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Real Estate Investing

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Why Flip Houses?

There are many great questions to ask when it comes to real estate investing
and one of the many that you should consider if you are thinking of flipping
houses for your real estate investment is: why? Why flip houses? It certainly
seems as though it's a great deal of work and it is. It isn't an easy task to
take upon your own shoulders and yet many people around the world purchase
houses each and every day for the purpose of flipping those houses. Why? Profit
is the long and the short answer but it goes much deeper than that for many who
are interested in flipping houses even if profit is the ultimate goal.

Some people really enjoy working with their hands. Purchasing a property in
need of light cosmetic repairs and retouches is a great way to get your hands
dirty without risking too much money, time or effort. Properties needing more
serious work may require a pair of hands that have some degree of experience
rather than hands that are best suited for balancing books. That being said if
you want to do the work yourself and enjoy the prospect you may find that you
can save a great deal of money if you use your own labor rather than paying for
the labor of others when it comes to flipping a house.

Other people go into this line of work because the idea of giving a family
their dream home is so appealing. When you go in and flip a house you are
putting your sweat into creating someone else's dream. You are taking something
that may have been plain, ugly, or drab and turning it into a beautiful home in
which they can build their dreams. While it may seem a little romantic, it is
in a way. This is part of the beauty of flipping houses though; there really is
no wrong reason to do it.

Some people choose this line of work because deep down inside they need the
pain that goes into turning a lump of coal into a diamond. I think the literal
term for these people (and really this could apply to anyone who decided to
flip houses for a living) is masochist. The shoe fits for most people who flip
houses. If they didn't know going into it the first time they certainly know
before they go into it a second time.

Then there are those that are simply driven by profit. There really isn't
anything at all wrong with that. Most of us would never get into this business
if there weren't some hope of a pot of gold on the other side of the rainbow.
This is hard work and there are days that the promise of a pay off is the only
thing that gets you out of bed and hitting the ground running yet again.

Just remember that at the end of the day it doesn't matter what your goal in
flipping houses is. What matters is that you show up day after day and do the
work necessary to pull off your house flip. This is what makes the difference
between those playing at flipping houses and those who are doomed to be one hit
wonders in this brutal business. Of course, there are still those few who flip
houses just for the sake of seeing the finished product when everything is said
and done.

How to Flip a House

If you haven't seen the many shows on television advertising and explaining how
to flip a house this should help you find yourself well on your way to real
estate investing riches through the process of flipping houses. While there are
some negative connotations attached to flipping houses because of shoddy deals
and shoddy workmanship in the past, you can create a positive reputation by
doing things the right way if you follow the advice mentioned below.

1) Find a suitable house in a suitable location. This is probably the most
important aspect of flipping a house. There is no way a flip could be
successful if you do not get an absolutely great deal on a house that is in
good shape, needing only cosmetic repairs and touches, that also happens to be
in a neighborhood where houses move and will get the price you are setting as
your goal. While it seems like a little more than a mouthful each of these
things is important to the success of your flip.

2) Have an inspection. This is also essential because your inspection should
clue you in to any unforeseen problems that may arise. You can either adjust
your bid in order to cover the costs of those repairs or you can pull out of
the project all together if discovered and unanticipated repairs would
eliminate the profit you potential you need in order to make the house flip
worth your time.

3) Decide what must be done. It is best to salvage as much of the original
structure as possible and make mostly cosmetic repairs to the house. The goal
of a flip is to spend little and make a lot. Plan projects that can be
completed quickly (carrying costs are the bane of the house flipper) and with
little expense. Flooring, paint, and fixtures are a great way to make a large
impact without spending too much money.

4) Get the work done. Whether you are doing the work yourself or hiring experts
you need to get the work done as quickly as possible in order to maximize your
profits. Plan projects to move quickly and avoid projects that rely on the
entire property being useless while they are being performed as they risk
putting other projects behind if they are delayed for some reason.

5) Be flexible with the price. If you stick to your budget you should be able
to go with your original target asking price. You do not want to price the
property more than the neighborhood will be able to support and you definitely
want to avoid turning off potential buyers by turning down a fair offer too
quickly. It is better to take a lower offer and sell the house quickly than
hold out for a larger offer that never comes (all the while paying costly
carrying costs).

Flipping a house is a trying ordeal and during the middle it is likely you will
decide that you aren't asking for nearly enough money out of the deal. The hours
are long and the work is difficult but if you stick to it and don't get greedy
you will find that the profits can be quite attractive by real estate investing
standards and fairly quick to come. While the work is difficult the payoff is

Benefits of Flipping Houses

Aside from the obvious financial rewards that go along with real estate
investing and flipping houses there are a few more abstract benefits that can
be gained when you embark on a house flipping adventure if you are looking for
a little more incentive to get going in the direction of your dreams of real
estate riches through flipping houses.

Most things in life have more than one pro or con to them and the same can be
said when it comes to flipping houses. Whether you are doing this for a living
or this is a one-time deal you will find that there are all kinds of little
lessons you learn along the way. Knowledge is rarely a bad thing and the
lessons you learn while flipping houses are lessons that can be applied in many
aspects of your life.

1) Budgeting. There are few things that can give you a crash course in
budgeting quicker than flipping a house. In order to successfully flip the
house you are working on you will need to learn to budget quickly or you will
wind up literally hemorrhaging money. Learning to set a budget and stick with
it are both necessary skills for any flipping houses but when they carry over
into other real life applications you will find that this is a very useful
skill that has you looking at everyday purchases with new eyes.

2) Muscle Definition. Who knew that flipping houses would be such an excellent
workout? This is especially true for those who traditionally hold jobs that
aren't necessarily dependent upon physical labor and those that do much of the
work themselves (which is highly recommended when you can in order to save
expensive and profit eating labor costs). From heavy lifting to hammering and
several other physical jobs in between you should discover that your labors are
rewarded in more ways than simply watching your project come together.

3) Attention to Detail. This is a huge benefit that comes from flipping houses
and you will get better at this with every subsequent flip. The money, when
flipping houses is often made in the small details that others will overlook
such as new electric faceplates, proper staging, and a good eye for color
throughout the property. These things make potential buyers see a home that is
loved and cared for rather than just another house on their list of places to
see. If you take this attention to detail into your 9 to 5 job after flipping
houses or into your tax preparation, event planning, and home organizing you
will find that the lessons you've learned while flipping houses are well worth
the time, effort, and labor that went into learning them.

4) Positive Thinking. You will hear many times in life that positive thinking
is a powerful tool. There are very few places that this holds true more than
when it comes to flipping houses. You definitely want to season your positive
thinking with a nice hefty dose of reality but you should be aware that
thinking positively has many benefits to you when flipping houses and in almost
every other aspect of your life. You do not want to spend the time you could be
improving your flip searching for problems or excuses.

5) Just Do It. The old Nike commercials had a point and if flipping houses
doesn't teach you anything else it should teach you this lesson.
Procrastination wastes money. Every day that you carry the house you carry the
expenses of the house (electric, mortgage, interest, etc.) get in there, get it
done, and move on to the next project. Putting off the distasteful tasks won't
make them go away so you may as well go ahead and get them over with.

Flipping houses isn't rocket science but it does take a unique combination of
luck, skills, and stubbornness to turn a profit in this particular business.
Learning the lessons above will help you not only succeed when it comes to
flipping houses but in other aspects of your life as well.

Beginners Guide to Flipping Houses

Flipping houses is becoming big business in the world of real estate
investment. Unfortunately it takes all kinds of 'flippers' to make the world go
around and some of them aren't nearly as conscientious as others. If you are
going to get into the business of flipping houses and want to make a living,
and build a good reputation, for producing quality results you need to see to a
few details throughout the process.

