Contrary to popular belief, flipping houses is not against the law. Many people are afraid to try out this particular type of real estate investing in fear that local regulators will come after them. However, this is not really the case as the process of finding bargain properties and then selling them to bargain hunters is not entirely illegal. It is against the law only when a real estate investor commits mortgage fraud to inflate the value of the property he wants to flip or to earn extra pocket money.
There are two most common methods to flip a property. The first one is called multiple investors flipping. In multiple investor flipping, Investor A buys a property at a lower price and then sells it to Investor B. Then, Investor B will resell the house to an end buyer, who will use the property either for residential or investment purposes.
The second method is known as fix and flip. In this type of flipping houses, an investor will buy a property, fix it up, and then sells it to a home buyer. Those who are involved in this business usually purchase undervalued or distressed houses. Once the repairs and renovations are completed, they will sell the properties at prices near their full market value.
If you are considering flipping houses for profits, here is a list of things that you should to do to ensure your success in the business:
1. Find profitable properties. When buying houses you want to flip, make sure that the properties are located in a nice neighborhood and that they have proximity to schools, hospitals, and other important establishments as much as possible.
2. Create strong seller’s and buyer’s lists when flipping houses. Such a move allows you to move properties quickly and prevents you from being stuck when a deal comes your way.
3. Find a mentor. Having a seasoned investor guide you when doing deals enable you to avoid making big mistakes that can affect your career. In addition, a mentor can provide you insights to latest market trends and other vital information about the real estate business.
4. Educate yourself. You should continue to sharpen your skills as a real estate investor even after your first successful flip. Never underestimate the power that fresh information can bring to your business.