How to Flip Properties Successfully

Learning how to flip properties is easy.  Learning how to do this successfully may be a little harder to grasp.  However, by following some basic guidelines, you can maximize your profits while minimizing your risk.  To begin with you must understand the basic strategy involved in the process – to buy low and then sell high.  Real estate, unlike many other commodities, is valued by comparison.  This means that in order to settle on an appraised value, you must consider what similar buildings with like characteristics sell for in the surrounding real estate market.  Thus, the real estate market fluctuates up and down much like a stock market.  By timing these swings, it is possible to predict when a market will decline and went it will increase.  By understanding these swings, you can more successfully manage your assets.

Once you are confident in your knowledge of the real estate market, you can then begin searching for potential investment opportunities.  Remember that the basic principle is to buy low and sell high.  Therefore, you should look for properties with a depressed value.  Houses and buildings can have a depressed value for many reasons, including foreclosure, forfeiture, or property condition.  Foreclosures and forfeitures are great buys.  Try to avoid distressed properties unless you are willing to invest more money for repairs and/ or demolition.

After you identify potential investments, then you need to secure the capital used to purchase the properties.  You can always buy a house or building with your own cash.  However, this requires a huge investment and carries a lot of risk.  If you cannot move the building, then may be forced to pay property taxes that can run into the thousands for large commercial assets.  The best way to purchase an asset is to seek a loan from a bank or other suitable lender.  This way the bank or lender will carry most of the financial burden and your cash will not be tied up in a few investments.  This is important because you can then take your freed up capital and use it to purchase other properties.  So, instead of buying one house for one hundred thousand dollars, you can buy ten houses for an investment of ten thousand dollars each.  In this manner you can minimize your financial risk and maximize your profit margin.

The final step in this easy real estate transaction is to sell the acquired asset and repay the loan.  Obviously, if you have fronted your own money, then you do not need to repay anything to anyone.  However, if you have used my advice, then a loan will have to be paid off.  Try to sell your buildings quickly.  The longer you hold on to them, the less available cash you will have to put towards future investments and the more fees you will have to pay to the lending institution.  Quick enhancements, such as new paint, some improved landscaping, or fixture upgrades, will make it easier to sell and increase your profit margin.  Sometimes just having the property cleaned will vastly increase your options.  Follow these simple rules and you can easily learn how to flip properties successfully. 

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