Flipping homes for fast cash
In economic boom times, many investors turn to the real estate market as a potential profit builder. “Flipping,” that is, buying a property and quickly reselling it for a larger sum, sometimes after renovating, is a popular move. It is interesting to note that flipping can still be a very profitable source of fast cash even in today’s tougher economy. Of course, one of the most crucial factors in successful flips is to know which properties to buy. This is where the professionals, Madison real estate brokers, come into the picture. They have their finger on the pulse of the Madison real estate market. For advice as to choosing worthwhile investments and negotiating with buyers and sellers, an experienced realtor is invaluable.
What you’ll need
There are several things you’ll need if you are looking to work at flipping properties – and it is work! First, you’ll need a readily accessible supply of cash, in order to finance the original purchase, to pay contractors and other professionals for repairs and to cover the cost of carrying the house until it is resold. You’ll also need a lot of self-confidence, patience and a willingness to work very hard for your money. Next, it is essential to know about distressed sales and pre-foreclosures on Madison real estate in advance. This is where Madison realtors are an excellent source of help. After that, remember the golden rule of real estate buying: location, location, location. This is certainly true when buying property to flip
How to prepare yourself
Know the market. Know what homes are worth in any given zip code and what makes a desirable property. When you are going to check out a particular house, find out its basic characteristics – number of rooms and bathrooms, roof, type of frame, heating system, condition, whether it is currently occupied and so on. This will give you an idea of the property’s worth before you even speak to the seller, or the seller’s agent. Set yourself a maximum amount you are willing to pay. Then tell the seller you are prepared to close quickly on an all cash deal; ask for the lowest amount he’d accept under those favorable circumstances.
Types of flips
The typical housing market flip that most people have heard of is buying a rundown property, upgrading it and selling it for an enormous markup. That can be a profitable way of investing in Madison real estate, but it also comes with many strings attached. You need reliable workers to carry out the renovations, and ready cash to pay them with. Most likely you will need to wait at least 90 days before putting the property back on the market, due to FHA anti-flip regulations. If you’ve taken out a mortgage to purchase the property, you may be penalized for early repayment. Another method is what Madison realtors call “wholesaling.” This means that you assign the purchase contract to another party, who will pay you an assignment fee. You never actually take ownership.