FLIPPING? WHY??
I simply dont get it.
Why on earth would a body get a property on deep discount and then flip it cheap? I have seen figures of $3K or 20% of equity for the flip.
So what? W
Why not take ownership of the property, and sell it retail? Yeah, ya might need to pay some agents fees on the retail sale but it seems far cheaper than the giving equity to the "flip buyer".
You've already done the hard part. Why not ake some real money?
For my situation just a few deals pays off my own mortgage and now I live in my home for the tax and insurance. What better immediate goal?
Whywould I flip?
scoso
There are many reasons for flipping a property to another investor.
You've negotiated a great deal, but you have no money to actually buy the property.
It's a major rehab project, and you have no experience and/or desire to do it.
Depending on the method of flip, it cuts your liability to practically 0.
You don't have the cash to pay the monthly payment while the property is just sitting around waiting to be sold.
You prefer the fast nickel to the slow dime. If I can make $3-5K on a property I've had for a day or two, or $15-20K if I wait 2-6 months and retail it, I'll take the 3-5 every time.
These are just a few examples off the top of my head.
Roger
For me it's this simple - no risk and best use of my time.
If I find a house with a lot of equity sure I can buy it but then I own the thing and have either my money in it (risk) or a mortgage (debt equals risk even if it's less risky). As owner I may be the unfortunate one who owns it when something happens to it, a natural disaster, car drives into it, tree falls on it, etc. You may say that this sounds paranoid and 'so what if there is insurance on it'. Well if any of these did happen,however unlikely, it would at least be a hassle and absorb my time. And the point is I can avoid it.
If I were to flip that same property I would have zero risk. I have only a contract on it which has an out without penalty to me if I need it. I would never agree to a contract without covering my assets. I find a buyer who then assumes my position in the contract and I turn into a fee on the HUD-1. That's it. NO possiblilty of disaster or hassle (ok hassle often cannot be avoided in any real estate transaction but it's still no risk to me). I then can move on and find another deal.
Further, I don't possess the skills to do the rehab myself so I would be at the whim of cost overruns and delays on the project. Also dealing with investor buyers is easier than dealing with retail buyers and their meddling Realtors who don't understand investing.
I heard it said by an investor named Charlie Parrish that you should "buy low, sell low and do it often" if you want to be successful in flipping.
[addsig]
Quote:
On 2003-05-11 23:42, rajwarrior wrote:
There are many reasons for flipping a property to another investor.
<snip>
If I can make $3-5K on a property I've had for a day or two, or $15-20K if I wait 2-6 months and retail it, I'll take the 3-5 every time.
These are just a few examples off the top of my head.
Roger
Hi Roger;
Thanks for the rather rapid reply.
I get the first few reasons posted. They may apply even in my case.
However, at least in my area, in todays market homes sell in three weeks or less for the FMV or higher.
I'll retail the non-rehabbers myself until the market moves!
In fact, perhaps the hot market kills many high equity deals and I need to focus on short sales for now!
Thanks again;
scoso
Another reason--or result, at least--is to build business/networking relationships with (presumably) more established investors which can yield profitable results in a variety of ways down the road.