myEmpirePROHere is what to look for when flipping a house; look for motivated sellers.
Flipping a house basically starts with putting houses under contracts at 65% of its after repair value minus estimated cost of repair.
By doing so, you will acquire a right to purchase the property at the maximum allowable offer of 65% MINUS repair cost estimate.
The right is called equitable interest.
You can then sell the right at 75% of its after repair value minus estimated cost of repair.
The 10% spread between the 65% and 75% of the after repair value is what you should look for in fees for securing these types of deals for real estate investors.
- For a $100,000 home, expect $10,000
- For a $200,000 home, expect $20,000
- For a $300,000 home, expect $30,000
- For a $400,000 home, expect $40,000
- For a $500,000 home, expect $50,000
That’s just what to look for.
It may be more or less.
The highest I’ve made on one deal is $82,000 from a $400,000 home.
It’s because I put it under contract at much lower amount than the 65%.
I’ve also made just $5,000 from a $300,000 home… point is it may be more or less.
It’s your responsibility to use comparable (comps) to determine the after repair value of the property and to estimate the cost of repair.
Why would anyone want to sell you this properties at 65% and lower?
1. The property is distressed
2. The property ownership is distressed
3. All of the above and motivation to get rid of the property.
However the first step to flipping a house is to find these deals. This is one of the most effective and cost effective strategy.
Cold calling and prospecting distressed home owners that are listed in public records such as preforeclosures, probates, tax defaults and more.
Enjoy watching as I demonstrate in this series.
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