There are at least a dozen different ways to find a house to flip. Some are obviously better than others, but all of them have some sweet spots for finding potential flippers.
12 Ways To Find A House To Flip
- Bandit signs – You’ve probably seen all the “we buy houses for cash” signs adorning intersections and telephone poles in your city. I’m not suggesting that you do this yourself (unless you’re just getting started and need to wholesale flip some houses to make some quick cash). What I am suggesting is that you call these “cash buyers” and add yourself to the list of people they call when they’ve got a deal to peddle. This is an extremely cost effective way to find a house to flip. Essentially, you can offer a little extra cash for them to bring you their best deals. It’s the easiest way to setup your own flipper property funnel.
- Short sales – Another great way to find houses to flip is to actively seek out short sale situations. Sure, the process is a little more complicated because you have to use a real estate agent to run your offers by the bank or mortgage company. And, there’s always a lot of back and forth on the price because the mortgage holder is taking a loss and the home seller is going to get taxed on the amount written off. Nevertheless, this can be a great way to snag a highly profitable deal on a high-end fixer upper. Plus, because the homeowner is still living there, these upper price range homes usually only need some cosmetic improvements (unlike our next category – foreclosures). On the other hand, low-end short sales are not a great way to find a house to flip because the percentages aren’t in your favor.
- Foreclosures – Foreclosure properties are not always a great way to find a house to flip. For one, the competition has gotten heavier which drives the prices up, sometimes beyond the profitable entry point. Plus, many foreclosure properties have been damaged by angry homeowners or poorly maintained for the last few years. So, these properties often need more work than is financially worthwhile as a flipper. That’s not to say you can’t find a good one from time to time, but when you do you must move quickly to lockup the foreclosure before someone else grabs it first. Surprisingly, many of the best foreclosure deals are on high-end properties where there’s a lot of wiggle room on the price. Just remember that high-end previously owned homes are not usually one of the strongest market segments because high-end buyers are often looking for brand new homes. Location is also extremely important. Never buy a house to flip that’s not in a subdivision or central area. Otherwise, your group of potential buyers is extremely limited.
- REO properties – Bank owned real estate can be a good source of houses to flip if you do your homework. REO properties fall into two groups – those where the bank is trying to make a profit and those where the bank is highly motivated to dump a property. Usually, the latter category is where you want to focus. Find out what the actual foreclosure amount was on the property. Also find out if it has failed to sell in an online auction, especially if it’s happened more than once
- Courthouse auctions – When banks foreclose on a property, many cities and counties hold open outcry auctions at the local courthouse to auction off the property and transfer the title to the new owner. Usually, the banks are not interested in driving up the price beyond the amount that they are owed on the property. Depending on how many investors in your area are actively participating in the courthouse auctions, there may be some real deals available. As with other property auctions, you have to have the funds in hand in the form of cashier’s checks to pay for any property you win. You may also be responsible for other liens, HOA dues, property taxes, and eviction costs. So, it’s definitely a buyer beware environment and not for the fainthearted, but there are often houses priced where there is substantial upside for flipping the house.
- Online auctions – Online auction Websites like Auction.com, Hubzu.com, HomeSearch.com, Xome.com, HudsonandMarshall.com, and others are an excellent source of potential houses to flip. Each has it’s own bidding and registration rules, but all of them require that you have the ability to close quickly. You’ll need your proof of funds information and a bidder’s deposit on each house you bid on. Most online house auctions are multi-day affairs and last-minute bid sniping is commonplace. It’s also not unusual for the banks and other property owners to set unrealistic reserve prices the first time a property goes up for auction. However, many banks have also started reaching out to the highest bidders on houses that didn’t sell to see if they can’t negotiate a deal.
- Estate auctions – Houses sold in estate auctions in an open outcry format may offer surprisingly good financial upside because the competition tends to be smaller than for courthouse auctions where multiple properties are being sold to the highest bidder. The downside is that you have to actively search for houses being put up for onsite auctions and pay close attention to the auction terms and conditions.
- MLS listings – Don’t overlook the MLS listings as a possible source of houses to flip. Do a regular search for all low-end price point houses in your chosen market or preferred zip code. You can sometimes find some hidden gems in city areas where the market is starting to heat up or where the lot is worth almost as much as the house for sale. However, this can be time consuming and you might be better off outsourcing this work to a real estate agent who can send you new listings that meet agreed upon criteria. Still, it never hurts to keep an eye on the local real estate marketplace. Consider asking an agent to get you full MLS access as an “uncompensated real estate assistant” so you can pull comps and set up your own alerts.
- Real estate agents – Building a network of real estate agents who know you pay cash for houses is another way to find a house to flip every month. They know which listings aren’t selling, who really needs to sell, and which awful looking houses are really diamonds in the rough. Maybe it’s someone who’s home is still on the market long after they’ve moved away. Or, they know which listings are estate sales where the family members might welcome an all cash offer well below the listing price. Plus, they can feed you new listings that meet your specs, giving you another way to find houses to flip.
- Lead generation website – Putting together your own lead generation website offering quick cash for home sellers with an urgent need for cash can easily become your biggest deal pipeline of all. Sure, it takes some time to get the website SEO and incoming links you need to rank highly for the right terms. But, once your site is up, you can use highly targeted pay-per-click ads on Facebook, Google, Bing, LinkedIn and other sites to get motivated house sellers to your site. Be sure to prominently feature your phone number alongside your contact form and testimonials.
- Attorneys – Bankruptcy attorneys and divorce attorneys have large numbers of new clients every month who are experiencing financial difficulties. By networking with these groups of attorneys and demonstrating how a quick cash sale help resolve some thorny issues for their clients, you can tap into a high-volume niche of people in need of selling their real estate assets quickly.
- Property websites – Websites like Zillow.com, RedFin.com, Movoto.com, and others can be a good way to search for short sales and preforeclosure homes. They can also provide easy ways to check recent prices on adjacent and nearby neighborhood properties. That can help you determine quickly what the average home sale price ranges are in a particular neighborhood or zip code. Other websites like AreaVibes.com can tell you a lot about specific neighborhoods within a city or county. That can help you zero in on property trends in nearby areas that may have escaped your notice.
So, those are 12 ways that you can find a house to flip. Happy flipper hunting!