In the last pair years you and I have now been hammered on TV with real estate flipping demonstrates depict these people making outrageous profits flipping properties and making it search simpler than heck.
So, is this flipping stuff true? Well... it positive is. You will find countless people on the market making a darn great residing flipping homes. But... the television shows on flipping are darn misleading as it pertains to the "fact" of real estate flipping.
Is flipping real estate the simplest way to get starting in real estate investing? I'll let you choose for yourself. Nevertheless, in my opinion, for most people, specially in today's down markets (not all markets are down... there are actually some doing really well), real estate flipping is not the simplest way to get going in real estate investing.
Listed here is why:
First, let's explain two types of flipping.
The Correct and Change - Wherever you get real estate, rehab it, and offer it to a retail buyer. The type that is on the TV shows.
The Wholesale Change - Wherever you get real estate (or obtain it under contract), look for a wholesale customer, and turn the contract. The type that is less glorious... but has a huge amount of profit it... with a heck of way less risk.
If you ask me, the Correct and Change technique is not for most newbie's... even though that is the kind of real estate investing you see on TV all of the time.
You need a great comprehension of rehab expenses
You will need to be able to move the holding expenses in the event that you can't offer the home quickly
If that you don't determine your expenses only right... there may possibly not be a lot of room for error... and room for error means larger risk on you!
The marketplace is in a downturn... so are there less retail customers on the market for middle money houses... which will be what many people start off flipping
There are lots of people on the market making a good residing flipping... but many of them started many years ago... and have several flicks under their belts.
They curently have techniques down, have advertising stations to get customers, have strong financing places, etc. Not to say that new real estate investors cannot do all of the above... YOU CAN!
But, there are better methods for getting started in real estate investing that permit you to enter with little if any risk or money, and enables you to learn the Correct and Change business when you actually have a enormous money commitment to do so.
What's the simple simplest way (in my opinion) to get going in real estate flipping to minimize your risk and reduce your understanding curve... whilst making wonderful money along the way? Well... demonstrably choice #2 from above: The Wholesale Change - or in other words... wholesaling real estate, flipping properties for rapid money, flipping contracts, etc.
When you wholesale real estate you do everything a flipper might typically do... except actually repair the home and offer it to a retail buyer. But, you don't have the danger or time commitment that the repair and flipper has.
Basically, you as a wholesale real estate flipper (or wholesaler for short), find properties that want function that you can buy at a big discount and turn them for a price to a rehabber who is going to do the work.