How to Find the Best Houses to Flip for a Profit
Flipping real estate refers to buying property at a low price, fixing it up where necessary, and then selling it for a profit. Prospecting or knowing where to look for underpriced properties is a key element in the process of profitably flipping real estate.
Finding Leads for Properties to Flip
Search the Multiple Listing Service (MLS).This database contains all houses for sale whether under a listing contract by an agent's brokerage or by any other participating broker. Your real estate agent can set up an advanced search in the MLS listing requirements that you would desire in potential houses to flip.
- For example, tell your real estate agent (or use the MLS search function on the MLS.com website) that you’re looking for houses that are at least 3 bedrooms, 2 bath; minimum 1,300 square feet; and priced between 0,000-5,000. You can get much more specific with the requirements if you want. For example, ground pools, extra storage, 3 car garage, built before 2005, etc. Just remember that the stricter your requirements are, the fewer houses you’ll get a chance to look at.
- The MLS website also has a "Find Foreclosures Near You" option that could provide a listing of lower priced properties.
- Your real estate agent can also send you a link to a collaboration center where all of the listings that meet your criteria are organized. In the collaboration center, you can separate the listings based on which ones you're interested in and which ones you don't like. If a new listing is added to the collaboration center, you'll be immediately notified over email.
Contact and/or join Real Estate Groups.Joining a Real Estate Group puts you in the middle of the local real estate players. In addition, when you are speaking with people in the group or talking up your next project, someone usually has a project in the works and is looking for partners.
- You might also hear about properties an investor is trying to off load because they don’t have time to flip it or just need their money out of it for personal reasons. You can make a lot of friends and valuable business associates from these types of groups.
- To find a Real Estate Group in your area, do an online search for "real estate investment clubs."
Explore tax auctions.Tax auctions and sheriff’s sales (properties being sold due to unpaid property taxes) are another way to acquire property for flips. You can successfully flip property using sales of properties due to unpaid taxes but they’re a bit more risky. You have to really know what you’re getting into and run your own "comparables" so you know with certainty the price you should walk away with at the closing table.
- For unpaid tax sales, you will have to pay all back taxes owed on the property.
- "Comparables" refers to the price that properties are selling for that are similar to the one you are considering in regard to location, number of bedrooms and bathrooms, square footage, condition, etc.
- You can find out about tax auctions and sheriff's sales at the website of your county or city. Before the sale you must first register as a bidder. Sales are made at a public auction and buyers will have to bid on the property. You might want to consult beforehand with the attorneys who are representing the financial institutions whose actions resulted in the properties being brought for sale.
Researching Properties From Traditional Sources
Contact home wholesalers.These are companies that usually acquire properties through tax sales or short sales and sell them to investors. Companies like this usually have a list of buyers like you that are looking for homes to flip, hold, or buy for some personal reason.
- After they acquire a property, home wholesalers will write a brief description about it. Enter an internet search on ”real estate wholesalers” into your favorite web search engine you’ll be inundated with firms. They usually only deal with people that have cash or approved asset-based loans (loans that you have put up collateral for such as another property).
Read the local paper.Believe it or not, people still do (as of now) advertise to sell their homes in the local paper. You’ll most likely find more “Open House” ads but they’ll usually list when, where, and the sale price. You can find a lot of mobile homes and condominiums for sale by owner (FSBO) in the local Penny Saver newspaper.
Explore probate sales and estate sales.This is a great way to pick up homes that are in decent shape at a discounted price. Probate sales are properties being sold by a probate court because the owner did not have a will or there are no heirs. This process is more of an advanced system to acquire houses but it can be invaluable once you understand the risks.
- There are disadvantages to buying a property through a probate sale. You will need to put down a 10% deposit that is not refundable if you can't close on the sale for any reason. Also, seller disclosures about known defects are not required. And until you're under contract, the house continues to be marketed, so you have to be ready to match or top any counter-offers.
Send mailings to absentee home owners and owners who have inherited property.If you see a run-down property and believe it might be a rental, you can find the name of the owner from your town clerk. Read the obituary section of the newspaper for leads on homes that may be for sale due to the death of a loved one. Then send a letter offering to purchase the property.
- To find the address of absentee homeowners and those who have inherited property, visit .
Working With Attorneys for Potential Properties
Partner with probate attorneys.These lawyers work with families going through the probate process to liquidate assets (houses, cars, stocks, bonds, etc.) to distribute to surviving heirs. Getting to know probate attorneys can open up a wealth of opportunity with virtually zero competition in acquiring the property. Most of the time families just want to liquidate assets from the estate as quickly as possible to receive their inheritance.
- You have a VERY motivated seller in this situation. You can usually use their desire for a quick sale to your advantage by buying the property at a greatly discounted price if you can close quickly. It also helps to have the attorney to nudge them along.
Partner with divorce attorneys.As you can imagine, people tend to get a bit irrational and spiteful during the course of a typical divorce. At times some people tend to not care about what they receive just as long as the other party receives even less. There is often a home for sale as a result of a divorce.
Partner with bankruptcy attorneys.These attorneys will have clients who are filing for bankruptcy and may be interested in selling their home before or after they file. While unfortunate for the bankruptcy filers, the leads from this type of attorney could be very lucrative.
- You can also find notices of bankruptcy sales in the local newspaper as there is a requirement to post notice before any sale due to bankruptcy.
Partner with real estate attorneys.In addition to handling real estate closings, this type of attorney deals with fixing problems people are having with their partnerships, co-ops, joint ventures, etc. They will also know about real estate deals that end up not closing for a variety of reasons, and you can be right there to make an offer to the sellers.
Video: How To Find Houses to Flip
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