Which Type of House Flipping Do You Think Will Work for You?

Getting out of our comfort zones and taking action is terrifying for everyone, and facing that fear is the only way to overcome it. That fear will not be alleviated by studying. Doing is possible and will be done. It's much easier to begin by taking small steps and venturing out. This will enable you to quickly recognize what is critical for you to know at that point in your learning.

Here are 6 options when you decide to venture into flipping. I recommend picking one or a few of these strategies and concentrating on them. It would be best if you become an expert in the techniques you've chosen, and the only way I've found to do so is to practice. You must take action, expand your knowledge and learn from other people's mistakes. Don't be duped. 

Very Little Money to Start and/or Need Money Fast

1. Wholesaling 

Investors use real estate wholesaling as a short-term business strategy to make large profits. Contrary to popular belief, real estate wholesaling is unrelated to retail wholesaling. The wholesaler sells a large quantity of goods to a retailer, who then repackages and sells it to consumers at a much higher price. The wholesaler can charge the retailer a much lower price because of the volume of goods sold to the retailer.

Real estate wholesaling doesn't involve the sale of multiple properties at lower prices at all. It's an entirely different kettle of fish. In this strategy, the wholesaler contracts a distressed home with a seller, shops it around to potential buyers and then assigns the contract to one of them.

2. Bird Dogging 

It is the process of locating serious cash buyers to whom you can sell leads. Some will pay you a small fee for each lead (the seller must be motivated to sell their home, and investors rarely pay for leads involving properties listed by Realtors), and others will pay you a referral fee if and when the deal closes. You don't have to see the house or negotiate anything with bird-dogging, except the payment from the investor you're dealing with.

Money Saved Up, But Not Enough to Buy a House

3. Fix and Flip Retail 

Borrowing from private or hard money lenders is referred to as rehabbing. These are lenders who are willing to lend on investment properties in exchange for a high rate of return. Just make sure to shop around to find the most affordable options. Always keep in mind that everything is negotiable.

4. Prehabbing

This is when you buy a house and only do a demo and clean-up work to sell it to an investor for a higher price. Of course, some people will fix the issues that keep most buyers away (even if they are investors). Repairing fire-damaged areas, leveling foundations, and rewiring or re-plumbing the house are examples of these tasks. But, if you're going to do all of that, you might as well rehab the entire house.

Enough Cash to Buy One or Several Houses for Investment

A Lot of Pretty Houses with Little Equity Available

5. Short Sales. You can do short sales if you're in an area where there are many people behind on mortgage payments that have little equity. Short sales can take months and require a great deal of effort. They can, however, be highly profitable. If you decide to go the short sale route, make sure you tell the seller everything you're doing and the possible outcomes (one of which is that the lender can wait until the last week or day before the foreclosure auction date to tell the seller they won't accept the short sale), as this may influence their decision on how to best deal with their problem. You should also warn them about the potential tax consequences and the possibility of a judgment against them for the amount of the discounted loan.

Fix. Rent. Sell 

6. Or Turnkey property is a fully renovated home or apartment building purchased and rented out right away by an investor. A turnkey home is typically one that has been purchased from a company that specializes in the restoration of older homes. Those same companies may also provide property management services to buyers, allowing them to spend less time and effort on the rental.

Whatever method of house flipping you choose, resist the urge to focus solely on volume rather than profit. (Don't be greedy, we're making money here the intelligent way) All that matters is how much money you're making and how much work and risk you're taking. Many people fall into the trap of wanting to do X number of deals regardless of the circumstances, don't be one of them.