1) Do what needs to be done. Don't cut corners and create situations that will
put the family that purchases your home in personal or financial risk. You want
to create a safe home for the family or person that ultimately makes the
purchase. You do not accomplish this by taking shortcuts and using shoddy

2) Avoid spending money that doesn't need to be spent. By this I mean don't
spend money creating more work. Many people do this by deciding to tackle
additions, rip out walls, or changing floor plans. These kinds of changes are
best left to the buyer unless they will significantly improve the asking price
you can bring in on the house. Otherwise spend the bulk of your money in
kitchens and baths where they are best known for bringing in bigger profits.

3) If it ain't broke don't fix it. There is a lot of wisdom in this age-old
saying. There is no reason to go in and fix something that doesn't need to be
fixed unless doing so will improve the value of the house to its buyers.

4) Always work within a budget. Most people set a budget when planning to flip
houses but very few manage to work within that budget. This is the difference
in making the profits you anticipated and putting the entire project at risk.

5) Create a home that the buyer will want to live in not the home that you will
want to live in. You should never flip a house or design a flip according to
your tastes; it is a recipe for disasters in more ways than one. First of all,
it is unlikely that buyers will be able to afford it. Second, it sets you up
for hurt feelings if a potential buyer rejects any small details. Third, it
often raises the price you must seek for the property in order to cover the
increased costs of decorating and designing according to your taste. Finally,
it often leads to unnecessary expenses, which defeats the purpose of a quick
flip type of project.

6) Time is money. Remember this in all things. The more time it takes to do the
flip the more money it's going to cost and the less money you are going to make.
Plan small changes that have a big impact and can be done quickly to get the
most out of your flip.

7) Never attempt a champagne flip unless you have a champagne budget to back it
up. Just as flipping above the market is an unwise move it is equally unwise to
flip a property beneath your target market as well. Do not attempt to flip a
house in an upscale neighborhood if you can't manage the upscale building
supplies and appliances that will be needed in order to make it a success.

While these aren't guarantees for success they are solid advice that will
minimize the risks you face when flipping properties.

ABCs of Flipping Houses

All new things can be a little frightening or intimidating at first glance. The
same is definitely true when it comes to flipping houses. Many people feel
several times during their first flip that they have gotten in over their
heads. The truth is that it will take more than a few flips to feel comfortable
with the process. Most people make very little, if any real profit on their
first flip and write it off as a learning experience only to enter into the
next flip with newly learned lessons and a positive attitude. Learning the ABCs
of flipping houses is a great place to begin and can help you avoid costly
mistakes made by many first time flippers.

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 do not want to buy the best
house in the neighborhood, in fact it is best if you can find the neighborhood
eyesore and turn it into a competitive 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) Can do Attitude. You absolutely must believe 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 will need to stand up to your contractors, inspectors,
and even some vendors in order to get the best price and the most bang for your
buck. In other words you need to believe in yourself and what you are doing in
order to get it done. This doesn't mean you shouldn't listen to the advice of
those with more experience and expertise, especially when it comes to
structural issues within the home and bringing the property to code but you
also need to stand up for yourself to insure that you aren't 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. If you want those profits you are going to need to push yourself
out of bed even on those mornings when you feel as though looking at the
property in question is going to make you wail and moan and pull out your hair.

5) Excitement. This may be the most necessary 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 start on the ABCs of house flipping and real estate investing
but I think you get the picture. Good luck!

Pros and Cons of Flipping Houses

If you have watched countless shows on television about flipping houses and
making tons of money in a very short amount of time you've probably thought to
yourself that you could do that and possibly wondered why you haven't. If you
are considering entering into the world of real estate investing through the
role of one who flips houses there are a few pros and cons that you might want
to carefully consider before taking the plunge.


Potential profits that are large and relatively quick. Those who flip
properties as a sole source of income can make in a few months what the average
worker in this country makes in an entire year. The potential profits are great
in this line of work for the successful house flipping team.

Being your own boss. This is within certain limits of course are some areas
have strict zoning ordinances and code requirements that must be respected and
adhered to when working on a house. Even so you maintain a large degree of
control over all the decisions having to do with the flip.

Getting to work with power tools. There is that little kid in most of us that
really loves the idea of playing with power tools. In fact, that is the
deciding factor for many who have gone into this particular field of real
estate investing in the past.

It's hands on. There are all kinds of different investments that you can put
your money into but very few allow you to pour your heart, soul, blood, sweat,
and tears into them the way that flipping a house does.


Risk. Real estate is a risky business in its own right. When you add the skills
that are needed in order to flip a house, the wide variety of things that may go
wrong during a flip, and the volatility of the market in general there is so
much that can go wrong when it comes to flipping a house. You must be prepared
to walk away with less than nothing in order to make the high dollar profits
that a successful flip can bring to the table.

No easy out. If you invest in stocks that go bad it is possible to pull your
money out of that stock and go somewhere else. It is a little more difficult to
do this when it comes to a house flip. You need to be prepared to see it through
to the finish if you begin flipping a house.

Expenses. It's expensive to flip a house. You will need to come up with no
small investment of your own in order to do this. It will take careful planning
and diligent adherence to those plans in order to successfully flip a house but
the rewards for your significant financial investment are most often well worth
the effort.

Physical labor. For many first time house flippers who are accustomed to office
jobs the aches and pains and inexperience of muscles and hands to certain jobs
prove painful both physically and financially. Not everyone is as skilled as
the next guy when it comes to physical labor, carpentry, painting, installing
floors, hanging cabinetry, and countless other skills you will be called upon
to perform while in the process of flipping a house. You will occasionally need
the help of skilled professionals and on occasion need large doses of your
favorite muscle ache ointment.

Despite all the pros and cons many people around the world embark on their
first house flipping adventure each and every day. The allure of quick rewards
often outweigh the need for cautious prudence. But for many of these people
their efforts will pay off. Are you ready to take the plunge or have you
decided that a safer difference between you and the power tools just might be
the best bet? If you decide to go the distance and flip your first house I wish
you the best of luck.

5 House Flipping Do's

While many people have very specific dreams of enjoying the bountiful profits
that can be made from flipping houses very few people put too terribly much
thought into the process or any formulas that might be pertinent to success
when it comes to flipping houses as a real estate investment venture or for the
sake of building a nice comfortable lifestyle or retirement. You will hear a lot
about the things not to do when it comes to flipping houses but very few people
take the time to mention the things you absolutely must do in order to
successfully flip a house and thus begin your ride on the road to real estate
investment riches.

1) Do put everything to pen and paper and plan it out carefully before you
begin. If you are going to enter into this to make money you need to treat it
like a business. This means you need to have a plan of action and make every
effort to work towards carrying out that plan.

2) Do establish a budget for the entire project. You need to have a plan for
how much money you are willing to invest in the property itself, how much for
renovations, and how much money you need to make in order to be a worthy
investment for your time and labor. A house flip is a lot of work in order to
pull it off successfully. You want to have a good idea of how much homes in the
neighborhood are worth, the value of your property as is and the estimated value
of the property once improvements are made. In addition you should also have a
pretty firm grasp of the costs involved in making the repairs in order to
create a realistic budget for the entire project.

3) Do have an inspection. This is the single most important detail that can
save you a great deal of time, money, and heartache when everything is said and
done. Be prepared to walk away if the inspection determines that there is more
work needing to be done than simple cosmetic repairs. You want to make changes
that people can see because those are generally the changes that drive up the
cost of the house. You want to avoid needing to make changes and improvements
that aren't visible but are very necessary. If you need to invest a lot of
money and labor into the house you need to seriously consider the realistic
profit potential the property offers. If it isn't significant then you need to
walk away before the property becomes a real estate investment money pit.

4) Do know the neighborhood and plan your flip according to the needs of the
area rather than your personal tastes and needs in a home. This is another
thing that many first time flippers forget. This is not a personal project it
is a business project and you need to treat it as such. Keep costs down and
feelings out.

