Real Estate Investing

Flipping Houses is the absolute best way to build fast cash in today’s economy.  It is said that 90% of the world’s wealthiest people made their money through flipping houses.  But how can an ordinary individual flip houses and make a substantial amount of money in today’s real estate market?  What are the main things you need to understand before going to flip a house?  And why is it important to educate yourself before flipping a house?  In this article I will go over 8 tips that will assist you in your real estate investing venture.

Tip number 1: Find your Buyers First

In order to profit in real estate investing, you need to find buyers first.  You can do this by calling we buy houses signs, building a buyer’s list, attending auctions, working with real estate agents and using the Multiple Listing Service as well as other simple strategies and tactics.  The best strategy to use if you ask me would be to target buyers that have a history of buying properties for cash.

Tip number 2: Gather Necessary Information

After finding your buyers the next thing you need to do is find out what your buyer’s interests are.  You can do this by asking them what areas of town they are investing in.  How much they are looking to invest on their ideal property?  What type of property they are currently investing in?  And how fast they can settle?  Getting these questions answered will give you an idea of what to approach your buyers with.

Tip number 3: Find motivated sellers

In order to make money in real estate investing you have 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 distress financially, or physically.  An example of a motivated seller is someone who is getting a divorce, going into foreclosure, paying 2 mortgages, need to rehab their property but don’t have the cash, going bankrupt, and so on.  Therefore, in order to get a great deal when flipping houses you have to find someone that falls within this category.  You can find these sellers using various forms of advertising.

Tip number 4: Prescreen the Seller

When your advertising is working and the motivated sellers are coming in, in order to really get a good house flip you want to get as much information from the seller as possible.  You can do this by asking the seller for information on their investment property.  You want to find out what type of condition the house is in as well as the asking price of the property, but the most important question you need to know is why the seller is determined to get rid of their property.

Tip number 5: Run the Comps

Once you receive the information from the prospect, the next thing you need to do is run comps to see if the deal will be a good house flip.  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 punching in Bank of America Home Value Estimator.  You can also use sites like Eppraisal.com, or consult with a real estate agent.  There are many ways to run comparable sales when you’re looking to find out what a house is truly worth.

Tip number 6: Work the numbers

After running your comparables sales for the house the next thing you need to do in order to invest in real estate is work the numbers.  You can do this buy understanding the MAO formula.  The Maximum Allowable Offer formula is as followed:  You take the ARV (After repair value) and you multiply it by 65% and that leaves you with the amount that 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) that you can make on the house.

Tip number 7: Make the Offer

Once you have the MAO the next thing you do is make the offer.  Your offer should be less than what your MAO is.  The best thing to do in this case is to subtract and additional 10% off of the MAO and start you’re bidding with the motivated seller from there.  Negotiations can make or break your deal when it comes to investing in real estate so make sure that you’re sincere and very clear with the seller from the very beginning.

Tip number 8: Make Money

Once you get all of this done, you need to approach your buyers list that fit the criteria of the particular property.  Doing this will allow you to sell the property rapidly, being that you have prescreened the buyers and you know that they can close fast!  Once you have solid buyer then all you need to do is send the contracts over to the title company and wait for your check to come in the mail.  The best strategy to use in real estate investing would be to sell the property for less than the market value without rehabbing it.  This is called wholesaling the property.

Copyright © 2010 Jamel Gibbs
All Rights Reserved
————————————————————

WANT TO USE THIS ARTICLE IN YOUR E-ZINE OR WEB SITE? You can, as long as you include this complete blurb with it. Jamel Gibbs own one of the fastest growing real estate investment businesses in Pennsylvania. He’s originally from Brooklyn New York. He became a real estate agent at the tender age of 21 years old and a broker shortly after. Jamel started buying real estate when he moved to Pa and he now has a successful investment business. He also coaches others who are interest in making massive profits in real estate. Check him out at www.HowtoFlipforProfits.com

This Article is presented to you courtesy of the REI Education Academy. You can visit our website at www.REIEducationAcademy.com