Property Flipping – The Good

These days, the term “property flipping” or “house flipping” carries illegal or fraudulent undertones. It used to just innocently mean buying a property or house below market value or at a discounted price from a motivated seller and selling it quickly with little to no renovations done on the property, thus, quickly generating profit. This real estate game plan includes wholesaling, contract assignment and fix and flip schemes. Property flipping is a good starting point for real estate investors as they can generate quick cash using this strategy with little to no money required.

Property Flipping – The Bad and the Ugly

Then unscrupulous and greedy individuals enter into the already topsy-turvy realm of the real estate market and sullied the innocence of the term through their twisted schemes. They buy a… Read the rest

In psychology, the capacity to delay gratification is a manifestation of emotional maturity. This was demonstrated in a study where most younger children opted to immediately get the small candy rather than wait for a bigger one later. This may also be apparent in real estate investing, but the maturity in question is, to a greater extent, financial rather than emotional.

If you have been around the block buying, fixing and selling or renting out properties then chances are, you would carry a “Been there, done that!” stance when the discussion of wholesaling is broached. And most likely, flipping is where it all began for you.

For most newbies in the business, wholesaling opens the doorway to real estate investing because it allows one to quickly make profits, as in the small but readily available candy, even with little to… Read the rest

Do not become a landlord or fix and flip real estate investor without the appropriate reserve funds.

Without the appropriate reserve funds you will most likely be adding to our economy’s foreclosure backlog and just become another statistic. Take this advice seriously, it has been learned the hard way by many investors that have come before you. Refer to Murphy’s Law.

The Perfect Rehab?

How many rehab projects have you heard of that have had no hiccups, no delays, and no surprises?  Ask this to a group of real estate investors at your local REI club and you’ll quickly find out that the perfect rehab or long term rental doesn’t exist.  From surprise foundation problems to the guaranteed buyer/tenant that all of sudden cannot close on the deal; surprises are a part of this business.

Property Rehab Gone Wild

Even… Read the rest

FHA Admits They are Hindering the Real Estate Recovery

The FHA has finally come to the realization that many investors buying and fixing foreclosures are taking much less than 90-days to rehab their homes.  Good rehabbers can actually have an ugly house ready for occupancy less than 30 days after its purchase.  So beginning February 1, 2010, the FHA is suspending the 90-day resale restriction imposed on sellers selling to buyers using FHA insured financing.

In order to re-sell a home to a FHA buyer in under 90 days, the following conditions must be met.

This chart was created using the information listed in the Waiver of Requirements of 24CFR 203.37a(b)(2) which is located on the HUD website at http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf.

Here are two more points not listed in the chart.

1. The 90-days flip restriction waiver will expire one… Read the rest

Did you know that you do not have to invest your retirement funds in the stock market?  Real estate prices are at historical lows and there may never be another buying opportunity like this one again.  Lifelong, conservative investor friends of mine that have always believed real estate investing was too risky are now purchasing and rehabbing properties using the money in their 401k’s and IRA’s.

The concept of investing in real estate or other assets in retirement plans has been around for more than 30 years.  These kind of retirement accounts are called self directed IRA’s/401k’s and are governed by the IRS.  There are strict rules that the investor must abide by in order to receive the tax benefits associated with these retirement savings accounts, but they are fairly straight forward.  ALL expenses associated with the purchase, rehab, and… Read the rest