What is MICRO FLIPPING in Real Estate?

Question: “What is MICRO FLIPPING in Real Estate?”

Micro Flipping in Real Estate is a term that I coined.

…but there’s a good chance that there’s these other kids that coined it and they created a product around it.

They are called connected investors, you know they are out there.

 But I remember that, a while back like a few years ago, I think around 2016 or so, 

…I created a video just of the term “Micro Flipping Real Estate”.

I thought it was Real Estate that’s all because about 11 years ago (2009), I learned the concept called “Attraction Marketing”.

It’s something that I have applied in my business, it’s basically a leverage point.

A really really sleek leverage point that allows you to produce more, with less resources.

PREVIOUS POST: Do You Need A LICENSE Or Any CERTIFICATION To WHOLESALE HOUSES?

That’s something that I teach heavily inside of myEmpirePro.

Just in case you follow me, you know I’m obsessed with leverage.

You know that if there’s a way you could do it with less resources, I would do that.

Hence, the reason why I don’t teach things like cold calling.

Even though I know how to.

If you search with this same channel you will see me cold calling live. 

I know how to, I can close deals but it’s not about that.

It’s not about what I can do, it’s about what can get done in the shortest amount of time, with less resources  called leverage,

…because if I don’t pay attention to that,

Then my competitors which are basically new people coming into the game everyday will basically catch up to me.

Everyone can pick up the phone and start cold calling, everyone can do that.    

So meaning, there’s a low barrier entry there that means there’s a higher chance the competition will increase that much more.

I have always been obsessed with the idea of using technologies.

Real Estate Investing and Real Estate Wholesaling using technologies essentially is what Micro Flipping is.

TRENDING: What is Micro Wholesaling Real Estate?

And it’s not just isolated technologies,

…what I mean by that is that, sometimes a new tool comes out,

as long as it’s a low barrier of entry like if it costs $10, that means anyone can come into it.

Then it’s just gonna be watered down only a matter of time.

That’s why 11DaysChallenge  is going up in price significantly.

Hence why even the book is not gonna be available for download for free soon because once everyone and anyone can access it anyhow,

…without doing so much work or investing anything,some kind of resource, it gets watered down.

We’ve got to put some price on it because when people don’t pay, they also don’t pay attention.

So back to Micro Flipping,

Micro Flipping is simply using technology but I don’t mean isolated technology.

Meaning, technology that can expire very soon or at some point.

I’m talking about perpetually, always looking about “what’s the next new thing”.

Everyone is doing this right now, that means there’s an opening somewhere because mankind,people or your ideal prospects are also moving.

So they are moving their attention somewhere else if there’s so much attention here, basically what happens is,

…Like Facebook, everyone is kind of like “I don’t wanna go there anymore” and you see a bunch of ads.

You still use it but now more people are migrating to Instagram and then to Tiktok, then to Snapchat.

It’s the same thing in real estate.

The idea of paying attention to that is what Micro Flipping is.

HAVE YOU SEEN THIS: More Video on our YouTube Channel

How you can use technology and continue to perpetually evolve with technology when it comes to real estate investing.

That’s what it’s all about and that’s something we focus on heavily here.

Now the connected investor guys, they put together like some kind of community where they claim that they have investors ready to buy.

The truth is that the best investors that are gonna buy your deal, there’s public records showing that they already bought deals.

So don’t get sold too much on that.

At the end of the day there is still gonna be extra stuff to learn beyond the technology itself.

The point I’m making there is that Micro Flipping is an ever evolving thing.

It’s the idea of just perpetually being obsessed with the idea of leverage in your  business of real estates. 

But if that’s what you are looking, you wanna make sure you are on the edge,

…you wanna make sure you are ahead of the curve always,

That’s what we do here in myEmpirePRO.

Speaking of, I just finished taping Facebook Marketing for Real Estate.

11Days Challenge to Facebook Ads the Real Estate Investors Edition.

I just finished that so hopefully by the end of the day tomorrow, it’ll be up for the members so you can start.

For the Premium Members.

And as far as if you are not a premium member, you just wanna pay for it one time, we will be putting that together as well too.

But it’s 11Days Challenge just like everything else.

In 11Days you’ll get all set up.  

If you’re looking for mentorship or education about this whole process, please go to 11DaysChallenge.com right now.

