Real estate investments are quite expensive. Not only do you need the money to purchase the property you will be flipping but you will also need money for the improvements, repairs, and renovations that need to be made along the way. Unfortunately, the real estate business is a tricky business and there aren’t very many traditional lenders that are willing to go full out in support of your real estate investment business venture.

This means you are going to have to come up with a good portion of the money yourself or you are going to have to find someone else to fund a portion or all of your house flip. Let’s talk about first things first, the less interest you pay, the more money you bring home. You want to try to not max out all your credit cards trying to get profits from a property flip if it can be avoided. Merchant accounts aren’t much better but they can help you keep better track of exactly how much money you are spending on the flip and some will even give you 90 days same as cash (this is great if you can complete the process within 90 days).

It should be said that these aren’t methods that are endorsed by the writer but they are definitely possibilities when it comes to funding your house flip. Your best-case scenario would be that you would have the money to invest and assume no real risk in the property flipping process but not many people starting in real estate investing have that luxury.

That being said, one way that is extremely risky (especially if you are nearing retirement age) is to cash out your retirement funds. This is not one of the best methods for many reasons not the least of which is the fact that there are pretty big penalties for doing it like this and you are also risking your retirement security. It is an option however if you are in a bind for your flip. If your flip is successful it’s water under the bridge, the money can be returned or reinvested and the profit from your flip can then help fund subsequent flips or other types of real estate investments.

If you discuss things carefully with your family and decide that you are all willing to take the risk you can also risk your home by taking out a second mortgage for the funds. Again this is not the preferred method because the assumed risk is great for the security of your family. It is very important that everyone involved be aware that flipping houses is a risky investment. Not only is it verr risky because you aren’t experienced enough but the real estate market is also very picky. Your house could sit for several months requiring costly carrying costs before it sells.

Forming a partnership is another way to share the risks and help lighten the burden when it comes to flipping houses. Please keep in mind that this is a very stressful business venture and should be treated as a business venture. For this reason a volatile or fledgling friendship may not be the best risk for a venture such as this. If you do choose to do a partnership you will need to discuss in depth the type of financial and labor investment that will be expected of each partner and the what share of profit that each partner will receive as well. You should also consider carefully whether you are willing to risk the friendship for the sake of profits or would you rather go with a partnership that isn’t a close friend (most real estate investment groups have people willing to help with the financial side and assume the risk for the lion’s share of the profits).

Banks will typically fund a portion of the property costs if you can come up with an adequate down payment and show them a well thought out business plan. Do not rely on banks however if you have poor credit, lack a business plan, or do not have a sizable chunk of your own money to invest in the venture.

Please make sure you check out my real estate blog at http://cashmoneyhousebuyerblog.com

If you are planning to flip a house for a real estate investment you really need to take a step back and decide that you are absolutely not going to be one of the house flip sob stories that are rumored about in Internet chat rooms. In fact, you want to be listed among the success stories. Unfortunately that takes a great deal of proper planning that is almost never shown on these television shows. In fact, to put forth your best effort you need to devote as much time to studying and planning properties, prices, and home values in your area before you even begin to search for your first property to flip as you need to invest in the entire process of actually working on your first flip. In other words, several months worth of planning and research need to go into your first house pick in order to lower the risk of not succeeding and to raise the odds of success.

The second thing you need to do when planning your first flip and avoiding a sad tale and a sob story is to be realistic and avoid great expectations. With your first flip you are darned lucky to turn a profit at all. If you are expect to make more money on your first property flip than you made all last year as a full time job, then you might need to make other plans. The first flip rarely goes as expected.

Third, you will need to put back at least twice as much money (or even three times as much) as you think you will need for the improvements on the property in order to cover the actual costs that you will incure. There will inevitably be tools that you need, permits to pull, supplies to get, and more labor that wasn't counted on in the original budget figures as well as the tendency to underestimate the cost of the supplies and materials that will be needed in order to get the project done. If you can't afford to spend that much and then walk away without a loss then the property you are considering probably is not the best property for your first flip.

