Ok I have been in Real Estate for 2 years. I would like to make an investment, but I'm not sure if I (1) Should invest in a REO and flip it. (2) Buy an REO live in it for 2 years and do work on it and then sell or (3) Buy a dublex? Any advice..

buy low and sell high.
Now is a great time to buy low. I think January and February are going to be fabulous times to buy low. It's hard to say which type would be best for you to buy...it all depends on how much you have to pay, upside potential, etc.

Why are you just focusing on the REO side of it?

Your goals will be about how you want to grow your portfolio and do you want to invest locally or nationally.

I don't know your market so I couldn't say what is a better investment.

My personal philosophy is in the beginning build cash flow by flipping a bunch of properties.Then for every five you purchase keep 1 to 2 of them to rent if it makes sense.

Over time your residential portfolio will build and you will start acquiring commercial properties as well.

The problem with buying rentals right out of the gate is if you have 3 homes and 2 become vacant because you had to evict you are now in a negative cash flow situation.When the real good deals come along you are now STUCK with these properties and your credit lines are maxed out.

Flip First and build up cash unless you already have an ungodly amount of money which is not typical for most new investors.

trailer park

Rentals are good for long term, flips are obviously good for short term. I think the best thing to do right now is do a few flips get some cash for the short term and pick up a rental or two once you have some cash to put down.
On another note, why only focus on REO? My experience has been that the majority of the time these do not offer a good at all.

If you are fairly limited on cash and you real estate market is not flourishing you might try your hands at real estate wholesaling. Real estate wholesaling works well in any market and is about as close to risk free as you can get.

You have to invest according to your circumstances and your resources. If you have little cash to invest, a quick flip could work out the best. Just get it done and over with quickly and make money on your first deal. Build confidence and find a great team to work with. You will need to know the market, you will need financing unless you have cash, you will need to know who to sell to and how. If your market is in a slump, id go for the quick flip.

Best of luck!

Quick flip is the way to go. If you live on a property for couple of years, fix it up and then sell it, that would go with a long term goal and would be a slow process. With flip you can get in and get out quickly and move on to next property if everything works out. With flip you could end up doing a few properties in a year but there is a risk involved in that. There are Mortgage companies that do 100% financing and even finance the repairs.

Now you can do IMO.
Buy low sell high.
Buy and hold. The market now is down, but in a few years will pick up and price will go up.

Real estate whole selling what is that never heard that term around here before?

Wholesaling is also called buy low sell low. You find a house worth $200k fixed up, buy it for $100k and sell it as-is to a rehab investor for $120k.

Different definition here...could be based on location.

To me, wholesaling is when you find a deal and put it under contract and then sell (or assign) the contract to a rehabber who then closes on the property.

Example:
Find a deal where the after repaired value is $200k that needs $10k worth of work.

Know that in many areas a rehab investor would buy this between $125k - $130k. So you need to put it under contract for less than that.

You write up a purchase offer for $120k and have it accepted. Then you assign your contract to the rehabber for $125k...you make $5k at closing.

There are other ways to doing this but this is the simplest explanation.

Chris

In my area, flipping is when you assign or wholesale a contract. Rehabbing is when you buy a house and fix it up for resale.

Why not buy low and cash flow those sons of guns? Then when the market goes crazy again sell them off?

Since in here we are talking about flipping properties, I was just wondering that a buyer can always check out the original home price on the internet and then it can cause problems in the deal, right. Any solutions or am I just wrong in my thinking? Suggestions please.

I did a flip a couple years ago, buying a house for 21K and sold for 56K a few months later. The buyer stated, "I know what you paid for this." My response, "So what? I fixed it and it's now worth market value." Another investor in my area routinely picks up foreclosures for 25-30K and sells them fixed up for 80K. I've seen his spread be as much as 100K. He used to offer "owner financing" and sell for more than market value (and then sell the loans), but the subprime meltdown has affected him and he's no longer offering that finance option. But he's still in the flipping business.

Hello Everyone,

There is real estate contract flipping and then there is real estate flipping. They are two different instruments. Contract flipping involves locking prospects into a purchase, option or trust and simultanously assign or sell the right to perform
for a fee.

There is owner finance flippling where a seller creates a trust deed/seller financed note and simultaneously assigns or sells that contract to an investor or financial institution at closing.

Real estate flipping typically involves short term holding for the purpose of rehabbing/re-positioning for resale. Based on capital gains objective this can range from 1 day to over 2 years.

Finally, there is simultaneous real estate flipping. Here's where the investor enters into a purchase, option or land trust and instantaneouly sell or assign his "right" to perform on the contract. This is often done simutaneously at closing. There is no holding time.

The term wholesale flipping typically relates to finding a deal and simultaneously selling the right to perform to an investor for less than retail profit. Wholesale flipping does not require the use of the seller's money, credit or traditional closing. In my experience, wholesale flipping typically involves an investor bird finding properties for rehab investors. Wholesale flippers seldom use their own money or time to fix properties. Their goal is to profit a few thousand dollars from finding deals for REHABBERS.