We’ll see you on the next one.

Peace.

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Micro Flipping in Real Estate: A Comprehensive Guide

In the ever-evolving world of real estate investing, new strategies and trends often emerge. 

One such trend that has gained traction in recent years is micro flipping. 

This innovative approach to real estate investment has captured the attention of investors looking for a quicker and potentially more profitable way to turn properties. 

In the next segment of this blog post, we’ll delve into the concept of micro flipping, explore its differences from wholesaling, discuss the 70% rule, delve into the pros and cons, and provide guidance on how to get started with micro flipping.

What is Micro Flipping in Real Estate?

Micro flipping is a real estate investment strategy where investors buy properties, often distressed or undervalued, at a discount and quickly resell them for a profit. 

Unlike traditional house flipping, which involves significant renovations and holding periods, micro flipping focuses on rapid transactions with minimal renovations. 

The goal is to identify and capitalize on quick profit opportunities by purchasing properties below market value, and then immediately selling them to another buyer, usually an end-user or another investor.

Micro Flipping Vs. Wholesaling

While both micro flipping and wholesaling involve the quick turnover of properties, they differ in certain aspects:

1. Strategy: Micro flipping involves a faster process and usually minimal or no renovations before selling the property. 

In contrast, wholesaling focuses on finding deeply discounted properties and assigning the contracts to other investors without taking ownership.

2. Ownership: In micro flipping, the investor takes temporary ownership of the property before selling it. 

Wholesaling, on the other hand, does not involve actual ownership transfer; instead, it revolves around assigning the contract rights.

However, wholesale real estate sometimes uses double closing which involves title passing through a wholesaler’s name for a brief moment.

3. Profit: Micro flipping aims for relatively smaller profits on each deal but completes transactions at a higher volume. 

Wholesaling typically targets higher profits per deal, but the volume of deals may be lower due to the longer acquisition process.  Time is worth more than money.

How much profit is the 70% rule?

The 70% rule is a widely-used guideline in real estate investing, including micro flipping and traditional house flipping. 

It states that an investor should not pay more than 70% of the after-repair value (ARV) of a property, minus the repair costs. 

The formula for the 70% rule is:

Maximum Purchase Price = (ARV x 0.70) – Repair Costs

In other contexts, it may go down to 65% and others, as high as 85% in very busy cities with high demand.

This rule helps investors ensure they acquire properties with enough built-in profit potential or equity to cover expenses and still generate a satisfactory return on investment (ROI).

How do I avoid capital gains tax on a flip?

Capital gains tax can significantly impact the profits made from flipping properties. 

However, there are several strategies to minimize or avoid capital gains tax:

1. 1031 Exchange: Under Section 1031 of the Internal Revenue Code, investors can defer capital gains tax by reinvesting the proceeds from the sale of one property into a like-kind property of equal or higher value.

2. Primary Residence Exemption: If the property being flipped was your primary residence for at least two of the past five years, you may qualify for the primary residence exemption, which allows you to exclude up to $250,000 (or $500,000 for married couples filing jointly) of capital gains from taxation.

3. Real Estate Professional Status: If you are considered a real estate professional by the IRS, you may be able to offset your real estate gains with real estate losses, reducing your overall tax liability.

Please check with your local tax professional.

What is a good profit on a house flip?

The profit margin on a house flip can vary depending on factors like location, property type, market conditions, and renovation costs.

However, a good rule of thumb for a successful flip is to aim for a net profit of 10% to 20% of the after-repair value (ARV). 

For example, if the ARV of a property is $300,000, a satisfactory profit would be between $30,000 and $60,000.

What is the Rule of 70 (Doubling Time)?

While it may be confused with the 70% rule used to secure a healthy ROi as discussed earlier, it’s different in the broader world of real estate.

The Rule of 70 is a mathematical formula used to estimate the time it takes for an investment or economy to double in size. 

It is calculated by dividing 70 by the annual growth rate. 

For example, if an investment is growing at a rate of 7% per year, it would take approximately 10 years for it to double (70 ÷ 7 = 10).

To Recap, what is a Microflip?

A microflip refers to the act of conducting a micro flipping transaction. 

It involves identifying and acquiring a property at a discounted price, and then rapidly reselling it to another buyer for a profit, often without significant renovations or improvements.