5) Do remember that you are in the market to make money not waste money when it
comes to establishing an asking price for the property. You've poured blood,
sweat, and probably more than a few tears into your flip but you cannot set the
value of the property by the effort you've placed into it. Have realistic
expectations of how much you stand to earn from your efforts and how much you
are willing to go down on the price in order to walk away with some profit in
your pocket.

You should also take a moment to reflect upon the fact that many first time
flippers actually lose money on their first flip. If you turn a profit at all,
even a small profit you have learned many valuable lessons that you can carry
with you into future flips and make more money. More importantly the lessons
you learn from your first flip are lessons that money really cannot buy so it
is worth a lower profit or even taking a slight hit if your experience makes
you even more money in the future as you continue along your real estate
investment path.

5 House Flipping Don'ts

When it comes to making money in the business of flipping houses and other real
estate investments you will find all kinds of do's and don'ts along the way. The
truth of the matter is that these are extremely useful whether this is your
first house flip or you have been flipping houses for years. In fact you might
just find that you can learn something new on occasion by reading lists such as
this even if you've been flipping houses for years and have many successful
flips under your belt.

1) Don't forget to check out the neighborhood before you buy. You will want to
make sure that the property you are considering is a good fit for the
neighborhood. You should also take the time to make sure that the plan you have
in mind for the property will match well with the other neighborhood residents
in order to guarantee a quicker sale.

2) Don't blow your budget without just cause. Your budget is what you used to
determine whether or not the house would be a profitable venture. If you blow
your budget and cannot recover the extra money you've spent in the selling
price on the house you will have seriously cut into your profits if not
eliminated them all together. The goal in property flipping is to get in and
out quickly and spend as little money as possible in order to make as much
money as possible.

3) Don't forget to set daily goals and hold yourself accountable to those
goals. If you don't reach your goals for the day it can set the entire project
back by as much as a month depending on the goals and what has to be rearranged
as a result. Stick to your timeline and your daily schedule in order to avoid
potentially costly delays in time and money.

4) Don't neglect the exterior. Curb appeal is what brings buyers into the
property. If you spend all your money, time, and effort making improvements to
the exterior of the home you will have little left to make the outside
appealing to potential buyers. A homebuyer is in the market for the entire
package. A home that looks run down on the outside leaves the impression of
being neglected on the inside and many potential buyers will never walk inside
if the outside looks forlorn.

5) Don't spend money you don't need to spend. While it would be great to put in
granite countertops and gourmet kitchens into every home it isn't always
practical and this is often money that will not be recovered, particularly in
homes that are in marginal neighborhoods. If you want to get the most for your
money avoid costly expenses that aren't exactly necessary for the successful
completion of the flip. Resurface bathroom fixtures rather than replacing them
if possible and use new cabinet doors or hardware rather than adding new
cabinets all together to cut down on expenses. In other words, salvage what you
can, fix what needs to be fixed, and add a few cosmetic touches before moving on.

The market for real estate is a very fickle market. Avoid risking too much time
and money on a property that isn't going to recover those added touches and
expenses. Instead hold onto those ideas for higher end flips once you have a
few successful flips under your belt.

House Flip Boot Camp

If you are anything like millions of Americans you have probably caught
countless shows on cable television that boast the serious profits that can be
made by flipping houses. This is a very true statement, serious money can be
made when one goes about flipping the correct way, however, serious money can
be much more easily lost when a house flip goes wrong. If you are hoping to
find your way to fortune through real estate investing you need to pull
yourself up by the bootstraps and understand a few house flip basics.

The first thing you need to understand is that the ultimate goal in a venture
such as this is to make as much money as possible in as little time as
possible. This means several things to the wise investor not the least of which
is that you must always have a complete inspection performed before you make any
sort of financial commitment to the house. A good inspection can help you
identify work that must be done, whether or not there is any structural damage,
or whether there are any unexpected problems such as signs of termites or water
damage behind the walls.

These are very important things to know and should have a significant impact on
your offer on the property as they will have a direct effect on how much you
will need to invest in making the property sellable and whether or not the
property will even be profitable when you consider how much money will be
needed to get it in minimal selling condition and how much you can reasonably
expect to sell the house for after that.

Once you have the inspection done it is a good idea to take into account all
the things that will need to be done to improve the property and the things
that must be done in order to get the property in sellable condition along with
permits that are needed, inspections that are needed, and jobs that require
licensed contractors in order to meet local code requirements. Each of these
will take a significant amount of investment in order to accomplish and that
should also reflect in your offering price.

Far too few would be house flippers manage to take in the big picture when
making plans and this is where they end up missing out on the bigger profits
that can be made by successfully flipping houses for the lowest possible
investment with the highest possible return on their investments. When making
your plans you will want to go with changes that are cost effective.

Avoid making significant structural changes to the house unless you have a
licensed contractor sign off on the wisdom and safety of those changes, as they
can be very costly as well as dangerous to the stability of the property. At the
same time you should salvage as much as possible within the existing structure.
Flooring and paint are almost always required in a house flip but you do not
always need new cabinets in the kitchen or bathroom fixtures. Chances are new
doors and hardware in the kitchen would be a great fix for drab and tired
cabinetry while greatly impacting the overall look of the kitchen without
robbing you of some serious profits (doors cost significantly less than making
new cabinets and can add the appearance of custom cabinetry).

The biggest idea to walk away from house flip boot camp with is the idea that
the most visual impact you can have on the home for the least amount of money
the better. In other words you don't want to purchase a home that needs new
heating or air conditioning as they are not visual changes and are quite
expensive. Find a house to flip that needs minor cosmetic repairs and a little
dose of style and imagination and you will be able to maximize your profit.
That is what real estate investing is all about after all.

The Risks of Flipping Houses

Real estate investing is a field in which millionaires are made and lost on an
almost daily basis. Most of the wealthiest investors in the world will agree
that real estate is by far one of the most profitable fields in which you could
invest. It also carries some of the biggest risks when it comes to investing at
the same time. Real estate investments are large investments for the most part
so when you loose on an investment such as this the losses tend to be much
greater than when you loose in other investment avenues.

When it comes to flipping houses there are several risks that you should
consider before diving in headfirst. While most of the risks are not something
you can anticipate or plan for they are risks that you should be aware of and
carefully consider before investing in a risky venture such as a property flip.

1) Fickle market. The real estate market is a fickle business. There are
countless things that can greatly impact the likelihood that your investment
will sell quickly or sit on the market for months on end and most of them are
beyond your control Tornadoes strike nearby, crime happens nearby, a big
company goes out of business, or a new company moves into the neighborhood. For
better or worse all of these things have a profound impact on the real estate
values nearby.

2) Neighborhood knowledge. It is very important that you take the time to get
to know the neighborhood before you invest in a house you are planning to flip.
You want to make sure that your vision for the home fits with the reality of the
neighborhood and that the average income of the people in the neighborhood will
be able to purchase the home you are creating.

3) Bursting bubbles. I'm sure you've heard all kinds of talk about the real
estate bubble and how it seams to be bursting. While I'm not sure I put much
stock in that I do know that heavy taxes in an area, new taxes in an area, and
the encroachment of crime in an area can give you a sudden stream of
competition for low prices while also making it more difficult in general for
the property to sell.

4) Underestimating your own limitations. This is a big deal when it comes to
risks in the business of flipping houses. You need to have realistic
expectations before getting in of the time frame for completion, budget, and
what you can do yourself and what you will need to hire professionals to
handle. If you don't you can seriously impair your budget and the impact of the
work you do as a whole.

5) Underestimating prices. This is another big deal because you need to have
realistic expectations when it comes to the price of supplies, tools, labor,
and equipment that will be required in order to complete your house flip.
Failing to have a reasonable grasp of current prices can have a devastating
impact on your budget and how much you can actually accomplish during the
course of your house flip.

