The business of flipping houses rests almost solely on finding the perfect house to work with quickly. Being able to identify a house that is affordable, fixable and profitable is not an easy task, and it is one that has caused many to fail in the past.
Choosing the wrong house can lead to many problems down the road. These problems can include the house costing more money than anticipated to fix, or being difficult to sell. Both of these problems can cause you to reduce your asking price and cut into your profits.
Here are some tips to help you find the perfect house to flip, and then turn that first flip into more.
While there are many ways to spot potential houses for a fix and flip, probably the most direct way to go about finding one is to simply explore a neighborhood. Take a drive, ride a bike or go on a leisurely stroll through an area. Regardless of the method, you are on a hunt.
Search for houses that look like they might be owned and unwanted. These houses are usually in a state of neglect or disrepair. Look for tell-tale signs such as an overgrown yard, peeling paint, a crumbling driveway or other visual cues that may indicate the house is either unlived in or not cared for. These clues could direct you to a home that is owned by someone who is strapped for cash or uninterested in keeping up the property.
Once you spot a house you think might fit the bill, the next step is to initiate contact. You can do it quickly and directly by walking up to the door and knocking. If you prefer an indirect approach, send a letter or postcard that states your intentions. While the idea of walking up to a stranger’s door and knocking is unusual these days, it helps to know that you have spoken to someone and made contact. The problem with an indirect approach is that there is no way of knowing if the homeowner ever sees it.
Of course, one of the skills here is learning to tell the difference between a home that is owned by someone who is willing to sell, and one that is owned by someone who is simply lazy or unconcerned with appearances.
Go to Auctions
If you want a quick and easy sale to fall right into your lap, then an auction might be right for you.
Today’s modern real estate auctions take place online. A property is offered, and potential buyers offer bids until the auction closes. Then, the winning bid gets the sale. Even if the auction takes place offline or in person, this format is usually the one that is followed.
Of course, just like any real estate sale, some research is involved. You will not be expected to buy a house unseen, so take the time first to inspect the house and see if it is what you are looking for. Also, do not forget to research the group doing the auction. Each auction group will operate slightly differently and affect your process and bottom line in different ways, such as whether financing is allowed, what fees they charge, etc.
Going into business before doing this research could cost you more money than you planned for, or it could even end up costing you a sale, with the time, money and energy that you put into it being all but wasted.
Put Your Ear to the Ground
In any business, word-of-mouth is an important part of a marketing strategy, and the same is true for fixing and flipping houses. Everyone knows everyone these days, it seems, and as you talk to potential clients and investors you might find that they know people who are looking to sell a house, or they know people who know people, etc.
Do not brush off those contacts you make even in casual conversations. You never know where your next client is going to come from. Every conversation matters!
Make Contacts in the Real Estate Biz
There is probably no contact more important or useful to a potential flipper than that of someone in the real estate business. Realtors meet people every day who are hoping to sell their houses. Sometimes these houses are in pristine condition, but more often than not they have been lived in for years, becoming outdated and worn-down.
These houses are ripe for investors who are looking for a fix-and-flip opportunity. They offer a great opportunity because they usually bring a win-win-win situation with them. Investors find a property to flip and real estate agents get a finder’s fee, and sometimes a commission, from the sale of the house. Owners get to sell the property and usually make a profit based on the equity they have built up over the years.
Reasons like these are why it is always a great idea to make contacts with real estate agents, as they want to know an investor because they have a client looking to sell their home quick. Having a handful of agents in your back pocket can mean having a steady stream of homeowners looking to sell, bringing their homes and properties to your attention without your having to do the work.
Join an Investment Group
If you are a newcomer to the fix-and-flip business, it can be hard to start. It can be daunting to find the first, right house. One way many people find the right house is by joining an investment group or club, which is a group of like-minded investors who have decided that it is easier to work with others than do it alone.
What are the Benefits of an Investment Group?
One of the main boons a potential investor gets is contacts. Just like any field, harvesting contacts is done by meeting people who know people, and so on. These investment groups are full of investors who have been in the business for a while, and you can bet they have made some contacts over the years. Getting to know these investors can lead to their contacts becoming your contacts, which helps to bring property leads right to you.
Another benefit of an investment club is that you can often find other people who are willing to go in on an investment property with you. This opportunity is great for someone who is just starting out. Finding a mentor who is willing to share some of the risks with you while also showing you the ropes can help you become a more confident and competent investor down the road.
Whether you are going solo or bringing along a partner Brass Financial is ready to help make your dreams a reality.
Market Yourself Physically and Digitally
As you are starting out, the power of a good marketing strategy cannot be overstated. You have to go out and sell yourself.
Of course, the real issue is how to market yourself most effectively. This question arises because there are so many ways you can approach the idea of advertising. For of the most common types of marketing yourself include:
Social media is arguably the most important marketing strategy in today’s digital age
Various platforms such as Facebook, Instagram and Snapchat can be goldmines of marketing success for the right person. Each one of these platforms gives you the chance to speak directly with potential customers, and the nature of social media means that the right advertising has exponential potential to go much further than originally anticipated.
There is more to it than just creating a profile and making a post, though. A good social media marketing campaign takes time, effort and ingenuity. Still, when done right your reach can be enormous.
Creating a website
Websites are important for people who are looking to learn more about a company or individual investor.
Direct mail campaign
Canvasing an area with a mail-out can still bring results. It is nothing more involved than sending out postcards that say you are an investor looking for properties to buy and include contact information for those who might be interested. Most of these mailers will end up in the trash, but just having two or three recipients reach out to you can be worth every bit of money and time spent.
Snatch up Foreclosures
When a homeowner falls behind on payments for too long, the house gets repossessed by the lending agency, which is usually a bank. The property then becomes “Real Estate Owned” (REO).
The bank does not want to hold on to these properties and is mostly interested in recouping some of the money they lost when lending. So, they will often sell these foreclosed houses at an extremely reduced price. These foreclosure sales are one of the best ways to find cheap, affordable houses that can be flipped.
One problem with buying a foreclosed home, however, is that these sales are always as-is, and often the home is not in the greatest condition. This is why it is imperative to have a thorough inspection of the property completed before finalizing the sale. Always assume you will be putting more money into the house than you would a normal investment property, and then plan accordingly.
Another problem with buying a foreclosed home is that, due to their reputation for being in poor condition, it can be difficult to secure financing for a foreclosure sale. So, a real estate investor needs to have access to the entire purchase price. For those who are just starting out in the business this can be a tall order, if not impossible. Thankfully, Brass Financial is here to help by offering reliable terms and rates to help in any situation.
There are many ways a fix-and-flip investor can find the perfect property. Whether you prefer direct, physical methods such as mail-outs and knocking on doors, or you are more into digital means such as social media, there are avenues available to reach out, make contacts and locate your next home to buy.
Once you are ready, bringing in the right financial partner is necessary. Brass Financial is ready to help fund your next fix-and-flip loan. Our reliable service comes with rates that put your needs first, helping you to find and afford your next big investment property.