Sunday, October 15, 2006

Is there a difference between "flipping" and "fixing" houses for profit?

Flipping Houses for Profit

Some investors flip houses without fixing the property or doing any clean up at all. In fact, some investors don't even see the actual property. These investors just tie up the property with a contract to purchase and sell the contract to another investor or a new home buyer without taking title themselves. Many house flippers turn over several properties each month and make between $1,000 to $10,000 or more on each transaction.

Fixing Houses for Profit

On the other hand, some investors make a profit by fixing a house up, refinancing it, and then renting it to a tenant. These investors often purchase the property with rehab financing. This means they finance the purchase and the repairs. For instance, if you buy a starter home in the Midwest at a bargain price for $70,000 and the property will be worth $100,000 when its repaired, a rehab loan of $80,000 could cover the purchase costs and basic repairs. Because the rehab loan interest rates are high, you would refinance with a normal investment house mortgage. The rents should cover your mortgage and possibly give you a little cash flow. Some investors who practice this strategy end up with 100 houses paying them each month. Besides the cash flow, they end up with appreciation on houses that other people pay for.

Fixing and Flipping Houses for Profit

Another investment strategy is fixing and flipping. In this type of transaction, you buy a fixer and remodel it for a fast sale to a new home buyer. If you turn the house over quickly, you don't have to worry about the real estate market taking a downward spiral. The idea is to get in and out with a quick profit. This method makes different amounts (even losses) depending on the investor's expertise. You must know what you're doing to avoid disaster. However, this is the method that many investors use to make $20,000 to $100,000 or more on each transaction.

Read more about Flipping Houses at www.doghousetodollhousefordollars.com



See the pictures of before and after: Real Estate Investing with Fixers

Copyright © 2006 Jeanette J. Fisher

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