Sell The Property On A Lease With Option To Buy

Category: Finance, Real Estate.

Flip Strategy# 1: Buy, Fix and Flip.

This process involves buying a property that needs work, then selling on, fixing it up the retail market, to a person, that is who will live in the property. Let s start with the most common form the good, old fix n flip. This method is tried and true, and works very well. The danger in fix and flips is either paying too much or underestimating repairs. You can easily make$ 15- $50k on one deal, depending on your market and how good you are at finding bargains. Be very conservative in your fix- up costs and length of time it may take to resell. Flip Strategy# 2: Buy, Refinance& Lease/ Option.

Also, make sure you include in your analysis the cost of paying a real estate agent to sell the property. Rather than sell the fixed up property for all cash, sell for terms. If you did the math correctly, you should have little or no money in the deal. Once you have completed the rehab, refinance the property at its new appraised value. Sell the property on a lease with option to buy. When your tenant exercises his option to purchase, you reap a larger profit, since you don t have to pay a broker s fee.

The rent payment from your tenant/ buyer should cover your mortgage payment( if not, consider an interest- only or adjustable rate loan that is fixed for 3 years) . If the tenant exercises his option after 12 months, you benefit from a lower capital gains tax rate. Don t like to do fix- up work? Flip Strategy# 3: Buy& Flip As Is. Consider selling the property" as is" as a light fixer upper. This is especially the case with houses in" transitioning" neighborhoods. If the local real estate market is hot, you should be able to sell the property in poor condition just a little below market.

Make sure, that you acquire, of course the property sufficiently cheap enough that you can sell it below market quickly and still profit. Strategy# 1, the fix and flip, which means there, is very popular are a lot of investors looking for rehabs. Flip Strategy# 4: Wholesale. You can buy the property cheap and sell it for just a few thousand dollars more to another investor without doing any work. Flip Strategy# 5: Pre- Construction. You won t make nearly as much as the rehabber, but you will realize your profit quickly.

In very hot real estate markets, prices are appreciating as much as 2% per month. If it takes 12 months for the development to be complete, and the condo price is$ 500, you could make, 000$ 100, 000 or more in one year! If you time things right, you can put a contract on a pre- construction house or condominium, then flip it to someone else when the development is complete. Of course, the opposite is also true- you could end up losing money if the local economy tanks and you end up with a worthless condo that you can t sell for more than you paid. Flip Strategy# 6: Scouting. Use this approach very carefully. The Scout is an information gatherer, so not technically a property flipper.

Many people get started as a Scout for other investors because it does not take any cash or prior knowledge to look for distressed properties. He is the" bird dog" who finds potential deals and sells the information to other investors. The Scout finds a property for sale, gathers the necessary information, and then provides this information to investors for a fee. The Scout can expect to make five hundred to one thousand dollars each time he provides information that leads to a purchase by another investor. The fee will vary depending on the price of the property and the profit potential. Flip Strategy# 7: Illegal Flipping. Illegal property- flipping schemes work as follows: unscrupulous investors buy cheap, run- down properties in mostly low- income neighborhoods.

OK, I am not advocating this approach, because it is illegal. They do shoddy renovations to the properties and sell them to unsophisticated buyers at inflated prices. The end result is a buyer that paid too much for a house and cannot afford the loan. In most cases, appraiser and mortgage, the investor broker conspire by submitting fraudulent loan documents and a bogus appraisal. Since many of these loans are federally insured, the government authorities have investigated this practice and arrested many of the parties involved. The fact is, flipping as I described in the beginning of this article is not illegal.

As a result, the public perceives is flipping to be illegal. Loan fraud in the process of flipping is what is illegal, so don t confuse the two. The other six ways to flip are very legal, very ethical and very profitable!

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