There are many lucrative options for getting started in the real estate without going through the process of becoming a real estate agent. Although becoming a real estate agent is an excellent option for making money in real estate, it is not an option that is feasible for everyone. Aside from becoming a real estate agent, one of the most basic ways to make money in the real estate business is by becoming involved in the business of flipping houses. Although the name may sound a bit strange, flipping houses is exactly what takes place during the process.
Simply put, those who flip houses will purchase a home for greatly under the value or retail price of the home and then turn around and resell the home for a profit. If the home is already well maintained or fairly well put together, then a house flipper may have minimal work to do for exterior appeal before putting the house up for resale. Many house flippers will buy homes that are greatly in need of repair in order to fix up those homes and add to the ultimate resale value of the home. Whatever the case is, the outcome is for the house flipper to make a profit out of the home by purchasing it for a low price and then reselling it for a far greater price.
So does this really work? Yes, in fact some of the best house flippers are actually real estate agents themselves, but this does not necessarily mean you need to be a real estate agent to flip houses. What you will need though, is a good agent, dealer or retailer who can help you in the process of selecting homes to purchase. Many flippers are full-time employed at another business but just flip houses to make money to save up for retirement, while others have made house flipping a full-time business of their own.
Before you get started on house flipping, you need to take a serious look at home much time and money you are willing to invest in each property. This means setting a budget for the amount of the home purchase, setting a limit for the remodeling of the house and setting a bottom line for the amount you are willing to make off of the resale of the home. Remember that you can invest in flipping houses by finding homes that need simple cosmetic repairs, such as painting, new caulking, new windows or even new ceiling fans, or you can work towards investing in homes that need structural repairs, such as repairing cracks in the walls or ceilings, adding on to the home, tearing down walls or even remodeling the entire kitchen, living room or bathroom. Most house flippers will suggest not wasting too much time on homes that have major structural repairs, although you may not be aware of these problems until a home inspection is done. Remember that you have the option to remove your bid from the table if you find out about any of these major structural repairs, or you could always counter offer with a bid that is much lower in price, depending on the cost of repairing the structural problems.
You will also want to consider whether or not you have the time and energy to spend repairing the home on the weekends or in the evenings, or if you will need to pay someone the cost of labor to repair the home for you. Remember that often the amount of money or time you put into the home will come back to you in the price of the resale, but this does not always mean you have the time or energy to put into that property.
As far as finances go, you will also want to look into how much you can afford to invest in a home. Of course this will depend on your location, as a small home in the Midwest can be purchased for anywhere from $70,000-$140,000, while a small home that needs to be fixed up would cost at the very least $300,000-$400,000 in most of California and many parts of Florida and New York, at the current market rates.
One of the best parts about becoming involved in the real estate flipping houses business is that you work for yourself, in partnership with only those realtors or laborers that you choose to work with.
Remember that if you are not capable or interested in investing the amount of money or time that goes along with the retail end of flipping houses, you can always get involved with flipping houses by becoming a scout or a dealer. A scout can help out a retailer by helping to find potential investment properties for the retailer and then accept a nominal fee for the finding of a home. There are also dealers who will find properties but also begin to invest in the property by starting the steps of the contract process. From here the dealer usually decides if they want to keep the contract with the previous owner or if they want to sell the contract to someone else.
Larry Goins is a regular guest speaker at CT REIA. Go here for the current list of upcoming real estate investing seminars in Connecticut.