One of the greatest challenges in the fix-and-flip industry is finding homes that are good candidates for flipping.
With all the factors behind a successful flip — right price, potential value, good neighborhood, etc. — locating those gem homes can consume a great deal of your time. Depending upon the Multiple Listing Service (MLS) in your community can be frustrating as the listings are already at market price or they get snatched up quickly by investors before you ever see them.
In that case, you need to look for sources to locate homes before they enter the MLS, if they ever do. Let's look at some innovative ways to find profitable fix/flip opportunities:
For Sale by Owner
Homeowners who don't want to give up a percentage of their sale price in commissions sometimes will have under-market values on their homes. These homes might be advertised in the local newspaper or shopper, where the classified ads are free.
More often these days, homeowners are turning to the Internet to advertise their own homes for sale. Places such as Craigslist, Zillow, etc. will have "for sale by owner" listings, but you can rest assured the competition is watching all of these sites as well.
Another approach homeowners often take, just as a fishing expedition, is to put a sign in their front yard. These types of sellers aren't in a hurry to sell, but if they get a good offer, they will listen. Keep your eyes open, especially if you are currently flipping houses in an up-and-coming neighborhood.
Eye on the Web
Websites are still a good source for searching for properties. If you can find sites that offer notification when new listings are added, this can give you a head's up. Otherwise you'll need to make a habit of checking the sites daily, or maybe even morning and evening.
Websites such as Zillow and Trulia offer many useful features, but typically are targeted for owner-occupied homebuyers with a heavy emphasis on mortgage, real estate agent and decorating. You'll have to wade through all the offerings to evaluate their potential.
One site designed just for the fix-and-flip business is FixFlip.com, which offers nearly 80,000 property listings nationwide, including a growing section of off-market listings. FixFlip uses a proprietary algorithm to filter through the clutter and find those listings that would offer the most profit for flippers. The site allows you to save searches and tag potential homes. You can register for a free account.
Monitor Probate Court
Families often are left with a home they are eager to be rid of when a parent or grandparent dies. These properties frequently must go through probate court before the family can sell, to ensure all of the deceased's creditors are paid.
Probate cases must be published in the local newspaper to alert any unknown creditors. When you find these notices, you can contact the executor to learn if a home might be involved. If you can get in an offer before the court case is completed, the family may be willing to sell for a low figure to avoid the hassles of listing and selling the home.
Don't Ignore Rentals
If you notice houses for rent, especially if not listed with a management company, it can't hurt to contact the owner to see if they are interested in selling. They might be tired of being a landlord, or maybe they were just renting the house because they weren't up to the challenge of fixing up the house to put it on the market.
Work Your Network
Make sure everyone you know understands that you are looking for houses. This includes your friends, your neighbors, but especially your banker or any friends you have in the real estate business. While you might not want to wait on MLS listings, if you or someone you know has first access to the service, you still can find some gems there.
If you're still searching for that perfect house to get into the flipping business, or if you have already found that gem, contact us to learn how we can help with financing your project.
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