Finally you need to plan everything. Every day will need to be planned before you show up and try to work on the house and you will need to have all the materials and supplies you will need on hand such as coffee, lunch, drinks, tools and supplies. Trips to the hardware store, lunch breaks, and coffee runs quickly kill a day and any productivity that may have been made during that day. Avoid these expensive delays by prior planning and you will soon discover that you have a real estate success story worth writing about.

Please make sure to check out my real estate blog at http://cashmoneyhousebuyerblog.com

1) Appraise. You need to have a proper appraisal performed on the house you intend to flip and compare it to other houses in better condition and of similar size and style within the neighborhood. You don’t want to buy the best house on the block, in fact it is better if you can find the neighborhood eyesore and turn it into a good productive house for the neighborhood in order to get the most for your money. More importantly you want the appraisal to reveal the actual value of the home now as compared to the price you are paying and talk to the appraiser about what the home would be worth the with improvements you are planning to make.
2) Bold Moves. Sometimes it takes bold moves to make the impression you want to make. The decision to flip houses is a bold move in and of itself and while you do not want to necessarily enter into risky waters you do not want to play it too safe either. Be cautious with your financing and guard your expenses and your budget well but make the changes that will catch the eye of the next owner for the property.
3) You must have a can do Attitude. You absolutely must have the confidence and believe that you can do this in order to get it done. A house flip is not an undertaking for the timid or those that lack self-confidences. You must stand up to the contractors, inspectors, and vendors in order for you to get the best posible price and the most for your dollar. In other words you need to believe in what you are doing and in yourself yourself in order to get it done. This does not mean that you shouldn’t listen to those with more experience and expertise, especially about structural issues with the home and bringing the property up to code but you also need to stand up for yourself to make sure that you aren’t getting ripped off and paying for things you aren’t getting.
4) Determination. You must also be determined to see your project through to completion. It takes a certain sort of pigheadedness to get through the first few flips. It should be stated here that flipping houses is certainly not an easy way to make a living. It does have the potential however, to be a highly profitable way to make a living and that is what most potential flippers are looking for. In order to make those profits you must push yourself out of bed on those mornings when you feel as though going look at the property is going to make you scream and holler and pull out your hair.
5) Excitement. I think this may be the most important of all ingredients. You will find that excitement is in short supply many days but it if you can recapture that initial excitement over your decision to flip houses then it will sustain you on those days when the plumber brings bad news or you just learned that a solid weak of rain is forecasted for the weak the roof was to go on.

This is a small part of the ABCs of house flipping and real estate investing in general but I believe you get the picture. Good luck!

We started off in my two previous posts by asking the following questions:

Are you easily bored?

Are you detail oriented?

Are you mechanically inclined?

Do you work best alone or with a partner?

What experience have you had?

Do you deal well with people and their problems?

To be an effective wholesaler of Real Estate, it’s helpful to first understand what wholesaling is all about. A wholesaler is an investor who ties up a property, usually by means of a purchase contract or letter of intent, and then “flips” the contract to another investor at a profit, often without ever closing on the property himself.

Wholesalers of residential investment property typically make a profit between $1,000 and $5,000, sometimes more on higher priced properties.

To be effective as a property wholesaler, you need to be a good negotiator, and it helps to have a good head for figures and details. Finding property to buy at a wholesale price is only half the battle. You then need to locate investors who not only are interested in buying, but who also have the means to close, meaning they can afford to pay cash or qualify for financing.

Often, the most difficult part of a wholesaler’s job is getting all parties to the closing table with everything they need to make the deal happen. Because of this, a wholesaler must be the kind of person who understands the details of a real estate transaction, and who can make things happen.

If wholesaling sounds interesting to you, you’ll find a wealth of information at Flipping Homes.

Next time, I’ll cover another area of real estate investing called Short Sales… meanwhile, you should check out Education In Real Estate Investing.