6) Great profits. While some do not necessarily consider this a risk, excessive
profits do work to impair your ability to pull out your wallet at the bank or
anywhere else along the way. While we could be all so lucky as to call that a
risk it is a very possible outcome of your house flipping attempt as long as
you spend at least as much time in planning your flip as you do in executing it.

You should understand that there is no such thing as a no risk flip or a no
risk real estate investment. You cannot eliminate the risk all together for the
types of rewards that stand to be made through real estate investing and
flipping houses. Tread softly, plan wisely, and work diligently in order to
make your financial dreams a reality through real estate investing.

Real Estate Investment Options

There are all kinds of avenues available to those that are considering real
estate as a likely method of investing in the future. And why on earth
shouldn't you? This is one way that millionaires around the world will agree to
build a massive fortune quickly. At the same time, real estate can be a very
risky venture for business so you need to have a few more stable methods of
bringing in money in order to have a truly diverse portfolio and a better
security system for your financial future. Even within the world of real estate
investment you will find different manners of investing that each bear different

Commercial real estate is a good place to begin because it is relatively secure
when compared to some of the other forms of real estate investing. The drawback
with commercial real estate is that it requires a massive investment to begin
with. This is something that many real estate investors do not even consider
until they have built a sizable portfolio and have plenty of money to risk. It
is stable because most businesses that lease from you will want to lease on a
long-term basis. This means that when you get clients, businesses prefer to
stay in one location as long as possible because it's bad for business in most
cases to constantly be on the move, they tend to stay a while.

House flipping. This is becoming a popular form of real estate investing and
many people have discovered that this is also a great way to make or spend
money very quickly. This is a high-risk venture to say the least but the
rewards are equally high when a flip goes well. You will have to decide for
yourself if you are willing to take the gamble as house flips are part skill
and part luck.

Residential rental properties. Becoming a landlord, while perhaps not as glitzy
as owning business properties throughout the city or flipping fabulous
properties for instant profits is a great way to work yourself into a rather
comfortable retirement. This is a long-term type of real estate investment but
the payoffs can be rewarding when all is said and done. For the cautious real
estate investor this is a worthy type of real estate investment to pursue.

Pre-construction real estate. Pre-Construction profits are even riskier than
house flipping in many instances, particularly as it has become so popular in
recent years. The trick with this kind of investment is finding the right
property in the right market. If you can get in a city that is about to have a
serious housing shortage or is in the beginning stages of a housing shortage
(such as a few desert and coastal communities have experienced in recent years)
you stand to make quite a fortune for yourself. The problem is that this field
is highly speculative and very competitive.

Lease or rent to own purchases can often bring better profits. For many real
estate owners this is preferable to straight up renting for many reasons. First
of all, those who hope to own their homes are much more likely to take better
care of their homes than those who are just renting. This means that even if
for some reason they decide to move elsewhere and do not complete the purchase
you are less likely to need extensive repairs before you can move along to the
next client. You can charge a little more than rent applying a certain amount
of the monthly rent to the purchase price or down payment of the home, and you
can actually be helping a family that might have hit a trouble spot along the
way to achieve the American dream of home ownership.

Real estate investing is a great way to build great fortunes. You must decide
where you want to begin your journey into this lucrative field however.
Remember that once you've begun your real estate investment career it is a good
idea to utilize more than one type of investment for the sake of diversity and
spreading the risks, as this is a volatile market at best.

Pre-Construction Real Estate Investing

If you have the heart and soul of a gambler or love extreme sports and
activities such as skydiving or bungee jumping then you may be the ideal
candidate for pre-construction real estate investing. Pre-construction profits
are often among the highest in the industry. At the same time so are the risks.
You will find the greatest highs and lows that can be found in the field of real
estate investing lie beneath the umbrella of pre-construction profits and many
of the big names we know so well in the real estate investing field have made
much of their fortunes through speculation and pre-construction sales.

Before I go any further, one word of caution should be spoken. While the
potential for profits in this particular corner of the real estate market are
unconventionally high the risks are also abundant. This is speculative real
estate at its very best and as we have all learned in the past, when the bubble
bursts in a specific market those who have the most invested are the ones who
often loose most heavily.

As far as what pre-construction real estate is there are a few interpretations.
The first is also the most obvious. You are buying real estate at some point
before construction is complete. In hot markets you will often need to purchase
the units before ground has broken on the project in order to get the lowest
price for your investment and highest potential pay off for your pockets. Once
you've purchased the unit or units you plan to sell you then begin seeking
buyers for those units. In markets that are on fire like some Vegas suburbs and
big retirement and vacation cities along the Florida coastline the same property
is not exactly uncommon for a property to change hands and have several owners
before the unit is complete. Each one will take a little something home from
the table for their efforts with those who get in earliest often taking the
largest piece of the pie home with them.

You may be wondering why this occurs and the answer really is simple. When the
contractors attempt to get funding for their buildings in these large complexes
they often need to have a certain percentage of the units "pre sold" in order to
convince the banks that there is an adequate market and to garner some of the
revenue that is needed to get the venture up and running, so to speak. So real
estate investors buy these units at rock bottom prices because essentially they
are paying for the idea of the unit (which hasn't at this time been built and
isn't yet approved to be built in many cases) rather than a brick and mortar
property. As the project draws closer to completion, particularly in markets
where real estate is in high demand, the value of the property rises
dramatically ending in ridiculous profits for those who have managed to hang on.

The risks however are many. There are any number of things that can go wrong on
a project such as this not the least of which is that the demand for housing
will be met before the unit is actually built. This has happened and continues
to happen. Also recessions, business closings, economies collapsing, and
tragedies in the vicinity can occur before the property is complete leaving
everyone who has invested heavily in the project holding a little bit of the
bag and loosing their profits and, quite possibly, their investment. These
projects generally take a great deal of time to complete which makes the risks
that much greater and the anticipation of these events a little more difficult
to map out ahead of time. If you can manage to make it through however many
investors see more than a one hundred per cent return on their investment
making it a popular type of investment among many despite the rather large
risks involved.

Risks of Real Estate Investing

All good things carry with them some degree of risk. The same holds true with
real estate investing. Despite the promise of high rewards you should temper
those ambitions with the reality that the risks involved are more often than
not just as high as the potential rewards. For this reason you need to take
every possible precaution in order to insure that you minimize your exposure to
risk whenever possible or at the very least are prepared, financially and
mentally to accept the consequences of those risks if the time comes.

The most obvious risk when it comes to real estate investing is the immediate
risk of losing your investment. This risk can be a huge blow depending on how
large your investment was to begin with but isn't the worst thing that can
happen during the course of a real estate investment gone wrong. While I'm
certainly not trying to talk you out of investing in real estate all together
it is a good idea to have a realistic view of the risks and the potential

If you are flipping houses as your real estate investment you have the
potential to loose a little more as you can become injured during the course of
your work. The sad truth is that many who are attempting to break into the
business of flipping houses have neither adequate insurance coverage (this is
true of themselves and the property in general and others that may be working
on the property), the money, nor the time that a serious injury might require.

Another risk common to real estate investing is the fact that stuff happens.
Market trends tumble, companies go out of business leaving towns and the local
real estate market in shambles, accidents happen during the course of the work,
natural disasters occur, and buyers change their minds and pull out at the last
minute. Each of these things can have devastating consequences and are almost
always events that are completely beyond your control as a real estate investor.

If that wasn't enough many investors fail to have a proper inspection and find
out when it is really too late that there are serious structural problems and
other sorts of things wrong with the property. These things cost money to
repair and cut into profits, occasionally resulting in a loss. The thing is
that once you find out something is wrong with the property you are honor bound
to either reveal the problem to potential buyers or fix the problems before
selling the house. In the case of a flip, many major problems will undo the
work that has already be done. If this doesn't remind you of the importance of
a thorough inspection I have no idea exactly what will but inspections are
important for many reasons and can save a lot of time and money if you have one
done ahead of time.

