If you are a new real estate investor you may not know that there are many different ways to flip a property. Most people have heard of the fix and flip property, a fixer upper that is purchased for pennies on the dollar, renovated and flipped for a huge profit. This type of flipping does work, very well in fact, but investors should know that there are other ways they can flip and make a profit.
One way you can flip a property, other than selling your fixer upper for cash, is to sell on terms. Once you have rehabbed your property, refinance it for the new appraised value. The objective here is to have little or no money tied up in the deal. Then, you sell it on a lease with option to buy. You have your potential buyer, likely a renter with a dream of homeownership, pay a large enough monthly rent to cover your mortgage payment and when the buyer exercises the right to buy, you walk away with cash. You can also require potential buyers or lessees to put down a few thousand dollars as a non-refundable deposit. In this case, if they choose not to exercise the option you keep the money and then start the process over again.
The next strategy will depend on the market. This strategy requires you to buy fixer uppers and then flip them un-rehabbed to other investors. The key with this strategy is to make sure that you purchase the property cheap enough that you can sell significantly below market value and still make a profit. If you want to see profits quickly, this may be the way to go. For example, let’s say you purchase a fixer upper for $12,000. You turn around and sell it for $14,500 and make a quick $2500. It may not be a lot of money, but if you are in the business of flipping properties regularly, the profits can add up quickly.
If you prefer not to invest your money into real estate, but wish to make a profit in the business, you can be a scout. A scout is the deal finder and for a fee, will pass that information onto investors. This method does not involve money or risk because all you are doing is looking for distressed properties. If you are short on cash, or if you are trying to build up your cash reserves for future real estate purchases, being a scout for seasoned investors is a great opportunity.