House flipping provides quick cash profits with reduced risk. Just match up sellers and cash buyers (other investors). You don't need to hire contractors or deal with picky buyers needing financing. Your credit is irrelevant and you need no previous experience. It's a fast start for beginners and a quick solution for experienced investors needing cash flow now.
NO funding and NO credit check
No, provided that you use the correct contracts.
Plus, reduced risk because you never take possession or own the property; instead, you control it. Control without ownership lets investors make money on properties they don't own because they are not selling the properties -they assign the contract (paperwork) that controls the property's sale. The contract's equitable interest gets assigned to your buyer, and you collect an assignment fee.
70% of the after-repair value (ARV) minus the Estimated Repairs Costs (ERC) equals the Maximum Purchase Price (MPP). With this handy formula, you'll stay focused and ensured a profit. No one likes getting caught up in the frenzy of negotiating. Knowing the MPP will keep this from happening.
Run your comps do your due diligence. Use a Realtor, the MLS, online software, county property appraiser. Use current, comparable sales of properties in excellent condition and the same neighborhood as the one you are about to put under contract. This is the after repair value (ARV). Don't speculate on the numbers when house flipping. If you're in doubt, reach out to a Realtor and ask for their opinion.
Determine the amount of rehab need. The buyer will want to hold the property, rent it, rehab it, and sell it to a retail buyer. There needs to be a big enough pie (profit) so that everyone gets some. Remember, house flipping only works when everyone wins, you, the seller, and your buyer. It is also vital to represent the rehab amount concisely, so there are no misunderstandings. It establishes trust with your buyer and shows that you're a professional. No one likes to have their time wasted. Plus, you want a fast turnaround time, and you want to assign this contract now! So, send accurate property descriptions, pictures, reports of comparable sales for ARV, rehab estimates, and closing costs.
Search for motivated sellers and find their contact information using online software to generate a list. Look for the types of properties that you already have buyers lined up and waiting on. But sometimes, a search, like for probate properties, will bring back all different types of properties, some of which you may not have a buyer anxiously waiting for on the sidelines.
Your elite cash buyer list. Know exactly what your buyer wants by building and maintaining a cash buyers list. Refer all interested buyers to your website to sign up and enter their buying criteria. When you have house flipping deals available, they'll be automatically notified.
Contrary to what most believe, you don't need thousands of cash buyers; just a few will do. The investors who reply quickly, who already have a portfolio of properties that they hold and rent, or investors that rehab and then sell the property to an end retail buyer, only the serious ones.
The other cash buyer is still an investor, but we find them a different way - and these are the ones we like the best. We do reverse engineering and look for investors, LLCs, and trusts that own properties in the neighborhood and surrounding areas. Contact them through direct mail or phone and tell them that we have a contract in the vicinity of one of their rental properties and would be interested in the details.
(About 85% say yes)
Negotiate and write the contract with the property owner. See a sample sale and purchase contract. When you're house flipping, we highly suggest writing the contract using your LLC or Trust. Do not put your name on the contract, ever.
Not commonly known, but all contracts to purchase real estate are assignable unless stated explicitly in the contract that it's not. In most cases, if you are buying real estate from a bank, mortgage company, or a Realtor, the contract will contain a non-assignability clause. Find out how to legally work around non-assignable contracts.
Be sure your contract includes permission to show the property to prospective buyers. Then get out your trusty phone and make a video. Walkthrough the property inside and out, show the good and the bad- you want your cash buyers to have an immediate idea of the property's condition. The video you'll send to your cash buyers list and post to Youtube and Pinterest. Also, complete a repair/ rehab list with an itemized material and approximate costs. The more information you can provide about the property's physical condition, the easier and faster it will be to assign the contract.
No inventory for house flipping? Do this.
1. Call every "we buy houses" bandit sign, Google, and CL ad you can find. 2 Find out which properties they have under contract. Ask if they're open to doing a deal split if you bring the buyer. 3 find a cash buyer who can close quickly and match them up.
Use An Assignment of Contract
The buyer pays you to sign over the contract to them. Use an Assignment of Contract; here's a sample one. Once this form is signed, the buyer steps into your shoes. All the rights you negotiated in the original contract transfers to them.
Make sure your buyer is serious. Get a large deposit- $ 5,000- $ 10,000. This demonstrates a strong level of commitment from your buyer to get the deal closed.
Always make the escrow deposit non-refundable.
Also, get a proof of funds (POF) letter or statement from their bank showing where the money is coming from for closing.
If you collected an assignment fee at the time you signed over the contract to your buyer then, you're done with the transaction. However, most times, you will not get fully paid till closing.
When assigning a contract, your profit is disclosed to both the buyer and the seller. It is not always a good thing, especially if the house flipping fee you're about to receive exceeds $ 7,000. In this case, a simultaneous or double closing is a better choice because it'll keep your assignment fee private.
The simultaneous closing is highly effective when a Land Trust or LLC is the buyer on the contract. You assign your beneficial interest of the trust over to whomever you're flipping the property to. Plus, it resolves all seasoning issues since there is never a break in the title chain. Also, fees will be lower because it's recorded as a transfer, not a sale. And You, as an investor, are limiting your liability.
It can be a lot to keep track of, especially if you have several assignments going on at once. That's why we suggest that you do it right. Use a team of skilled professionals, automated systems, and real estate investment software to get your house flipping business automated overnight.