This is most descriptive of a true wholesaler.



SOLDHOMES, if REO is in abundance you can flip it or wholesale to a REHABBER. If you find a deal of the century, you can live in it. An investment in a duplex should be assessed based on the area and your financial motive. Specialists tend to do one thing and one thing extremely well and a generalist will use all the tools at the right time. To each his own.

Hope this helps.

Think about locating great flip (or wholesale flip) properties, determine 3 or more exit strategies that could build up cash reserves, then consider the possibilities once your capital is secured. Wish you the best and a prosperous future!

BUY HIGH, SELL HIGHER using seller financing such as lease options, lease purchase, wraps, AITDs, contract for deed, land contracts, installment land contracts, equity share, subject 2, etc

these strategies work on properties with no equity regardless if the payments are current or not. why? because none of this requires any of your credit because the seller already qualified for the loan based on their down payment, credit, finances, etc. they'd have to keep the loan in place and wait for their loan to be paid off sometime in the future. just make them a full price offer or whatever they owe on the loan balance and find someone else to take over payments. it doesnt matter what the market does just as long as you have a tenant covering PITI and the investor getting positive cashflow.

those methods can be used as an entry or exit strategy. majority of my competitors are in the foreclosures, REO, short sale areas.

while majority of the investors are low balling sellers, only a handful of us are making full price offers and getting them under contract with a non exclusive option which allows us time to advertise for our partner (buyer's who've been turned down with conventional financing but has 3-10% in cash to put up front and with an owner's mentality).

Hello Alvin,
Saw your comments about R/E Agent investing. Question: what does AITDS stand for?

all inclusive trust deeds.

it deals with a would-be buyer who cant qualify for conventional financing to put up a down payment in exchange for the deed. this is also called a wrap around where the seller has an underlying interest rate of 5% and can increase the rate to 9% which allows them to cash flow above their PITI. they also mitigate the risk by collecting 5-15% down. most lease option investors dont ask for this high down payment but rather a small non refundable option fee. lease option investors attract people with renter's mentality. AITD aka wrap aka owner financing attracts people with an owner's mentality.

investors who are doing these types of owner financing are involved as a middle man via double wrap or sandwich lease options. they acquired an interest as a principal and theyre reselling their interest/terms to someone else to take over the payments. seller may get to keep their existing equity by freezing it and waiting for the sale or refinance. investor gets to keep the positive cashflow and some up front money and some future appreciation(if any). look up these keywords on google and youll find some good resources.

in regards to AITDs/wraps, usually the seller would have to foreclose on the buyer if they default in which title is compromised and due on sale clause maybe triggered. its doable but dangerous if you dont know how to mitigate the risks.

thats why most brokers wont allow their agents to do these because of the liabilities.

let me know if you have any what if questions

if you understand how to do these alternatives to seller financing ethically, legally and safely, you can be very dangerous among your competitors because most agents cant do these. they need to be trained with an investor's mindset or have a very dynamic broker who also does creative investing.

think about all the buyer turn downs that have 3-10% that are unable to qualify for a new purchase loan. these are the leads that can be turned into a lease option, wrap, AITD, contract for deed, land contract, equity share, sub2, etc regardless of credit and no bank qualifying.

I learned something new. You find those deals in GA... I'll take 5!

Buy and flip is good and you don't need REO properties only. You can find all different kind of properties. What you have to have in your mind is that we are in depreciating market and flipping properties is dangerous. You have to make sure if the market is depreciated in your area and what is the %. Make a good research before you go after it.

You have a lot of options and all of them could work, you just need to define your priorities and the market in you area. I prefer long run investment but I see a good deal for flipping I do it. If you need fast cash try to flip but if you can't you can ever rent that property.

If I were you, I would not buy anything at this time, especially if you are a new investor. this is no time for newbies to go into the water. This market is destined to go down as the worst real estate crash in our history! I know you won't hear that anywhere else on this board, but that is the truth.

Try to get into the middle of transactions and take a piece as it goes by without ever taking ownership, like short sales. http://WeDoShortSalesForYou.Com
Or team up with a loss mitigation company and make money simply by referring homeowners facing foreclosure to them and making a fee.

Keep an eye on the # of permits for new housing in your area. That is the best indicator of what the pros think about the market a year or so out. Buy when you see the number of permits rising steadily. Be patient, it probably won't be for another 3-4 years before that happens!

Good Luck!

Bill Young

i work with 2 investors. one of htem has 2 settlements this week. one for the sale of one of his flips and the other settlement is the purchase of his next project. he is making 86k on his side of the hud and his expenses are around 17k. he owned the property 91 days on the day of settlement.

you can make money and it is a great time to invest, just depends on what kind of investing you want to do.