Do not allow the risks of real estate investing prevent you from taking the
plunge. They are spelled out here to remind you that prudence and caution are
wise when investing in real estate not to talk you out of this potentially
lucrative field of investing. If you are interested in real estate investing
there is no reason on earth you shouldn't take the time and make the effort to
learn more about its potential.

Funding Your Flip

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 either fund a good portion of the expenses
yourself or you are going to have to find some other means of financing your
house flip. First things first, the less you pay in interest the more money you
bring home. You do not want to max out your credit cards in search of profits
from a house 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. The
best-case scenario is that you would have the money to play with and assume no
real risk in the house flipping process but very few people trying to get
started 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 attractive for
many reasons not the least of which are the facts that there are hefty penalties
for doing this and you are 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 risky because you aren't experienced but the real estate market is
fickle. 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. Keep in mind that this is a 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 a partnership you need to carefully discuss the type of
financial and labor investment that is expected of each partner and the share
of profit that each partner expects to 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.

Multiple Streams of Income in Real Estate Investments

It doesn't really matter what kind of investing you are participating in, it's
almost always a wise idea to have multiple streams of income in order to
maximize your profits while spreading your risks. Even within the confines of
real estate investing there are different types of investing that can help you
spread your risks when markets meet turbulent times and this is a very good
safety net for those who do not want to feel as though they are gambling away
their investments on a real estate market that is fickle on its best days.

You really have two course of action when it comes to bringing in multiple
streams of income when building your financial portfolio. The first is to
spread your real estate wealth and investments across several different types
of real estate investments. There are a few types that come immediately to
mind. First there are rental properties. You have two options even with these.
You can either choose to rent properties outright to families, students,
singles, and the elderly in your town or you can offer a lease or rent to own
situation for those who have struggled in the past but still have the dream of
home ownership.

Other options for bringing in multiple streams of income through real estate is
to have a few rental properties and couple those with a few flips in the works,
perhaps a commercial property or two, and a pre-construction deal or vacation
condo in the pipelines. One thing is certain you should always be on the
lookout for your next real estate investment if you really want to make good
money in this business while having a little added security. Rentals are
passive income for the most part, especially if you have a solid property
manager taking care of the details and the other investments are often icing on
the cake.

If you want a truly diversified portfolio however, it is a good plan to include
a few investments that aren't related to real estate investing. While I firmly
believe that real estate investing is the way to go for most people there is
much money that can be made in other fields and it would be pointless to
discuss multiple streams of income without mentioning a few that were unrelated
to real estate investing. Retirement plans are a great option and you can now
invest in a retirement plan of your own even if you are self-employed. It is
definitely worth considering as yet another stream of income, even if it is
income that you will need to wait a while to receive. Franchise businesses are
often great money makers for those who need more immediate results from their
investments efforts, and stocks and bonds are also great long term investment

The truth is that there are many things you can do to create even more streams
of income to add to your real estate investments. From making money online
through affiliate marketing, blogs, and direct sales you can also tackle brick
and mortar businesses, though these tend to be just as time consuming as real
estate. The point is that you want to bring in money from different avenues and
real estate investing is one of many different routes to explore when deciding
on your investment future and establishing those multiple streams of income.

Managing Money During a Flip

Money management during any real estate investment venture is an essential
skill. If this is your first time flipping a property it is probably more
important on the first flip than any other as you need to fully realize how
much things cost and how quickly those expenses can up. It is so simple for the
budget on a house flip to get completely out of control. For this reason you
need to take control of the financial situation from the very beginning.

Begin by establishing a realistic budget for the entire project. If you find
yourself spending more money in one area than you had originally planned you
need to either revisit the initial budget and plan for adding more money to the
pot or you need to make cost lowering adjustments elsewhere along the way to
recover the excess. You will need to have a firm idea of the projects you are
going to tackle, big and small, as well as the costs involved in each project.
Take a walk through a hardware store and get a firm grasp of today's prices on
the hardware, equipment, and supplies you will need to complete the job.

Use contractors when necessary but sparingly. There are times when it will cost
much less to use a contractor on a project than to muddle through on your own.
There are also times when local laws require a contractor. You need to use
contractors for these times but you need to avoid paying the princely labor
costs contractors charge for things that you could easily do yourself. You
never want to spend a penny on a flip that you don't need to spend and labor
costs are a huge budget buster.

Get permits first and up front. Time is money when you are flipping a house and
once you start the work that time is precious. Make sure you have all the
permits you need and that they are paid for before you begin the project in
order to save time and money after the project has commenced.

Then create a habit of accounting for every penny spent throughout the day at
the end of every day. This becomes a good habit to have for your first and all
subsequent flips. By doing this you will have a solid grasp of how much money
you are spending as well as how quickly you are spending it. You will need
money to spend on little things throughout the course of the project so if you
are spending money too fast up front you may not have the money needed to take
care of the small details that mean a lot when all is said and done.

One huge way to better manage your money during a house flip is to make a
conscious decision and consistent effort to work according to your tastes.
Chances are quite good, especially for a first flip that you will be working on
a house for those who have less financial means than you may have. For this
reason you need to keep your project within the budget of your buyers. This
will save tons of money. In other words a lower income community cannot absorb
the costs of granite, marble, and hardwoods in most situations so don't go to
that expense.

In order to turn a solid profit when flipping a house or doing any type of real
estate investment you absolutely must have a firm grip on your money, where it
is going, and what your plans are for the money. The less money you spend the
more money, in many cases you stand to bring home in profit. Spend the money
you need to spend in order to improve the value of the home but avoid luxury
expenditures that aren't necessary for the neighborhood or the home in question
in order to maximize the potential profits you can bring home.

Real Estate Investing in Rental Properties

There are many ways in which a person can make a living when it comes to real
estate investing some of them carry more risks than others. It goes without
saying that those that carry the greatest risks are often the very real estate
investment methods with the highest potential profit but slow and steady, in
many cases, wins the race. Flipping houses is in the news a lot because so many
fortunes have been made doing this-more than a few have been lost in this
venture as well but those don't make the news nearly as often.

Working with rental properties isn't nearly as glamorous and doesn't provide
the almost instant profits that flipping houses might but it is also a great
and very valid method of real estate investing that will build a steady profit
over time if you plan properly. Rental properties are in demand now more than
ever with so many people going into foreclosure and losing the homes they've
worked hard to build for their families. For this reason rental properties are
a good thing to own at the moment, especially those that are family homes.

There are many reasons that people rent and while there are some risks involved
when renting properties, the risks are much lower than the risks involved in
flipping or pre-construction investment endeavors. There are a few things you
should consider when purchasing a property for the sake of renting however in
order to make a wise and long lasting decision for your real estate investment.

First, only invest in rental properties in areas that people want to live in.
It may be true that you can buy property cheap in a few very run down sections
of town but it is doubtful that you will turn those properties into profitable
rental units. It is best to pay a little more for a more attractive address for
renters. You will find that your properties are inhabited more often, which will
make you more money in the long run.

Second, pay attention to the types of people in the area and buy rentals
accordingly. It is quite possible to turn large homes into multiple smaller
apartment units (according to local zoning laws) that are ideal for college
students. You do not want to do this however in an area that is geared towards
family homes and won't be friendly or tolerant of college students. Design the
rentals according to the market you are attempting to attract.

Third, don't be greedy. The goal of owning rental properties is of course, to
make money. At the same time if your price your properties too high you will
find that they sit empty more often than not. Every month that your property is
empty is a month that you aren't making money on that property at best and a
month that you are losing money at worst.

