A lot of people these days are preaching about the buying and holding method of gaining wealth with real estate. There indeed may come a time in your life or business when you’ll want to hang onto a piece of property, although you’ll only be interested in keeping certain types of property. If you’re just starting out, flipping a house may be an ideal way to get started because it is the fastest way to build up working capital.
What you may not know is that there are three ways that you can flip a house, each with it’s pros and cons.
The first method is known as fix and flip. What this means, is that you buy a house in bad shape, do the repairs to fix it up, then turn around and sell it. This is the way most new real estate investors are familiar with the idea of flipping property.
The second way to flip is though wholesaling. Wholesaling involves finding a home for sale then flipping it to an investor for a fast, yet small profit. To do this, you’ll need to know the real estate investors in your area, the types of homes that flip the best, and how to fund your property so you can flip it to them. Having a good relationship with a private money lender is a must. If you live in a big area or a city, you’ll find that using the wholesaling method of flipping houses is actually easier to accomplish. Also, wholesaling can be done to the general public, especially in a rising market, where you can buy under value, then in just a few months, sell for over the initial value.
The third way to flip a house is by assigning the purchase. Using this method, you’ll commit to buying the house at first. Then, instead of closing the deal yourself, you’ll assign the contract to a real estate investor — of course for a small assignment fee. The investor will take the contract over and close the purchase themselves. This can be very profitable, especially if you invest in the right home, and buy significantly enough under value so that the investor is still getting a home well under value.
If you’re looking to break into the real estate market, you’ll need to learn all about flipping houses. The first method is the “easiest” for new investors, since it’s often easier to find this type of property. To make the fix and flip approach profitable, work with a mentor, connect with a private money source, and take it one step at a time as you learn.