By Greg Herlean
If you’re thinking about how to get started flipping houses, your first questions will undoubtedly be about how to get the money, when to call a contractor, whom you need on your team, and so on. Once you’ve gotten past these initial questions, though, you should really be thinking about ways to get great deals. Many real estate investors often think they have to wait for a great deal to fall into their lap. That’s often not the case. As investors it’s our job to see opportunity where others don’t – and often that means doing a lot of the negotiations up front to see if you can turn an ok deal into a great one.
You can’t rely on good luck and good deals to fall into your lap, but you can rely on your wits and know-how to see profit opportunities where others might only see loss and headaches.
Spot All of the Problems With the Property and Let the Seller Know
First of all, if you can get into the house before you close on it, you’ll get a better idea of what it needs for rehab. If the seller is asking for too much money, you can point out all of the repairs and maintenance that need to be done to the property to bring it up to code.
This could convince the seller to bring the price of the house down. In the case of an investment property like the ones you’ll be buying as you flip houses, you will rarely have a seller offer to fix a problem rather than lower the price of the house. However, you can often get a better deal on the house if you can get an appraiser to give an accurate appraisal of its current, as-is value.
Get the Seller to Pay for the Closing Costs and Inspection
If the cost of the house is still a bit on the high side but not out of the ballpark, you may be able to turn it into a great deal with a couple of tweaks to the terms of your purchase contract. For example, you can ask the seller to cover the closing costs on the property, and you can ask them to pay for the initial inspection of the property, as well.
Taking these two costs off of your shoulders will free up money for rehabbing the house and allow you to sell it for a reasonable profit. If you aren’t familiar with housing contracts and/or you’re new to the real estate business, you should have a real estate agent in your corner. Talk to them about the terms of your contract and see where you can tweak it to get a better deal and free up money for a better profit margin.
Getting the seller to pay for your closing costs is a really good example of this, as you will likely be paying for the closing costs when you sell the property. Paying double on closing costs could really eat into your profits and make the whole deal a lot worse.
Whichever terms you go after, and whatever methods you take to make the deal work for you, talk to a real estate professional first. In fact, when people ask me how to get started flipping houses, that’s the first thing I recommend. Flipping houses is all about knowing the ins and outs of the real estate market so you can get the best deal.