What is a Micro Real Estate Portfolio?

A micro real estate portfolio is a collection of properties acquired through the micro flipping strategy. 

Investors who specialize in micro flipping may accumulate several properties in a relatively short period, leveraging the faster turnover to build a diverse portfolio.

Pros and Cons of Micro Flipping

Like any investment strategy, micro flipping has its advantages and drawbacks:

Pros:

Quick Turnaround: Micro flipping allows for faster transactions, enabling investors to generate profits more rapidly.

Lower Risk: With minimal renovations, there is less exposure to renovation costs, construction delays, and market fluctuations.

Less Capital Intensive: Compared to traditional house flipping, micro flipping requires less upfront capital, making it accessible to a broader range of investors.

Market Agility: The ability to adapt quickly to changing market conditions can be advantageous in dynamic real estate markets.

Cons:

Lower Profit Margin: Each microflip may yield smaller profits compared to traditional house flipping, necessitating higher transaction volumes to achieve the same earnings.

Market Dependency: Success in micro flipping heavily relies on finding an active market with enough demand for quick property turnovers.

Limited Upside: Since micro flipping involves selling properties as-is, there may be missed opportunities for higher profits with significant renovations.

Transaction Costs: Rapidly buying and selling properties can incur higher transaction costs and fees.

Best Micro Flipping Software

Several software tools can assist investors in streamlining their micro flipping endeavors. 

These tools typically offer features such as property analysis, deal tracking, lead generation, and marketing automation. 

While the best software will depend on an investor’s specific needs, some popular options include PropStream, DealMachine, Realeflow, and Zoho CRM.

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How to Start Micro Flipping

Getting started with micro flipping requires a well-thought-out approach:

1. Education and Research: Familiarize yourself with the micro flipping strategy, study local real estate markets, and analyze successful micro flips.

2. Build a Network: Connect with local real estate agents, wholesalers, and other investors to find potential deals and buyers.

3. Financing: Secure adequate funding or partner with investors to have the necessary capital for acquisitions.

4. Marketing: Develop a marketing strategy to reach potential sellers and buyers, using online platforms, direct mail, and other targeted methods.

5. Property Analysis: Conduct thorough property analysis to ensure potential flips meet the 70% rule and offer a favorable profit margin.

6. Negotiation: Hone your negotiation skills to secure properties at the best possible prices.

7. Legal and Tax Advice: Seek guidance from real estate attorneys and tax professionals to ensure compliance with regulations and optimize tax strategies; especially after you start closing more than a few deals.

Micro Real Estate Investing and PIN Micro Flipping

Micro real estate investing is essentially the same as micro flipping, focusing on quick transactions and fast profits. 

The term “PIN micro flipping” may refer to utilizing Property Identification Numbers (PINs) to identify and track properties for potential micro flips.

Why Flipping Houses Is a Bad Idea

While flipping houses can be lucrative, it is not without risks and challenges:

1. Market Fluctuations: Flipping relies on a stable and active real estate market. 

Economic downturns or local market shifts can negatively impact profitability.

2. High Competition: The popularity of house flipping can lead to increased competition, making it harder to find profitable deals.

3. Renovation Risks: Renovation costs and unforeseen issues can eat into profits, especially if not accounted for in the initial budget.

4. Holding Costs: If a property takes longer to sell, holding costs like mortgage payments, property taxes, and maintenance expenses can accumulate.

Flipping Houses TV Shows Lie

Flipping houses has become a popular subject for television shows, with programs showcasing the challenges and successes of real estate investors as they flip properties for profit. 

These shows have contributed to the increased popularity of real estate investing and have given rise to new investment strategies like micro flipping.

In conclusion, micro flipping in real estate is a strategy that offers a faster and potentially more accessible way to generate profits by identifying undervalued properties and quickly reselling them. 

It differs from wholesaling and traditional house flipping in terms of strategy, ownership, and profit expectations. 

While micro flipping has its pros and cons, investors can leverage software tools, networking, and proper education to embark on a successful micro flipping journey. 

As with any investment endeavor, it’s crucial to thoroughly research the local market and have a clear plan in place before diving into micro flipping.

If you like this blog post, you will love the one we wrote on do i need an llc to wholesale real estate?

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