Real Estate Flipping - Is Flipping Real Estate the smartest way to get started in property investing?

"Flip This House", "Flip That House", "Property Ladder",... and on and on...

In the last couple years you and I have been hammered on TV with property flipping suggests that depict these people making outrageous profits flipping homes and making it look easier than heck.

So, is this flipping stuff real? Well... it sure is. You will find countless people on the market making a darn good living flipping homes. But... the shows on flipping are darn deceiving as it pertains to the "reality" of property flipping.

Is flipping property the best way to obtain starting in property investing? I'll let you select for yourself. However, in my opinion, for many people, especially in the present down markets (not all markets are down... you can find actually some doing really well), property flipping is not the best way to get started in property investing.

Here's why:

First, let's clarify two forms of flipping.

 

  1. The Fix and Flip - Where you purchase property, rehab it, and sell it to a retail buyer. The kind that's on the TV shows.
  2. The Wholesale Flip - Where you purchase property (or obtain it under contract), find a wholesale buyer, and flip the contract. The kind that's less glorious... but has a lot of profit it... with a heck of a lot less risk.

In my experience, the Fix and Flip method is not for many newbie's... although that's the sort of property investing you see on TV all of the time.

 

Why?

 

  • You need a good comprehension of rehab costs
  • You need to have good funding... either from a private lender or a bank (private lender is preferable)
  • You need to have the ability to float the carrying costs in the event that you can't sell the property quickly
  • If you never calculate your costs just right... there may possibly not be a whole lot of room for error... and room for error means greater risk on you!
  • Industry is in a downturn... so might there be less retail buyers on the market for middle income houses... which is what a lot of people start off flipping

There are numerous people on the market making an excellent living flipping... but many of them started a long period ago... and have many flips under their belts.

 

They have systems down, have marketing channels to get buyers, have solid lending sources, etc. Not saying that new property investors cannot do all of the above... YOU CAN!

But, you can find better methods for getting started in property investing that permit you to get in with minimum risk or money, and allows you to learn the Fix and Flip business before you ever take a huge money commitment to accomplish so.

What's the single simplest way (in my opinion) to get started in property flipping to minimize your risk and shorten your learning curve... whilst making nice money in the process? Well... obviously option #2 from above: The Wholesale Flip - or in other words... wholesaling property, flipping houses for quick cash, flipping contracts, etc.

Once you wholesale property you do everything a flipper would normally do... except actually repair the property and sell it to a retail buyer. But, you do not have the chance or time commitment a fix and flipper has.

Basically, you as a wholesale property flipper (or wholesaler for short), find properties that want work that you can get at a big discount and flip them for a fee to a rehabber who will do the work.

Your job is to find the properties, analyze the numbers to find out the repairs needed, create an offer that allows both you and the rehabber you will sell to to make a profit, and sell the contract to a rehabber who will in truth make the repairs.

Often times property investors could make between $2,000 and $20,000 on a wholesale deal. So, for a low to no risk way to get started in real estate... you can find huge profits to be had.