Fourth, know the market. Study the local market for buying real estate and
renting real estate. This will help with many things, not the least of which is
determining whether or not any given property will make an attractive rental
unit. Another thing it will help you determine is how much rent the units you
are considering can bring in month after month.

Finally, when renting properties you need to keep your eye on the long-term
goals rather than shortsighted goals. Property rental is a marathon rather than
a sprint with the greatest profits coming at the end. You will want to pay as
little interest on the property as possible and pay the property off as quickly
as possible in order to realize the maximum profit potential and acquire new
properties. The real money when renting properties as a real estate investment
isn't in renting out one or two units but twenty or thirty. The more rental
properties you own the more money you stand to make from owning them.

House Flip Sob Stories

What you don't see on many of the television shows about flipping houses are
the many sad tales of promising flips gone wrong. These epic tales of woe are
often the precursors to financial hardships for quite some time as those who
fail at their property flips work on recovering from their heavy losses and
moving on with their lives. Some are hit harder than others but the snowball
effect of a bad flip are often not even hinted out on the prime time
televisions shows that are so proud of the many success stories that arise
because of serious and studious efforts in the house flipping arena.

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, months worth of planning need to go into your first property pick in
order to lower the risk of failure and to greatly improve 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
expecting to make more money on your first flip than you made last year as a
full time employee you might need to make other plans. The first flip rarely
goes as expected.

Third, you need to set aside at least twice as much money (preferably three
times as much) as you think you will need for the work on the property in order
to cover the actual costs that will be needed. There are inevitably tools,
permits, supplies, and labor that wasn't counted on in the initial budget
figures as well as the tendency to seriously underestimate the cost of the
materials that will be needed in order to get the job done. If you don't have
that much or can't spend that much and walk away without a loss then the
property you are considering might not be the best property for your first flip.

Finally you need to plan everything. Every day needs to be fully planned before
you show up to work on the property and you need to have all the materials you
will need on hand from lunch to drinks, to 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 costly delays
by proper planning and you will discover that you have a real estate investing
success story worth writing home about.

Commercial Real Estate Investing

The financial industry greats will be the first to tell you that real estate
investing has the potential to bring in serious profits. They will also
gleefully inform you that the risks in some cases far outweigh the potential,
especially if they are among the more cautious investors in the industry. Those
who have made their fortunes in real estate however will tell you that investing
in real estate is worth every ounce of risk when you manage to work through the
rough patches and find your way to real estate investing fortunes.

Commercial real estate is somewhat unique among real estate investment types.
This is the type of real estate that requires a high investment to get into the
game, much higher than most residential property and poses equally great risks
depending on what you plan to do with your commercial real estate investment.
Of course you will also find more than a few options for your commercial real
estate investment that many investors find appealing.

Most investors find leasing office or building space to be the safest route to
take when it comes to real estate investing is the path of leasing office space
or warehouse space to businesses. They feel that this is a relatively steady
source of income because most businesses prefer to keep their locations as long
as possible. Smart business owners are well aware that customers, clients, and
vendors need to be able to find them in order to do business with them and for
this reason, prefer to keep their business in the same location whenever
possible rather than reestablishing themselves in different locations year
after year.

Commercial real estate investing is a bit of a different animal than
traditional residential real estate that many of us are more familiar or
comfortable with. You will need to do a lot of research before jumping in with
both feet with this particular sort of real estate investment. Commercial real
estate investments can take on many forms. From strip malls and outright
shopping malls to business and industrial complexes to sky scrapers and high
rise condos you will find all manner of commercial real estate interests.
Whether your interests lie in business or personal types of commercial real
estate there are significant profits that stand to be made.

Unfortunately, beginners often find the path to commercial real estate
investing laden with thorns. You will need a massive contribution to fund your
commercial real estate pursuits and it is probably best if you can find a group
of investors in order to share some of the risks. Real estate, in and of itself,
is a high-risk venture. Commercial real estate bears a little more of the risks
in the beginning however once you're established and people, particularly
investors, know your name you will find that path to real estate wealth is much
easier obtained through commercial real estate, if you play your cards right
than many other types of real estate investing.

To create even bigger profits it is often best to work as part of a team of
investors when it comes to commercial real estate investing. Not only does this
approach spread out the risks to some degree but also helps find the good buys,
spreads the labor pool, creates an environment of ideas, and allows you to
bounce those ideas off one another seeking temperance and enthusiasm for
members of your investment group in like measures. It is a great idea for those
who are looking to build a prosperous future in the field of commercial real
estate investing and can be extremely profitable for all involved.

Commercial real estate investing can be extremely intimidating if you allow it
to be. Avoid putting yourself in a situation where you feel out of control or
completely uncomfortable for your first commercial real estate investment but
if you have the means, the price is right, the deal appears to be solid, and
you feel you are ready for the challenge, commercial real estate profits can be
a serious motivation.

How to Maximize Profits on a House Flip

When it comes to real estate investing a house flip is a great way to go. It's
also a rather bold move for many who are considering this as a first time real
estate investment. At the same time you can minimize the risk while maximizing
the profit potential by following a few guidelines.

1) Have an inspection. For whatever reason there are many people who enter into
a property flip situation without ever having a valid and complete inspection of
the property made. This means you could be doing work that will need to be
undone at some later point in the process. You want to avoid this situation if
at all possible and it is easily done (in most cases) by having a thorough
inspection. There will almost always however be some unanticipated surprises
along the way. 2) Establish a budget and stick with it. Most people flipping
houses plan a budget. Unfortunately, for whatever reason, very few actually
stick to the budget they originally established. It is a good idea to leave a
little wiggle room in your budget for unexpected emergencies but be firm on the
spending limits for specific projects. If you go over on those projects
eliminate something elsewhere in order to save money.

3) Consider the target buyer when making adjustments. You must understand when
purchasing a house to flip that you are buying the house for someone else and
you need to make adjustments, changes, and improvements according to what your
target market demands, expects, and can afford to absorb the costs of you
adding. It doesn't matter how beautiful you've made the house if no one that is
willing to live in the neighborhood can afford your asking price when all is
said and done. 4) Remember that this is a business situation and don't refuse
to consider offers that will net you a profit just because the profit isn't as
good as you'd like. A house sitting empty on the market accrues carrying costs
and is ripe for all manner of disasters. You want to get in and out as quickly
as possible so that you can free up your investment to move on to the next
project. Entertain all offers seriously even if they aren't what you were
hoping for. You never know when one might be the best you're going to get.

5) Don't take it personally. Once again a home is a very personal thing to most
people. While you may have worked very hard selecting colors, materials,
flooring, etc. not everyone is going to share your tastes. Do not alienate
potential buyers by attaching personal emotions into the mix and getting angry
because they do not appreciate your hard work. I hate to add this but it
happens a lot more than you might think when flipping houses.

6) Spend as little money as possible while making bold changes. This is the
best way to maximize your profits. You want the changes to be visible and
effective. Don't overlook the value of curb appeal you need to put serious
effort into improving the exterior of the home as well as the interior because
this is what people will see first and the change that will invite them to take
a look at what you've done inside.

Little changes make a big improvement in the value (especially the perceived
value) of a home. Make the necessary changes and sell the house as quickly as
possible in order to bring in the best possible profits.

Finding a Flip

Flipping houses is becoming increasingly popular. Unfortunately, the popularity
of the idea is creating a bit of competition among those who would love to try
it out for the first time. The increased competition often serves to drive up
the costs involved in purchasing the profit, which only manages to lower the
profit potential. However if you find a good deal and feel that the property is
a good candidate for a flip you can ask yourself the following questions to help
you determine whether or not the property really is a good candidate.

1) Have you had a qualified inspection and determined that there are only minor
repairs that need to be made to the property and the landscaping? This is
important because every repair that needs to be made will eat into your budget.
You want to complete the project with as little extra money invested as possible
in order to get the greatest return on your real estate investment possible. 2)
Is the property suitable for the neighborhood? By this I mean is the property a
three-bedroom house build for families in the middle of a retirement community
or is it a one bedroom, cottage-style home in the midst of family houses? These
aren't exactly a good match and can cause problems when it comes time to sell.

