Flipping
Different Ways to Make Money from Flipping Real Estate
By BuyIncomeProperties.com
Jun 1, 2006, 15:36

Real estate investors who flip properties make their money by buying a property and then selling it again straight away for a profit. Here we show you some different ways that you can make money by flipping real estate. 

One of the ways to make money from flipping real estate is to search for suitable properties and then sell the information to another investor so that they may make the investment and earn a profit. This can provide a novice real estate investor with some valuable experience and knowledge before they get started on the more profitable, but riskier side of flipping real estate – making deals for themselves. It is also a great way to start building capital for further investment in real estate. Scouting for properties for other investors is how many successful investors have made their start in real estate investment. 

Scouting involves searching for properties that show some sign of potential profitability. Properties that appear run down, are boarded up, have overgrown lawns and gardens or are left unoccupied are perfect examples. These properties can often be bought at below market rates and can be sold quickly by a flipper for a quick profit. 

When you find such a property, gather as much information as you can about it. Find out who owns the property, what are the owner’s plans for the property, do they owe money on the property and any other information that will help an investor determine whether the property is worth looking at for investment.

Any investor who plans to flip the property for a quick profit, or to make repairs or renovations and then sell the property onto another investor or owner-occupant will need to know:

• the full address of the property
• the property owner’s name and contact details
• the current condition of the property
• the current financial situation of the property, and 
• whether there are any liens on the property. 

This is all information you can obtain on the property by either asking the owner, neighbor, or searching through public records. 

When you have gathered this information, you can then search for an investor who is looking for a property to invest in. You can usually sell this information for between $500 and $1,000 depending on the potential profitability of the property. 

If you want to make more money, then you may consider signing a purchase contract yourself and then either selling the purchase contract onto another investor or closing on the property yourself and then selling it to another investor. 

If you choose to sell the purchase contract, you might expect to make between $1,000 and $3,000. Alternatively, if you decide to on sell the property yourself, you could make even more money. As you become a more experienced real estate investor, you will learn which the best option for each individual property is. 

When you decide to sell the property yourself, you will have to decide whether you are going to make any repairs that may need doing or selling the property as is. If you decide to fix the property, make sure you accurately estimate how much time and money the repairs will require. If you misjudge this, you can lose your profit margin on the deal. You should always consider cleaning the property, so that it is in a presentable state, you don’t need to get it spick and span, just so it looks presentable to any potential investor. 

The idea here is to sell the property as quickly as you can, so sell it for a reasonable price that will entice potential investors. Sell it quickly and you can move straight onto your next deal. That’s how you make your money. And you can make good money from this. In fact, flipping real estate in this way can earn an experienced full time investor upwards of $15,000 per month!

Now we’ve discussed how you can make money in real estate by scouting for potential properties and either selling the information or investing yourself and then flipping the property straight away for a profit. A third option is to renovate the property and sell it for maximum price to an owner-occupant. This is the most risky, but provides the opportunity to make the biggest profit. You should consider this once you have become experienced in the previous two forms of flipping properties. 

If you are going to make money by firstly renovating the property, then you need to be able to accurately determine how much any renovations are going to cost in both time and money. If you underestimate the costs of the renovations, or the time it will take to complete them, you can easily lose your money on the deal. You’ll also need an excellent knowledge of the local real estate market as you are trying to make more money from the deal and are not therefore selling at a discount. While renovating and selling to an owner-occupant can be far riskier than the other two options, it does offer the potential for the greatest rewards. And as a property investor, this will eventually be your ultimate goal.