Real Estate… Answered

If you’re flipping houses, the worst thing that can happen to you is buying a house that you can’t sell. You make money by quickly flipping the house to another investor, not tying up your cash for months in a dud real estate investment.

The reality is buying houses at discounts isn’t enough; you need the ability to sell the houses once you buy them. So, how can you ensure that you’ll be able to unload a real estate investment to your database of investors? This post will tell you how.

On Each House You Flip, Make Your Investors Money

If you’re crunching numbers in your calculator to pull a few thousand dollars out of the property, no one will want it. Likewise, if the property has clear potential for a lot of profit, people don’t mind paying you a few thousand dollars to act as a middleman.

Let’s look at an example. You buy a house for $60,000 and it’s worth $100,000. Do you try to sell it to your investors for $90,000 and escape with $30,000 profit? No! In most markets, $10,000 isn’t enough. You’ll sell the house much faster by offering it to your investors for $70,000 and allowing them to make the 30K.

When Flipping Houses, Buy Them in the Right Price Range

You also need a clear understanding of how much money your investors are willing to put into a property. Are they beginners that can’t afford to invest more than $60,000 at a time? Or are they financial heavyweights that can take down houses in any price range? You need to know. Buy in the wrong price range and you’ll be stuck with it.

For example, I know a highly successful wholesaler in Charlotte that specializes in flipping houses to beginners. Knowing that beginners don’t have a lot of cash available, he focuses on properties in the $50,000 range. His database eats them up.

Similarly, there are investors that only want high-end properties. If you bring me a $50,000 house, I’ll politely decline, no matter how much potential it has. In general, I’m not interested in buying anything for less than $400,000. Show me a house with $200,000 of equity and a purchase price of $400,000 and I’ll close it in a heartbeat, paying you a hefty fee in the process.

Fit the Property to the Methodology

Realize that not all investors are looking for a house in perfect condition with instant equity. A lot of guys with handyman skills like buying a house, fixing it up, and selling it. Some investors are only interested in rental properties. Others will only look at deals with owner financing.

You can make money by finding houses that fit into those methodologies. If most of your investors like to buy fixer uppers, look for rundown properties in developing areas. To please the landlords, think about finding a tenant and then selling the deal as an "instant landlord" package. For nothing down investors, talk to sellers that are willing to give you financing if you can give them the right price.

The bottom line is the best flippers are good matchmakers. They know what they’re investors crave and specialize in finding the "food" to satisfy them. Keep to that motto and you’ll have no problem flipping houses.