The main purpose of flipping houses is to make money. This line of work is fun and rewarding, but it’s also a source of income. The key to making money is by flipping homes quickly. As soon as the property has been closed on, you can use your profit on another home and continue the cycle.
As simple as the fix-and-flip process may seem, it’s quite complex. To be successful, you must find the right property, get the right financing, decide what to repair, hire the contractors, sell the house at the right price and more. Fortunately, knowing how to make smart decisions will help you turn a profit sooner rather than later.
Let’s discuss five ways that you can get money quickly out of the homes you invest in.
If you are just getting started in the fix-and-flip business and you don’t have a lot of money, wholesaling may be right for you. With this method, you buy a property from a wholesale contractor and fix it up. The benefit is that you get a decent deal on a property without having to go through an auction process.
- Bird Dogging
Bird dogging is a term used in the real estate industry to describe a person who locates properties that will make an excellent investment. Usually these properties are old, distressed, and have people living in them. The homeowners don’t know what to do with them, so they sell their home to the investor and part ways. Like wholesaling, bird dogging is a good option if you’re new to the market and have little money to work with.
- Hard Money Lenders
If you want to take advantage of all properties, not just those from wholesalers, talk with a hard money lender. Hard money lenders are private and flexible compared to traditional bank lenders. If you have bad credit, that’s OK, too. The amount of the loan is based on your assets, which in this case, is the property. If you make a profit and pay the lender, you’ll be ready to move forward with another investment.
- Estate Sales and Short Sales
Don’t limit yourself to the types of properties you’re willing to work with. Some investors only want REOs, but this can slow down the money you make. Instead, be open and willing to work with all properties – short sales, foreclosures, estates, and even normal sales.
- Use Cash
Cash is king. Sellers prefer cash as opposed to financing. To get cash in hand, work with a hard money lender. The cash will go to the seller, and you can part ways. When the property is fixed up and sold, you can use the profit to pay back the lender.
Real estate can make an excellent investment, but you must make smart decisions. Because most new house flippers don’t have a lot of money, it’s best to make money gradually on smaller properties.