| Okay, you know the drill: purchase a house below the | | | | Look into getting an option arm mortgage loan with a |
| current market rate, make some repairs and | | | | 1% minimum payment. This type of loan program can |
| improvements to it, and then turn around and sell | | | | increase your cash flow by cutting your monthly |
| [flip] the house to generate big profits. | | | | payment in half! |
| While the concept of flipping houses is nice, the | | | | These loans will also allow you to take a small piece |
| reality is that so much more is involved in flipping real | | | | of your equity and turn it into a tax deduction by |
| estate. Without the proper knowledge on how the | | | | creating deferred mortgage interest. |
| process works, you could end up being saddled with | | | | Management Costs - During the period you own the |
| a house you really do not want to own or end up | | | | home you can expect to shell out cash for property |
| taking a big loss on the sale of your property. | | | | taxes, utilities, lawn maintenance, homeowners |
| The real estate market has the potential to create | | | | insurance, mortgage payments, and more. The longer |
| huge profit windfalls for the savvy buyer. Here are a | | | | you keep the home, the more expenses you will |
| couple of tips to help increase your profit margin | | | | incur. |
| when flipping houses: | | | | Home Improvement Costs - Are you ripping out the |
| Buy low and sell high. How do you find homes to buy | | | | kitchen? Laying new flooring? Putting in a new |
| below the market? | | | | garden? Whatever repairs and improvements you |
| 1. Create a free brochure titled "3 ways to avoid | | | | make, are you certain that you can recoup these |
| foreclosure and get cash NOW for your equity". | | | | costs when you flip the house? Will the value of the |
| Then, distribute your brochure to people who are | | | | house increase enough to cover your expenses? |
| currently in the foreclosure process and homeowners | | | | Selling Costs - Once you are ready to sell the home, |
| who are currently 90 to 120 days behind on their | | | | will you be selling it privately or through a realtor? |
| mortgage payments. | | | | Real estate commissions running as high as 6% can |
| By the way, one of the helpful tips in your brochure | | | | eat up your profits very quickly. In addition, you will |
| should be to call you for a quick sale. | | | | need to pay an attorney to represent your interests |
| You can obtain foreclosure information from your | | | | and pay any other related expenses. |
| local court house. For a list of homeowners who are | | | | Capital Gains - A "good problem" to have is to make |
| currently behind on their mortgage payments you will | | | | so much money off of flipping houses that you have |
| need to contact a credit agency - Experian.com, | | | | to worry about paying capital gains taxes. You may |
| Equifax.com, or | | | | avoid federal taxes, but your state or local |
| 2. Contact divorce attorneys in your area. Offer your | | | | government may assess a tax on you. Count on it |
| home buying service as a resource to help clients | | | | especially if you live in a high tax area! |
| liquidate their homes quickly at a fair price. | | | | The "deal" you thought you made with the purchase |
| Now, before you get into house flipping there are | | | | of a house can quickly evaporate if the market turns |
| five main points you must take into consideration | | | | cold or your expenses run too high. Carefully consider |
| prior to closing on your deal: | | | | all five points before taking action and know your |
| Acquisition Costs - Every home will cost you money | | | | local real estate market inside and out. |
| before the deal is even finalized. Plan on writing out | | | | Yes, people do make tidy profits by flipping houses, |
| checks to your attorney, to the title company, | | | | while others lose out. Do your homework before |
| government agencies - such as recording fees, and | | | | jumping in to make certain that you understand |
| an application fee for a mortgage [unless you are | | | | everything before buying a house that you plan on |
| paying cash], and other closing costs. | | | | flipping later. |