In today’s market, real estate flipping has become a popular and effective way for investors – even less experienced investors – to make money at real estate. A real estate flip is when you buy property and quickly resell it instead of keeping it as a long-term investment.
Here are three ways to make money with a real estate flip.
Buy-it, fix-it, flip-it: This is the most common type of real estate flip. In a nutshell, you buy a fixer-upper property, make improvements and repairs, then sell it on the retail market to a buyer who will live in the house. With this type of real estate flip, you can easily make $15,000 to $50,000 in profit, depending on factors such as location, ultimate cost of repairs, and price you paid for the property.
When you pursue this type of real estate flip, be sure that you’re conservative and realistic in your estimates for repair costs, time to resell the property, and actual selling costs.
Wholesale real estate flip: Very simply, this type of real estate flip consists of buying a property that needs to be rehabbed, then quickly turning around and reselling it for a few thousand dollars more to another investor who is looking for rehab properties. Even though your profit may not be as great with this method of real estate flipping, you’re more likely to sell the property quickly, thus realizing your profit quickly.
Buying, then selling “for terms”: When you do a real estate flip this way, you buy the property, fix it up, refinance it at its current appraised value, and sell it on a lease with option to buy. The rent payment you receive should cover your mortgage payment. Because you don’t have to pay a broker’s fee, you gain more profit when the tenant exercises his option. You can even benefit from a lower capital gains tax rate with this method of real estate flip.
If you enjoy the challenge and rewards of making money at real estate, consider one of these methods of real estate flipping to realize substantial profits.