidding with the motivated seller from there. Negotiations can make or break your deal when it comes to flipping homes, so make sure you’re up front and very clear with the seller from the start.
Tip number 6: Find buyers
Once everything is up and done, you need to find a buyer to turn this house around. You can do this by placing ads in newspapers, creating a buyers list, putting the property up for auction, selling below market value for a quick sale, rehabbing the property and then selling it, and many other ways. If you ask me, the best strategy to use would be to sell the property for less than market value without rehabbing it. This is called a wholesale sale of the property.
For more quality information on flipping homes, simply visit www.HowtoFlipforProfits.com. There you will discover how to take advantage of the current housing crisis.
Copyright © 2008 Jamel Gibbs
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