There are many ways in which you can find a great property for the purpose of fixing and flipping or rehabbing for profit.
Look Twice at Crappy Properties
First, look further than skin deep at properties. Fix and flip profits are made from bargains. As a bargain, a home will have problems–that’s where investors make money. But many investors focus only on the cosmetic crap, just like regular buyers. Sure, investors have a higher tolerance for crap than regular buyers–and will see dollar signs where regular buyers see only a nightmare. But many investors go no further than the easily solvable cosmetic problems, such as replacing carpeting, refinishing drywall, removing and replacing kitchen cabinets.
But what many investors don’t do is look at how easy it can be to solve the non-cosmetic problems–and that can be a great source of wealth for smart investors. For instance, there are investors who only seek properties with cracked slabs. They use their partnerships with slab specialists and buy properties that no one else will touch. Then they remedy the problem and resell–often under market value in order to entice buyers–but at a significant profit to themselves. Do you see properties with foundation problems? What about fire damage? These can be remediated by specialists. As long as the property pencils out, why not?
Bad Location, Bad Location, Bad Location
Another source or properties are those in undesirable locations. Many investors buy fix and flips bases only on where they would live themselves. But many dollars have been made on properties in odd locations, like next door to a gas station, across from the fair grounds, next to the freeway, across from the shopping center. Remember the rule: Buy low, sell low, and you’ll be able to sell anything, anywhere.
Finding the Bargains
How do you find these bargains? It is useful to work with one or two Realtors who see a lot of homes. They are extra eyes out there looking for the right deals for you. Not only can they spot bargains, but they can give you a heads up about foreclosures, auctions, and probates. These are situations in which people often sell at a loss–and their loss is your gain.
Knock on Doors
Sometimes going door to door the old fashioned way is the best approach to finding leads. By walking neighborhoods, you discover that there are often vacant houses, run-down houses, and problem houses that might be purchased. These houses might not otherwise come to your attention, but by knocking on doors and asking neighbors for their thoughts about houses in the area, you’ll often uncover hidden gems.