3) Can the neighborhood bear the price you need to bring in from the flip? If
you are creating an upscale home in a marginal neighborhood you are almost
guaranteeing a loss on your investment. You want to find a house in need of
repairs selling cheap in a neighborhood of much better houses so that it can
bring in the profit you are hoping to get when all is said and done. 4) Can you
make the changes you envision for the house on your budget and without
significantly changing the structure of the house? This is a biggie and one
that often gets overlooked. You do not want to start knocking out walls or
creating additions when flipping a house. That is something you should leave
for the new owners. You want to make as few waves as possible and only make
changes that will improve the value of the home.

5) Can you improve the value of the home enough to make it worth your while in
a short amount of time? This is another big deal when it comes to a house flip.
It takes time and money to make the changes that most "flippers" have in mind
for their investment, especially first time flippers. Do you have the time to
stick with it and the money to cover the carrying costs while you are in the
process of making the changes?

6) Is the property in a high demand neighborhood, city, etc. for selling
properties? Another common mistake is buying in areas that are hard sells for
buyers. It is often quite simple to find lower priced properties that are
attractive at first glance however; if you can't sell the property you purchase
to flip it really defeats the purpose of putting all that time, effort, and
money into making the improvements.

7) Can you do the work or will you need professionals and if so, will it still
be cost effective? Be careful that you do not overestimate your abilities in
this if possible. It is great to think you can put down a hardwood floor but
the reality of doing it is quite another matter. Be sure you have a realistic
understanding of the potential costs involved in the flip and whether or not
the property will still be profitable in the worst-case scenario.

Answer these questions when checking out potential real estate investment and
house flipping properties and you should be well on your way to a successful
flip, at least as far as the selection of the property goes. You should also
find a house to flip that you like as you will likely be spending a great deal
of time there.

Do You Need a Property Manager?

There are many decisions that you will need to make when investing in real
estate. One of those decisions, for those handling rental properties is whether
or not you need a property manager. Property managers have many uses and are a
great idea for those who have many properties to handle and wish to have a life
away from their real estate investing businesses. A property manager is your
buffer between your tenants and your family.

The benefits of a good property management service are quite numerous. To begin
with you will find that they eliminate the need for tenants to have your phone
number. If you've dealt with rental properties before without the buffer of a
property manager you are surely aware that it doesn't matter what time of night
or the morning things go wrong, you are the first person your tenants call to
fix those things. A property management service is able to handle many things
for you while letting you sleep through the night. It's no small favor when you
consider the multiples of tenants as you purchase more properties. A few late
night phone calls and many rental property owners are almost ready to get out
of the business of renting properties.

Property management services also often happen to have a qualified staff of
maintenance people that can handle many of the things that go wrong with rental
properties. The fee for these services may be included in your fees for the
using the property management service in general or certain services may charge
additional fees. Regardless your property manager or property management team is
often the best source to find contractors to handle the repairs they cannot make
for you as well as the repairs that they can. It's nice to know that you won't
be getting up bleary eyed in the morning calling around for a plumber on the
first exceptionally cold day of winter. Moreover it's nice to know that someone
else can deal with some of the negative things about owning rental properties.

My personal favorite reason to seek the services of a property management
service is that they are qualified to handle the legalities of taking care of
tenants who cannot make the rent for months on end. This is after all a
business and while you can relate to the circumstances that leave some people
unable to pay their rent you need the income from their property in order to
make your bills. It's much easier to leave some of the less pleasant tasks to
someone else, especially if you are a softy for sob stories.

Property managers also handle the advertising for your property and the
cleaning up and retouches that are necessary between tenants. They also allow
you to take vacations and such filled with the knowledge that your properties
and tenants are in good hands even when you aren't there to oversee everything.
Everyone needs to take a break sometimes it's nice to know that with a reliable
property manager you can actually sit back and relax while taking those breaks
without worrying about all the particulars of the properties you own so far

If you are going to invest in real estate, this is one of the most worry free
ways you can do it. The more properties you have, the more sense it makes to
utilize the services of a reliable property management team.

Rental Ownership Woes

While real estate investing is a great line of business to get into in order to
make copious piles of money there are a few things to consider before jumping
into the fray. This is particularly true if you are considering going the route
of a rental property owner. There are all kinds of reasons that this is a good
solid investment for most that are interested in investing in the real estate
business however, it doesn't come without a few drawbacks, not all of which are
financial. It would be wise to consider these things however before you buy your
first rental property.

First of all, if you own rental properties and elect to manage them yourself,
which is probably wise unless your first property is a multiple rental unit,
you will quickly discover that your life is no longer your own. You are
literally on call 24 hours a day 7 days a week to handle problems that may
arise from pipes bursting, heating going out, electric issues, noxious fumes,
leaky roofs and window sills and countless other complaints that may erupt at
odd hours of the day or night. Your tenants will have your phone number and
expect you to always take their calls.

Second, you have to play the role of Mr. or Mrs. Mean every month when the rent
is due. This is probably the least tasteful task of owning rental properties for
many rental property owners and one reason that many resort to the services of a
property management agency above all other reasons. You will hear all manner of
sob stories in your role as landlord but you need to treat this like the
business even the things about your business you don't like such as rent
collecting and, when necessary, eviction proceedings.

Third, the constant need for upkeep and repair is often daunting to rental
property owners. It's a sad truth that people do not treat rental properties
with the respect that they would treat a home of their own. For this reason you
almost always need to paint and replace carpeting, at the very least in between
tenants. This takes works and time not to mention the fact that the time that
is spent painting and replacing the flooring is time that the property is going
to be empty of tenants and not bringing in any income.

Finally, there is the constant need to have the property occupied. As the owner
of a rental property you will need to find new tenants when the old ones leave
because every day the property is empty is a day you aren't making money. You
want to have the property filled as often as possible and you really want long
term tenants whenever you can manage that. One way of course is by making sure
that your tenants are treated well, not overcharged, and happy with their homes.

Owning rental property can be financially rewarding but it is a lot more work
than many people give it credit for being in light of other careers within the
real estate investment field that may require more work upfront. Rental
properties require a long-term commitment to keeping the property in good
working order and making it a profitable venture for many years to come. If you
are considering this business and the above things are a deterrent for you it
might be a good idea to obtain the services of a property manager.

House Flip Successes

Everyone who decides to flip a house has dreams of being the one to bring home
the big one. You know that really huge success story about how you made more
money in three months of working on a house than you and your wife combined
made last year. The sad truth is that very few flippers ever have a flip that
good and those that do often do not manage to do so on their very first flip.
If you don't have those dreams it's glad to see that you have your feet firmly
planted in the sometimes harsh soils of reality.

Flipping houses is one form of real estate investing that has received a lot of
media attention in the last few years and is currently the source of many
interesting television shows that play on do it yourself channels on
television. If you haven't managed to watch any of these shows you may be in a
much better position to tackle your first flip than many who see these shows
and get a false sense of confidence when it comes to bringing in a substantial
profit by flipping houses. While the profits exist and are much better than
most people would envision, the average first timer doesn't fare on the higher
end of the profit scales all too often.

In fact, most first time flippers make rather slim profits when the tremendous
amount of work that goes into flipping a property is considered. One thing you
will want to do when flipping your own property is take care not to get too
greedy in the asking price. If you can make ten thousand or more on your flip
after all expenses are paid (including taxes, realtors, and any fees) then you
are doing exceptionally well and should be congratulated. It is those who
decide to go for fifty thousand rather than being content with ten that find
themselves alienating a good portion of the population that may have been
interested in purchasing the property from the very beginning.

