| House Flipping For The Beginner |
| Copyright 2007 Emerald Key Software All Rights Reserved |
Category Construction Glossary
There are a lot of things to consider before getting started. One of the
most important is finding the right kind of property to flip. You have to
really research a house before making an offer. One thing you need to
know are the comps of the neighborhood. Find out what the other
houses in the neighborhood are selling for. Also check for the most
recently sold and how much they sold for. You then need to compare
other features of the houses such as square footage, land square
footage, condition of the house, etc.
Another beginning step is to figure out how you will pay for it. This
needs to be decided before you make an offer. You hear a lot about
no money down deals and creative financing but those methods will
not work in all cases, so you need to be prepared with alternatives.
One of the methods of financing is getting a Mortgage loan for the
property. This can be long and drawn out and you will need to have
good credit and show your ability to handle the note until you can sell
the house. You will also have to have enough money to make any
necessary repairs.
Another way to finance a real estate deal is to get a HELOC on the
house you are living in. A HELOC is a home equity line of credit that
you get approved for. You don't have to use the money, but it is there
if you need it. For example, you get a HELOC for $100,000.00 (you
can only get a HELOC for a percentage of the value of your house).
This money will just sit there available until you want to use it. If you
want to buy some investment property for $70,000.00 and need
another $10,000.00 for repairs, then you could withdraw$80,000.00
from your HELOC. Using this method you can have a quick closing and
be able to offer cash for the property. You can sometimes get it
cheaper if you pay cash. Some HELOCs require interest only
payments to pay back the amount you used.
If you intend to flip the house in a short length of time, you could just
pay the interest only (if this is the way your HELOC is set up) and when
the investment property sells you would then pay off your HELOC. A
HELOC can be very useful but remember that it is a second mortgage
against your home so use it wisely. Talk to your mortgage company or
banker to find out about HELOCs and if it is advisable for you to get
one.
You can also get a hard money loan. These are privately financed
loans that have a higher interest rate than a mortgage loan, usually
12% to 18%, and they are short term, usually 6 months to a year. One
advantage of these loans is that you can have an early closing,
sometimes two weeks. If you get the right property for the right price
you can sometimes finance the cost of the property and the repairs. In
some cases you will have no out of pocket expenses. You really have
to look for the right deal for these to be beneficial to you. Research
these loans as they can come in very handy. Your local real estate
investment club is a good place to talk to and about hard money
lenders.
These were just a few ways you can find and finance a good real
estate property to flip. As in anything to do with real estate you need to
research, talk to mortgage companies, real estate agents, and other
investors. The best thing a beginner can do is join a real estate
investment club where you can get good advice and maybe even get
your first real estate flip.
Real estate investing is a good business to be in but there is a lot of
studying and learning involved before you take on your first house flip.
Think smart and be diligent in your efforts to learn as much as you can
about investing in real estate before you take that first plunge.
most important is finding the right kind of property to flip. You have to
really research a house before making an offer. One thing you need to
know are the comps of the neighborhood. Find out what the other
houses in the neighborhood are selling for. Also check for the most
recently sold and how much they sold for. You then need to compare
other features of the houses such as square footage, land square
footage, condition of the house, etc.
Another beginning step is to figure out how you will pay for it. This
needs to be decided before you make an offer. You hear a lot about
no money down deals and creative financing but those methods will
not work in all cases, so you need to be prepared with alternatives.
One of the methods of financing is getting a Mortgage loan for the
property. This can be long and drawn out and you will need to have
good credit and show your ability to handle the note until you can sell
the house. You will also have to have enough money to make any
necessary repairs.
Another way to finance a real estate deal is to get a HELOC on the
house you are living in. A HELOC is a home equity line of credit that
you get approved for. You don't have to use the money, but it is there
if you need it. For example, you get a HELOC for $100,000.00 (you
can only get a HELOC for a percentage of the value of your house).
This money will just sit there available until you want to use it. If you
want to buy some investment property for $70,000.00 and need
another $10,000.00 for repairs, then you could withdraw$80,000.00
from your HELOC. Using this method you can have a quick closing and
be able to offer cash for the property. You can sometimes get it
cheaper if you pay cash. Some HELOCs require interest only
payments to pay back the amount you used.
If you intend to flip the house in a short length of time, you could just
pay the interest only (if this is the way your HELOC is set up) and when
the investment property sells you would then pay off your HELOC. A
HELOC can be very useful but remember that it is a second mortgage
against your home so use it wisely. Talk to your mortgage company or
banker to find out about HELOCs and if it is advisable for you to get
one.
You can also get a hard money loan. These are privately financed
loans that have a higher interest rate than a mortgage loan, usually
12% to 18%, and they are short term, usually 6 months to a year. One
advantage of these loans is that you can have an early closing,
sometimes two weeks. If you get the right property for the right price
you can sometimes finance the cost of the property and the repairs. In
some cases you will have no out of pocket expenses. You really have
to look for the right deal for these to be beneficial to you. Research
these loans as they can come in very handy. Your local real estate
investment club is a good place to talk to and about hard money
lenders.
These were just a few ways you can find and finance a good real
estate property to flip. As in anything to do with real estate you need to
research, talk to mortgage companies, real estate agents, and other
investors. The best thing a beginner can do is join a real estate
investment club where you can get good advice and maybe even get
your first real estate flip.
Real estate investing is a good business to be in but there is a lot of
studying and learning involved before you take on your first house flip.
Think smart and be diligent in your efforts to learn as much as you can
about investing in real estate before you take that first plunge.