What exactly is ‘flipping’ and who does the property get sold off to? Our plan is to buy, rehab and put the home back on market, but I’m curious what flipping is.
To ‘flip’, would I still need to secure a purchase loan and acquire title before handing it over to another buyer? Or is flipping more like a “finder’s-fee” arrangement to save someone else leg-work? What are the pro’s/ con’s of doing either??
Flipping is kinda slang. You can fix and flip and not buy at all and flip like flip the contract. It is like beaver says just turning a quick buck. I just saw a duplex get a quick paint job and the trash hauled off and put back in MLS for a higher price. They painted rotten wood and all and did not even attempt to do any fix up at all.
I have been doing the long haul slow fix up and complete rehab and resell or fix up to keep as well. I did sell one that I had under contract and could not close. I sold it to another investor who fixed it and leased it and is keeping it for long term appreciation.
Some flippers get them under contract and run an ad like Cheap Fix Up. Seller desperate . Must close Quick. Something catchy and sell the contract or do a double closing depending on the profit. A rule of thumb is about $5000 or less you would just assign and is you can earn more to do a double close.
So, first I get a contract for Sale, from the Seller, to buy the house… then I sell that contract to another Buyer at a minor profit… am I understanding this right?
What’s the going rate for profit margin on flipping? $5,000? A percentage? The new buyer I sell the contract to… that’s another person in real estate investment as well looking for a deal, right? Are they accustomed to honoring the contract I have with the Seller, once I’ve made a Contract with earnest money deposit?
What sort of protections do I need to have in place apart from an Intent to Purchase (Sale) Contract? Any good contracts already pre-written?
Sorry for the multiple questions, once I do my first deal I figure this will all make more sense. Thanks for any help on these items…
To a most lenders if you are not on the title for more than a year they consider it a flip. When you talk with a seasoned investor about you wholesaled a property your telling them you got the property under contract, got a second contract between you and an end buyer. The end buyer get financing, you do a double close and you come to the table with no cash and leave with cash. The reason you have no cash is because your using the cash you get from the sale of the house to your buyer and the title company treats you buying the house from the org. seller as a cash deal, the cash the end buyers lender gave you.