Finding houses to flip can be difficult, especially if you’re a first-time property investor because it takes time to learn where to look and even more time looking at possible houses to flip. They make it all look so easy on TV because they focus on the restoration of the house and not on what it takes to find and evaluate the property.
Most people head to the MLS or look for foreclosed properties thinking that they’ll find the heavily discounted properties they’re seeking. This strategy, however, is not necessarily where you find them. Read on for information on how to find the right house to flip.
Find an Investment Property
Finding a house to flip profitably can be like looking for a needle in a haystack. Follow these steps to make your search quicker and easier.
The first thing you should do is get prequalified for a mortgage so that when you do find the house you want to flip, you can put in an offer immediately. Contact your bank or lender to find out what documents you need to submit to obtain a pre-approval letter.
Find Possible Locations
Everyone has heard the saying that the key to success with real estate is location, location, location. So, the location is an excellent place to start. Look at the selling records of various neighborhoods you’re interested in and make a list of any homes for sale that catch your eye.
Search the MLS
Check the MLS. It isn’t the best option because the house prices are higher due to the stiff competition. So, although the houses you’ll find on the MLS will need less work, they will lower your profit margins, which isn’t what you want when flipping a house. But who knows, you may find a bargain.
Find Bank Foreclosures
Foreclosure listings are an excellent place to look for property deals. They generally have a price tag that is below-market, there is a less financial risk, and there is an urgency to the sale, which will speed up the whole process. Check how long a property has been on the market, the restoration required, and the surrounding neighborhood.
Look for Short Sale Deals
A short sale deal is similar to a foreclosure, except the bank has not yet seized the property. The owner is looking to make a short sale to avoid the foreclosure, so you’re sure to find some excellent bargains.
Auctions are where you will find outstanding bargains. However, you will need to do some homework. Find the property location, related prices of surrounding properties, and the house’s condition. Decide what your maximum bid needs to be to turn a healthy profit once you’ve done your homework, and stick to it! Auctions can be incredibly emotive, and the last thing you want to do is buy a house to flip based on emotions rather than dollars and cents.
You should also do the usual scouring of local newspapers and let people know you are in the market. You can also join a real estate investment group, contact a real estate wholesaler, or ask agents in the areas you’re considering if they know of any properties that are good bargains and could be up for sale. Whatever you do, be consistent, organized, and do the math. Remember, you’re buying a house to flip and not a home in which to live.