Fit Flip
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I can pretty much sum up most of the real estate investing methods currently being used into two different methods. One is a wholesale flip. It is very popular right now, and it works, if you want to go through all the hoops involved. People make money wholesale flipping properties. The other is retail flipping using a Subject-to or rehab method.
Here's the problem, with flipping property using these older methods of wholesaling, subject-to, short sale, or rehabbing. One, obviously, everybody and their mother's teaching these methods. So what you have out there is a lot of competition for the homes that are on the market that you can actually work this with.
In order to have a very attractive property that a rehabber/wholesaler can flip you have to buy a property at 50 cents on the dollar or less. They've got to have room to fix it up, and put money into it, and make a profit on top of that. So that forces you the investor to locate very few homes that come up each month that fit the criteria, and on top of that you have a ton of competition looking for the same deal.
That's why, when you get into wholesale flipping... right away, the first thing you learn is you've got to go after, basically, pre-foreclosure properties, and they've got to be around 50 cents on the dollar in order to make it work. So, that's the biggest problem with wholesale flipping. Again, there's good money if you get a system down like TV advertising or other expensive promotional means of locating these deals before the other investors find them. To me, that's a lot of work.
Now, I've taught foreclosures. I've taught wholesale flipping. I've taught all of these methods over the years, but when you compare it to something where you can just go out to any seller that's even halfway semi-motivated and still make the same amount you'd make - actually a lot more than you will on wholesale flip - $20,000, $30,000, $40,000, well there's no comparison.
Using a method called the Inverse Purchase will allow you to buy homes at up to 95% of full market value and still make thousands on the flip. The Inverse Purchase method also eliminates the "Title Seasoning" issue that prevents a simultaneous close with regular lenders. It isn't a subject-to type transaction so there is no Due on Sale Clause violation. You simply earn all the difference between what the owner will sell the home to you at and what you resale at full market value. You leverage the loan from the new buyer to make the purchase happen without doing a simultaneous close.
To do an Inverse Purchase, you simply create a transaction with three contracts involved. The first contract creates the agreement for you to buy the home at a lower price. You then promote the home to your buyer list and complete a second sales contract between you and the end buyer once you have found a prequalified buyer. You now cancel the 1st two contracts in exchange for a buyout from the seller. This is your profit paid to you at closing. The seller and the buyer now go into the third contract. This is contract is turned in along with your payment request to the title company. You simply wait for your check.
Dealing with nice homes in nice areas with nice owners is a much better way to flip homes. And there is a much better way to flip homes than wholesaling, subject-to, or rehabbing.
Author: John Alexander Copyright 2007, this article may be republished on the web as long as the author's name and website link are part of the article.
John Alexander is seen weekly on national Television on his Riches in 14-Days Show. He has been teaching real estate investing nationally since 1994. He is the creator of the only Patent Pending Real Estate Flip Technique called the Inverse Purchase. More information that can help the new or experienced investor can be found on his website. http://www.paperbiz.com
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US $14.68

























































































