The scout searches for properties where there is a potential to make money through flipping and gathers information on them. However, rather than flipping the property themselves, the scout will gather relevant information on the property and then sell this information to other real estate investors so that they may take advantage of the opportunity. Scouting for suitable properties is typically a role played by those who are new to real estate investing and trying to build capital and gain experience. In fact, this is how many real estate investors start out. This is because not a lot of experience or capital is required to make some money from scouting. 

The scout will keep a keen eye out for distressed properties such as those that are boarded up, or have overgrown gardens and lawns etc. These are all signs that the property’s owner may be unwilling, or unable, to spend money on the property. These properties can provide excellent investment opportunities through flipping because the owner may be experiencing financial troubles, or does not have any emotional attachment to the property. Therefore, the property may be able to be bought at a below market price as the owner may be motivated to sell, and sell quickly. 

When the scout finds a suitable property, they will gather as much information as they can about the property. Typically they will obtain:
* the full address of the property
* the name of the property’s owner and their contact details
* details relating to the condition of the property
* a photo of the property
* the asking price of the property
* the current financial situation of the property, and
* whether there are any liens on the property. 

This information may be gathered by speaking directly to the property’s owner or by searching through public records. 

When the scout has gathered this information, they will then sell it to a property investor who is looking for investment opportunities. The fee that the scout receives for the information will depend on the value of the property and the potential profit it can provide the investor. The scout will usually receive between $500 and $1,000. Not a bad profit for a keen eye and a little research! 

The dealer
In some respects, a dealer performs a similar role to the scout. However, while the dealer will look for properties in the same way that the scout will, when they find a property with potential for turning a profit, they will sign a purchase contract with the owner, rather than selling the information about the property to another investor who will then take advantage of the opportunity. When the dealer has signed the purchase contract, they then have two options:
1. They can close on the property themselves and then re-sell it.
2. They can on-sell the purchase contract to another investor. 

As the dealer often invests their own money in order to secure the deal, there is a higher level of risk involved than the scout. Therefore, the dealer expects a greater reward. 

If the dealer decides to sell the property themselves, they will often sell the property in the same condition in which they bought it. In other words, they will not fix any problems, or even clean the property. However, by doing a simple clean up of a property, such as mowing lawns, cleaning windows etc, a dealer could possibly increase their profit by several thousand dollars. Naturally, a clean property is going to attract more attention from a potential buyer than one that resembles a pig sty. And a clean up doesn’t have to cost much either! 

An experienced dealer working full time on flipping real estate has the potential to earn upwards of $15,000 each month. And this without ever spending money on fixing a property or having to deal with tenants. Dealers flipping real estate on a part time basis can earn upwards of $3,000 each month. 

The retailer
The third type of investor utilizing the strategy of property flipping is the retailer. The retailer buys properties from dealers or from real estate agents and scouts. The retailer aims to make money by fixing the property and then selling it to an owner-occupant. 

As the retailer buys the property, they are contributing the most capital and therefore are taking the most risk. They also stand to make the most profit from flipping real estate. However, where the dealer or scout usually makes money on their deal straight away, the retailer will sometimes have to wait months before realizing any gains on a property. 

To make money as a retailer, the investor must be experienced in renovations including being able to accurately estimate how much a renovation or other repairs are going to cost. This is crucial, because a wrong estimation on the cost of renovating or fixing any particular property can result in a loss. Naturally, the retailer must also have an excellent knowledge of the current market conditions prevailing in the area in which the property is bought. 

As more time and effort is required from the retailer on any particular deal, they are limited in the number of deals they undertake at any one time. Therefore, the successful retail property flipper will also wear the hat of a dealer. They will evaluate each deal in order to determine whether it will be better to act as a dealer or retailer in that particular case.

 

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