Best Ways to Find Homes to Flip
One of the most important aspects to real estate investing is sourcing good properties. Here are some of the best ways to find homes to flip, and turn a profit.
Conducting a successful flip is not an easy feat. You need to identify the right investment property, buy it at the right price, and then make repairs or updates quickly. Only then can you attempt to flip the property for a price that makes the whole venture worth your money and time. Here are a few tips and tricks to help you find homes to flip.
Come prepared to make a deal
Have your financing ready.
Before you start looking for a flip, make sure you have access to financing. Most flippers don’t use traditional bank loans, instead opting for hard money. But there are other ways to finance investment property beyond bank loans and hard money. They include cash and private financing. When you find a good flip, you’ll want to do your due diligence and then pounce. Waiting for financing to come through can sink a deal.
Run the numbers.
Before you put in an offer on a potential flip, remember to run the numbers. The 70% rule is a good place to start. In short, the 70% rule says that a flipper shouldn’t pay more than 70% of the After Repair Value (ARV). This is the estimate of what you can sell the house for after completing updates or renovations.
Get to the deal first
You’re likely not the only person searching in a given area for the perfect property to flip. That means you want to get to a promising flip before anyone else. There are many different avenues to finding a flip. They include good old-fashioned networking, making an offer when you see a for-sale sign pop up in your neighborhood, or scooping up an off-market house in pre-foreclosure. The ideal flip is an underpriced home needing minimal work in a solid or up-and-coming neighborhood.
Developing a network of people who know that you’re in the market for flippable homes is a great way to find gems. Your network could be people involved in real estate or real estate investments who can tip you off about opportunities. Certain real estate agents specialize in pre foreclosures and foreclosures. You may want to team up with one. If you’re new, you might want to apprentice with another flipper. Or, go to local meetups of people in the industry.
Beyond connecting with people in real estate and real estate investment, tell as many people as possible what you’re looking for in a flip. You never know who may need to offload a property. Having your name floating around as the first person to turn to is a good thing. The ideal flip is one that comes straight to you.
Real estate is increasingly conducted as an online affair. Creating a professional looking website no longer requires spending loads of money or time. Sites such as Squarespace, Wix, and Weebly offer easy, economical ways to create and host a savvy looking website.
Of course your website is only useful if someone finds it. Follow SEO best practices, like using keywords and publishing regular blog content. You may want to market your site. There are all sorts of marketing tools available to a real estate flipper, including social media marketing via Facebook and pay-per-click solutions at Google.
The hand-held business card still has a place in today’s digital landscape. Designing and printing business cards is relatively a simple task, thanks to sites such as Canva, Moo, and Vistaprint. Business cards can be handed out on the go, including to contractors (who tend to know quite a lot about local real estate), investors, and others in the business. Just remember the rules of a good business card, like including pertinent contact info and making it legible.
Some flippers rely on direct mail, flyers, and signs stapled to telephone polls saying “We pay cash for houses.” Your approach will depend on your market and what kind of homes you’re looking to buy. Some potential sellers will be turned off by a hard sales approach, so know your market.
Search for deals
The deals won’t usually come knocking, and you’ll need to do a good deal of searching on your own to find the right flip. There’s a lot of information available online. You’ll want to search the MLS for foreclosure listings, bankruptcy listings, and as-is sales (generally you’ll need to partner with an agent for complete MLS data).
You’ll also want to comb through other online real estate sites like Zillow and Trulia. It’s not just properties that need updates or homeowners in financial trouble that you’re after, although those can be helpful. Sellers with homes that have been on the market for a while or with listings that have expired may be ready to make a deal.
Look for websites that specialize in off-market properties. Sundae.com has an investor portal, which currently operates in Southern California and Sacramento, and provides investors in its system with lists of potential properties to flip. As well, banks, such as Wells Fargo, may publish their real estate owned (REO) properties online.
Hitting the streets to find properties that look derelict or otherwise unloved can pay off. Once you have your addresses, you can search public records at your local courthouse or online to get more information. This might be where you call on your network. Do friends, neighbors, or real estate agents know the story behind this house? You might also search local newspapers for notice of trustee sales or sheriff sales to get leads.
Attend an auction.
Most houses at auction have either been seized by banks for nonpayment of mortgage or the government for nonpayment of taxes. Property auctions can happen online at sites such as Auction.com or in person. There’s the potential to get a house at a deep discount, but you often don’t know what condition the home is in, and you may be up against experienced real estate auction buyers. You don’t want to walk into an auction without having done your homework. Research the house you want to bid on both online and by at least doing a drive-by (it’s unusual to be allowed inside). Run your comps. Do a title and lien search. Know the rules of the auction. Understand the purchase agreement.