Flipping Houses in Now and Beyond

Think flipping houses is "dead" after the real estate meltdown? Not at all. It just takes a different strategy to be viable in this real estate environment.

Here is how the art of flipping houses has changed over the recent years.

No More Investor Mortgages

When I first started flipping houses in 2005, there was more money available to investors than they knew what to do with! Mortgages were granted to nearly anyone, and so selling was easy.

Now, investor mortgages are all but a thing of the past. It's largely a cash game in the under $40,000 housing market. Luckily, there is plenty of cash out there and plenty of investors willing to buy - but they need a better deal than they can find anywhere else.

Money has to be left on the table..

Stricter Mortgage Company Lending Requirements

Another reason you'll find yourself flipping houses mainly for cash, is that mortgage companies do not like to see anything unusual on the settlement statement. Those unusual items include large cash payments to investors who never owned the property (you).

If you buy properties first and quickly resell, there will be no unusual items on the statement. However, seasoning requirements now become an issue.

Many banks do not want to lend money, to an investor OR an owner occupant, if the property has changed hands in the last few months.

Cash Buyers

When you have a cash buyer on the other end of your transactions, there is no mortgage company anywhere in sight! The title company will satisfy itself that the title is clear, and that's it! Done.

How do you get cash buyers, and how do you make them want to buy your properties?

This is easier than you might think. To find the cash buyers in your area, obtain a list of all cash real estate transactions in your county over the last year, along with amount paid and the buyer's name and address.

You can get this from many online list brokers, and it's not expensive.

When flipping houses to cash buyers, you must give the buyer a super deal, better than any he can get anywhere else. For tax sale/fixer property, I always try to sell for less than the LOWEST prices offering in that zip code, according to Realtor.com

This step should actually be done before buying the property, so you can make sure there's a profit in there for you even after giving cash buyers a deal they can't refuse.

Don't forget the rules when flipping houses in the down market: buy super cheap, sell cheap, and track down those cash buyers yourself, don't wait for them to come to you!

{ 4 comments… read them below or add one }

Joel August 18, 2013 at 3:04 pm

Very good advice and information. Thanks Rick!

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LAMONT JOHNSON December 9, 2014 at 8:13 pm

I WISHED THAT I'VE WOULD'VE KNOWN THIS YEARS AGO.THANKS FOR THE INFO.

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Anthony Hernandez February 14, 2015 at 4:56 pm

I'm curious about Multi-family, Commercial Light and Heavy Properties? Are they in the same parameters as residential properties as far as Logistically speaking, or is their a different form of attack we need to know about to search, refine, define under your same plan of attack for Tax liens-Deeds % rates or even acquire these properties?

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Rick Dawson February 23, 2015 at 10:07 am

They go through the exact same route through the tax sale system for the most part, if their taxes go delinquent, and I've seen ALL sorts of property pass through the system - an operating Arby's, a huge warehouse, even a bank branch once.

I don't think you're going to have nearly the success rate with these because you will usually have to deal with corportate officers, etc who aren't exactly walking away from the property. I've found residential properties are best but if an opportunity elsewhere comes up, don't run away from it.

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