Looking for an ideal property to flip is indeed challenging. It’s even so if you’re looking in a specific geographical area. Maybe it’s an area that you have thoroughly examined and it’s a neighborhood that you’re really interested in. Obviously, you should be able to acquire the house at a very low price, see that you can quickly rehab it at a not-so-expensive budget, and have the potential for a buyer to grab it a higher price. This way, you can make a handsome profit.
After you’ve learned about the market and identified which type of property you want to invest in, it’s time to go looking for properties that match what you’re looking for.
How You Can Find The Right House to Flip
As soon as you’re ready, there are various ways how you can find the right house to flip. For one, you can find a real estate agent who focuses on REO (Real Estate Owned). You can go to the Internet and search for free and paid property listings or review upcoming foreclosures. If you’re up to it, simply driving around the area can generate good opportunities as well.
Let’s look at some of the best options:
1. Search The MLS
The Multiple Listing Service or MLS is a comprehensive database that real estate brokers all across the country created. It lists all properties for sale at the moment within a geographical area with descriptions of the characteristics and information on their vital statistics.
The catch is, this list is only available to licensed realtors and costs more than $100 a month to access.
What if you’re not a realtor? Well, you can align yourself with a licensed realtor either as a team member, business partner or maybe just a friendly favor. So, if you’re thinking of choosing a realtor to help you in your project, it’s better to pick one who has access to the MLS.
Access to the MLS is a big advantage in calling the correct property purchases. The foremost benefit is that you can find most of the properties for sale in an area in just one list. Another feature is that you can find more information about the properties in the MLS than from other sources.
If you don’t want to use a realtor who has access to the MLS, you can use other sources to find houses for sale.
There are websites that provide information on homes for sale in selected areas. Examples are Zillow.com, ziprealty.com, and realtor.com. Sites like hubzu.com have a listing for REOs for sale and even has a bidding process should you want to purchase them. The downside is, the information on these sites may not be as comprehensive as what you can find in the MLS.
If you use the brokerages’ listings for properties, you will see all of the properties that each brokerage is handling in the area. Generally, they have a very comprehensive listing. The US Department of Housing and Urban Development is also a good source because they list all properties they have for sale on hud.gov.
The MLS might be very helpful in your search for a property to buy but remember that it is still just a tool.
Taking your time and being resourceful can give you a lot of essential real estate investment data that you won’t have to spend money.
2. County Recorder’s Office
One good source to find properties in the foreclosure process is to visit your local County Clerk or County Recorder’s Office and look at their listing. Their office makes this list free and open to anybody. Check out those properties that have a Notice of Sale, Lis Pendens or a Notice of Default and then make an offer to the property owner before they list the property on the MLS or Zillow sites.
You can also check out the Public Notice section of the local newspaper regularly because as part of the foreclosure proceedings, lenders should publish a Notice of Sale in a general circulation newspaper.
3. Wholesalers & Auctions
You can also use tax auctions and sheriff’s sales as your source to find good houses to flip but for these, you will have to do some extra steps.
The reasons why these houses are on the auction block is because the owners did not pay their property taxes. This means that you will have to pay any back taxes in addition to the property’s selling price.
Look at the current prices in the area first by checking similar houses that are selling in the neighborhood thru websites like Zillow to get an idea of how much you should bid. Visit the website of your local county or city to see if there is an upcoming tax auction so you can register as a bidder.
A home wholesaler is also a good source for underpriced properties that you can flip. If you do a web search under “real estate wholesalers”, you will find lists of properties that they purchase through tax auctions, short sales (where they paid less than the owner’s debts on the property) and other means. However, you need to show that you have money to invest or the capacity to get a loan from a bank.
There’s also another means called probate sales, which carries more risks but will be worth your while if you understand the process. These are homes that the state is selling because the previous owners did not have heirs or did not leave a will to bequeath the property to an heir. As a requirement, you must put down a non-refundable 10% deposit, then match or beat any other offers that come in before you close the sale.
