Flipping Ugly Houses

Real Estate Investing Article
Become a wealthy real estate investor: how to find, and fix bargain houses

Flipping Ugly Houses
By Jeanette Joy Fisher

Many real estate investors become wealthy by "flipping houses," or buying and selling swiftly for profit. Not all flips are fixers; however investors make millions turning ugly houses into dollhouses. Then again, some inexperienced investors lose money buying houses that just don't turn a profit.

If you're looking to get started investing in real estate by fixing and flipping houses, you'll want to know how to find a fixer.

Tips to Help You Find a Fixer with Big-Bucks Potential

Know Your Market

First, explore your market so you know a deal. Look at houses for sale in your area. Keep track of sales and how long the houses take to sell. Ask the selling real estate agent about the terms of these sales because this helps you understand how sellers market their property (some of this information is public record). For instance, if a seller paid closing costs for the buyer, did the price rise from the listed price accordingly? Or, did the seller come down on the price and then pay the buyer's costs, too? Pay attention to the sales that sell quickly. What home features and financing options encouraged the quick sale?

Also, look at model homes. Buyers often buy resale homes because they can't wait for a new home to be finished. Or, newer homes cost too much. But these buyers dream about special features new homes offer. Visit model homes and take notes on how details like a water fountain or a new state-of-the-art appliance makes a house sell itself. When you remodel your fixer, you'll know what turns buyers on and you'll make smart makeover choices.

Know When "Ugly" Means "Profit"

When you first start out in your real estate "flipping fixers" business, you'll want to look for houses needing only cosmetic work. Look for houses that only need cleaning, painting, and carpeting. You’re going to have to use your imagination when viewing these homes. Try to visualize the finished dollhouse as you look at structural features and the neighborhood. We like to buy bargain houses in family neighborhoods.

Don't be afraid of stinky houses that show horribly. Look for fixers with peeling paint, holes in the wall, stained carpeting, and trash left behind. One of our houses required THREE huge dumpsters. But, we made over $100,000 for our efforts. We literally opened the upstairs windows and through the trash down. Remember, these houses won't look good to most buyers, but other investors see them as gold mines.

Know When "Ugly" Means "Pass"

When you're new to real estate investing, always remember your limitations. Use caution when considering houses that need structural repairs. My husband Brian replaces walls, plumbing, structural beams, sub-flooring, and electrical systems, but he acquired those skills after years of experience.

If you find a house with structural problems, get estimates from reliable contractors to do the work. If the walls have too many cracks and bumps, you may need to hang new sheet rock or hire a professional refinisher. Look for signs of plumbing problems such as water stains under sinks and loose flooring, and get estimates for professional repairs. Take professional estimates into account before deciding whether or not to purchase a fixer. Any big expense decreases your eventual profit.

Turn "Yucks into Bucks"

Why would anyone want to do this hard work? How much does the average investor make? In Philadelphia, real estate investors buy houses expecting a profit of about $30,000. In Southern California, many investors make $50,000 to $100,000 on each house.

When you find a garbage-filled, flea-infested doghouse in a family neighborhood, take your bug spray, hold your nose, and get ready to make a difference, in the neighborhood and in your bank account.

You can make a fortune fixing and flipping ugly houses. Know your real estate market. Know when "ugly" means profit in your pocket, and when to keep looking for the house with the hidden gold mine.

Learn more about turning a "Doghouse to Dollhouse for Dollars"

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