Flipping 101: The beginner’s guide to finding properties
In the world of investment real estate, the methods for finding good deals on properties is endless, complicated and, admittedly, somewhat headache-inducing. The more experienced you become as an investor, the more creative, profitable and less competitive the deals become.
But yours truly is just a baby flipper and, at this stage in the game, I’ve got limited ways to access the good deals out there. Maybe you’re in the same boat! So today I thought I’d share with some of the places I know to look when seeking out a first flip.
Multiple Listing Service – This is simply the place where all the licensed real estate firms announce the stuff that’s up for sale. Anyone can access the MLS (which means you’re competing with a lot of folks for deals) online by visiting places like Realtor.com, Trulia.com or MLS.com.
Although I didn’t find my current flip through the web, I did find several good candidates there that I placed offers on. Of course, real estate brokers or agents are associated with MLS listings, so the profit margin is lower because their commissions must be factored into the price of sale.
AuctionZip – This is where you can find real estate auctions happening on any given date in your target community. Depending on how motivated the seller(s) is, you can get a great deal on a property at a real estate auction. You’ll need to be prepared to make a sizable down payment and be able to gather the total amount of money needed within a fairly short time. This can be a great route if you’ve got all the cash in hand. (I didn’t. I had 20 percent in cash, but needed to finance the rest through my local bank.)
Distressed property owners – When I start looking for my next flip, this will probably be where I concentrate the bulk of my efforts. You can find distressed property owners by putting an ad in the local paper stating you “buy ugly houses.” Or you can also keep a lookout for homes that appear uninhabited; are not being maintained; or have a “For Rent” or “For Sale by Owner” sign out front. These are clues that a homeowner may be motivated to sell at a great price. Scoring properties this way doesn’t involve any real estate commissions, so the profit margin could potentially be higher.
Craiglist – This can be another good source for finding commission-free properties and distressed property owners.
Realtors – This is actually how I found my first flip. For some reason, the search engines in all the online spots I checked never showed that magical property my realtor introduced me to. This may have been a factor in why the place didn’t get snatched up sooner. I’m not sure.
At any rate, realtors are often aware of properties that are for sale (or coming up for sale) before the general public finds out about them. I have an awesome, motivated realtor who is always on the lookout for places I might be interested in. To return the favor, I’m happy to have her sell my rehabbed properties for me. She gets the privilege of selling the same house twice (and earning the commission twice) in a short amount of time, and I get the privilege of having an “insider” keeping watch for great deals and proactively working to sell what I put back on the market. Good realtors can be worth their weight in gold!
The methods above are by no means all-inclusive. I just wanted to highlight the main ones I hit up regularly when I’m “on the hunt.”
Do you have any other great ways to find investment properties? Please share in a comment! Also, don’t forget to sign up to win a Duluth Trading Company gift card and get geared up with the clothing that helps me get my house flip on. Enter the giveaway here.