The catch is, the seller in these types of sale has no obligation to tell you any known defects in the home. If you want a jump start, scan the obituaries and find the family members of those who died (use whitepages.com) then make an offer for the property if it’s on sale. This works well for them because they can save money by not having to go through a real estate agent.
4. Real Estate Investment Forums
Here’s a cool tip: try real estate investment forums, LinkedIn groups, and local meetups.
Real estate investment groups have risen in popularity in the last several years. If there’s one in your area, you might as well check it out. These groups can provide education and a network that may prove useful when you search for a house to flip. On top of this, their websites and monthly newsletters sometimes offer real estate listings in the area.
You can also find many online forums that can help you in your search. Sites like biggerpockets.com offer a trove of information on property investment opportunities. You can also run into several real estate investment groups on Facebook and LinkedIn. Many of these groups can be a source for meetups where you can meet other investors and potential property sellers face-to-face.
5. Network Of Attorneys
If you really want to make a career flipping houses, you should build a network that includes lawyers who handle divorce, probate, bankruptcy, and real estate matters. Couples who are going through a divorce usually want to dispose of their properties, so they can divide their estate and move on. Probate attorneys can give you leads on families who are selling a home due to the death of a parent or other relative, and those who are filing for bankruptcy may be putting their home in the market.
Like we’ve mentioned, before going through a bankruptcy sale, the owners should publish notices in the local newspaper – this is a good source of leads. A real estate attorney would be first to know about closings that fall through, and if you have that kind of info, you may just be half a step behind to offer the next best option.
Finally, it could be beneficial to browse through the small local papers such as the Penny Saver because you can find ads by people who are selling their homes without a broker. The term for this is FSBOs or For Sale By Owner. Every time you can remove the middle man from the equation, you are much more likely to make a killing in any real estate transaction.
6. Use The Internet
The Internet is a ‘list seeker’s’ paradise and if you’re looking for a list of distressed properties, foreclosures, and short sales, this is the place to go. You can find lists that sort them by city, town or even by zip code. These lists are indispensable when you’re looking for a house to flip. The great thing is that many of the lists are available for free although a good number of them have tag prices. You can start with the free lists because you may already hit a jackpot in them.
Now that more and more information goes into cyberspace, it is becoming easier to find listings that could help you succeed in your house flipping projects. Just arm yourself with the knowledge of what makes the best market for flipping houses when you begin your search for houses on your own.
7. Get a Real Estate Agent
If you’re not familiar with the area, having an agent on your team could be invaluable. An agent can cut the search time for a house to flip. A good agent would have information on the best places for flipping homes, so they can immediately filter the options and select the ones that meet your requirements. What’s more, they can give you fresh real estate investment advice for your property purchase and house flip with a local, but important, perspective.
Getting an agent who specializes in REO can also help you find rehab properties for your house flip.
REO means “Real Estate Owned” and it connotes property that a lender or guarantor holds because of a defaulted loan. Majority of these homes have already gone through the tiresome foreclosure process and perhaps an emotional eviction process.
You can also expect that the former occupants of the property did not do enough care and maintenance on it during the period that they were defaulting on the mortgage, delaying the foreclosure and eviction. Because of these things, the properties may carry a lower price compared to the surrounding neighbors due to their forlorn condition. This makes them a good prospect to flip.
Many lenders and loan providers normally affiliate themselves with small groups of realtors who specialize in selling these types of properties. In order to find them, you have to work with a realtor who has an inside track on these real estate listings and new rehab homes available in the market. You may search for them via the Internet by looking for REO real estate agents and brokers within a specific geographic area.
8. Drive Around Your Preferred Location
Most buyers still drive around the neighborhood where they want to find a house to buy so they can identify potential properties that suit their purpose and requirements. Normally, they pick properties that stay within the same construction and architectural style of the neighborhood but show signs of neglect and little maintenance.
Then, they search public records to determine the owners then try to connect with them by mail or telephone with an offer to purchase the property. Many buyers report a respectable rate of success with this method because even if the owner is not thinking of selling now, he might want to sell soon.