Introduction to Fast Turn “No Equity” Homes

The previous articles are what most people think of when they hear the term “flipping houses” for profits. The buy low / sell high method is as old as time and usually requires very little creativity. You must find a good deal, fund it, fix it, and flip it to a new retail buyer for cash. This is a very profitable side of the real estate business but by no means the only, or even the best, way to successfully fast turn houses.  Our next few articles will deal with how to take advantage of no equity and even negative equity homes.  There is a whole other world of profits available to you in the real estate world that very few investors will ever understand or try to implement. This end of the business is buying at higher prices but with attractive terms. When you buy with attractive terms you can also sell using creative terms, creating chunks of cash up front, monthly cash flow, and another chunk of cash a couple years down the road. This end of the business will require you to understand financing real estate at a higher level than just the buy low / sell high business.  Most of the properties in this side of the business are in nice shape, requiring little to no repairs.  My goal is to help you down the road of becoming a real estate transaction engineer.  This would mean that any motivated seller that comes your way you will have the tools to make them an offer (or several different offers) that would make sense to both of you to get a successful deal closed. I want you to be able to make an offer on any deal that comes down your lead pipeline that is owned by a motivated seller. If you only know the ugly or semi ugly house business you are limiting yourself and your income potential.

Think of these upcoming articles as a continuation of the last several real estate articles about flipping homes, but starting after the “finding” article. The “finding” part is almost identical in either case; you are looking for flat out motivated sellers that have problems that you can solve with your offer. This will open up possible deals you could have never done with just the buy low and sell high method. When a motivated seller is talking with you and you quickly realize that they owe $195,000 on a $200,000 house, will you be able to buy this at a huge discount? Almost never—except for the occasional short sale (I will not be discussing short sales because they are not nearly as profitable or common as they once were) or if the seller is willing to bring $50,000 to the closing to sell to you at this time; which will happen about never.  For example: the seller has to relocate and is motivated but cannot sell their house at a cash price that will make sense to us and our criteria. For most investors that is the end of the conversation because they are one bullet hunters; they are the “Barney Fifes” of the real estate investment world.  I do want to add one extra strategy for finding the kinds of homes we are going to talk about in this chapter. A great pool to fish in will be expired listings from your local MLS system. You will either need to be an agent with access to this system or work closely with one that is willing to share information with you in exchange for your loyalty when you or someone you know needs a good real estate agent. A great lead source (for the kinds of houses described here) are expired listings that occur every day in your own backyard. Listings expire for many reasons but one of the most common is that the list price is too high. Why is it too high? Again, there are many reasons including a thick-headed owner that does not understand the free market telling them that their house is listed too high in relation to other similar properties. The condition of the home is secondary. After all, you can always adjust the price to accommodate almost any problem with the condition. Many times the price is too high because the seller owes too much on the property and is trying to sell the home for enough to pay off the house and pay a real estate commission. If they are unsuccessful with this route they will need other solutions. Some in this position will just stay and wait but many can’t afford to stay and wait and must move now!  Tune in next week for part two of this article on how to profit from over financed properties.