Flipping Houses: Bargains, Distressed Houses, and Fixer-Uppers Explained

If you're interested in making money flipping houses, it still can be done in a slow real estate market. In fact, many investors are looking for other ways to make money so the competition isn't as fierce. Also, sellers become more anxious every day their home sits on the market.

Flipping houses for money success doesn't depend on an active real estate market or in thirty percent appreciation. Your ability to make money in real estate depends on your ability to buy a bargain property and to sell it or rent it for profit.

Bargain Houses Have Distressed Sellers

Real estate investors make money when they find a bargain property which they can purchase for less than market value and resell or rent for profit. The key may be a "distressed seller" who needs out right away because of overwhelming problems like financial difficulties (pending foreclosure, lack of money to pay bills), divorce, death, addictions, job loss, or transfer. Sometimes a seller wants to use the money to purchase another property or start a different business and is willing to offer a bargain price to move on.

Distressed Houses Are Fixer-Uppers

A "distressed house" is one that needs help to bring it up to saleable condition--a fixer-upper. Owners of fixers are not always distressed sellers. They might not be in foreclosure or facing financial problems. They may just lack motivation or know-how to fix up the property and haven't sold it because most home buyers want a house in good condition.

You can make money buying both bargains and fixers. It depends on whether you want to work with houses in good condition or fixer-uppers. Some investors only buy houses in prime condition from sellers who are willing to discount for a fast sale. In today's market, you must know how you're going to make a profit before you purchase a house. If you know the market is still active in your area and you have a strong chance of reselling in a couple months for full price with the right marketing strategy, you can make an offer that gives you plenty of margin.

If you want to turn a fixer into a new owner's dream home or rental, you must know how much the house will cost to fix. Many investors buy fixers with rehab funding and don't risk their own money. After fixing the house, they refinance and rent, take some profit out, and have the tenants make the payments. House flippers fix and sell right away for fast cash.

Of course, if you want to fix houses, you want to find a fixer-upper that is also a bargain property for the highest return on your investment--money, work, and time.

By: Jeanette Joy Fisher