In order to make your flip a success you need to be negotiable on the price
when all is said and done. This is where many people loose potential buyers and
find themselves sitting on the market month after month until they find
themselves in a situation where they must sell or risk loosing the house and in
this situation they are often in a position that they actually loose money
rather than profiting.

Success stories, when it comes to flipping houses are widely available though
many of them are just as widely exaggerated. Be cautious in your optimism when
it comes to flipping houses but plan for profits and you will find that you are
much more likely to get them than if you enter into the house flipping and real
estate investing process without a proper plan at your disposal.

Turn your house flip into a success story by spending as much time in the
planning process as you spend in the entire labor process that is involved and
necessary when it comes to flipping houses. If you do this and budget carefully
while sticking to your budget religiously you will find that you are in a much
better position to have the success you are hoping to have.

Lease to Own Property Investment

If you've dreamed of real estate riches along with dreaming of being in the
position to help out those who have hit a few bumps in the road along the way
but are generally good people fallen on hard times then you may want to
consider a type of real estate investing in which you purchase properties and
then work out a lease to own agreement with people who, for one reason or
another, cannot get the financing to purchase their own properties right now.

This type of real estate investing is a great way to make money while helping
out your fellow man and there are many other benefits to this type of
arrangement as well. First of all, renters have no stake in a property. For
this reason you will often find that renters have little regard for damage done
to the property beyond how it affects their security deposit. Those who have
hopes of someday owning the property however are much more inclined to take
great care of the interior and exterior of the home they are renting. This
means that chances are good that the value of the property will actually
improve during their tenure whether they ultimately decide to purchase or not.

This also benefits you because these properties are often in high demand and
will fill up more quickly then the average rental property should the sale of
the house fall through for whatever reason. Common reasons for sales falling
through are work related transfers, divorces, and an inability to get financing
even with the money escrowed to go towards a down payment. The good news is that
even if the sale falls through you can try again and the house isn't likely to
sit empty for very long.

The benefits to those leasing from you are many. First of all, you will be
putting a predetermined and agreed upon sum of each months rent towards their
down payment at the end of the (again) previously agreed upon amount of time.
This allows them to save the money for the down payment without really
consciously thinking about it each month. This agreement also allows them a
little more leeway for making improvements, painting to taste, and decorating
than your typical rental home.

Another big benefit to those leasing to own is that it gives them a certain
amount of time, typically two years, to get their affairs in order and work on
improving credit, saving money, and taking other positive steps towards their
dreams of home ownership. They also get the opportunity to see how they like
living in the home in question. Many homeowners would love to have had a
two-year trial on their homes before making the final commitment. They have an
opportunity to learn about many of their neighbors, the local schools, the
local commute, shopping, and entertainment among other things. These things are
all great knowledge for those leasing to see and enjoy first hand before making
the absolute commitment to purchase the property. It also happens to keep money
filling your pockets month after month with excess paid to go to the down
payment reverting to you if after two years (or the agreed upon time frame)
they decide not to make the purchase.

Some have a difficult time making the decision to go the lease to own route
when it comes to real estate investing. They feel, for whatever reason that it
is taking advantage of some people and that is something you'll have to wrestle
with on your own. Truthfully speaking it is a service that many people wish was
offered much more often than it is and can be a huge help to those who are
experiencing a bit of a rough patch but otherwise have always been on time with
payments and are, at the core, good people who deserve a break. You can quell
the feelings of taking advantage by offering a fair price on an arrangement
that has the potential to be mutually beneficial.

When Good Renovations Go Bad

It is common sense to think that if you fix up your place, maybe add a little
more counter space in the kitchen or maybe another bathroom, you'll be able to
sell your home for more than you bought it for. And in most cases, you would be
right. But in a recent study done by Remodelling Magazine, there are some
renovations that can actually cost you money and hurt the value of your house.

One of the biggest signs in today's world that you've "made it" is the back
yard pool. Maybe no other home improvement screams to the world that you've
reached a level of financial security that you're comfortable with like a pool.
Well, not everyone feels the same way. Studies done in Florida and Arizona show
that having a pool is still a big part in building equity in your property. But
what about the rest of the country? How about places where it isn't warm
year-round? It turns out that a pool can work against you in parts of the
country that have four seasons. The cost of upkeep and insurance are the main
turnoffs. But there is one other turnoff, too. The risks of raising young
children in a home that has a pool has become a red flag for many new parents.
The fear of a drowning accident is very real for many, and the presence of a
pool can turn a first-time home buyer away from your property.

Be careful when you try to get too trendy when you go to remodel. An extremely
important point to remember is that while you may think a special touch is cool
and fashionable, the people coming to look at your house may not think so. And
while most remodel touches can be changed, you may have a hard time talking a
prospective buyer into that. If you are not completely sure that the house
you're living in isn't going to be the house you die in, try to make any
remodelling touches neutral so that if the time comes to sell, you won't regret
what you did.

A final risk to avoid is the Jacuzzi tub. While you may have the time to sit in
a hot tub for an hour a day, most people don't, and most people won't use it.
You would be better off with an elaborate shower system than a big, fancy

When Disaster Strikes: Keeping Your Investment Safe

Once you've finished searching for that real estate investment of a lifetime,
you've gone to the open houses, you've gotten the financing, made an offer, sat
at home worrying if it's going to be accepted, had the celebratory dinner once
it was and then moved in, you're faced with the chore of protecting it. The
number of threats that your property faces can be staggering. It's not just
termites and crude neighbours that are looking to sink your land value, natural
disasters are a part of owning land, too.

It doesn't seem to matter where you live in North America, there is a natural
disaster with your name on it. The south has their hurricanes, the northeast
and Midwest has blizzards and the west has earthquakes. A quake is the most
sinister of all natural disasters. People in the rest of the country can see a
hurricane and blizzard coming days, sometimes even weeks away and properly
prepare their property for the coming storm. With quakes, there is no warning
(usually), there is no report on the news that morning saying you're scheduled
to get one. They just happen. So, how can you protect your investment from
getting a bad case of the shakes? Here are a few tips.

A good first step would be to pick up the phone or log onto the company that
carries your home insurance. Almost no homeowners policies cover earthquakes.
If you have the extra cash every month, earthquake insurance is a very good
idea, but be warned, it is considered catastrophic insurance, so the deductible
is going to be very high, usually between 10-15 percent of the amount of your
policy. It's still a good thing to have. Check the website of the US Geological
Survey to see if you live in a high enough risk area to warrant extra insurance.

A quick quake-proofing of your home is another good idea. This won' so much
protect your house as it will protect you if one strikes. Use latches to keep
cabinets closed, always make sure you have fresh water around and working
batteries in all flashlights. These are common sense steps that anyone who
lives in any sort of disaster area should follow, whether it be earthquakes,
hurricanes or blizzards.

A final step to safeguard your home is to know where your utilities shut offs
are. Fires are common after earthquakes and you'll want to know where your gas
main shut off valve is so that you can turn it off and hopefully keep your
house safe after a major quake. Also, do not turn the gas back on until you are
told it's safe to do so.

Keeping your investment safe from natural disasters can seem impossible, but
with a little common sense planning, you can minimize the damage.

Tips for a Smooth House Purchase

Making the decision to buy your own home can be one of the most stressful but
rewarding choices of all. If you're a first time buyer, the entire process can
seem very intimidating. A few common sense tips can help you ease your way
through it much easier.

First off, go visit your local library and borrow a few books on basic real
estate principals. Make a sincere attempt at learning the jargon associated
with the real estate process, so once you're sitting in a meeting with a
seller, a real estate agent and a bank officer, you'll have a better idea of
what everyone is talking about.

Second, know what the difference is between "pre-qualified not pre-approved",
"pre-qualified" and "pre-approved". Sound confusing? It can be. It all relates
to how serious of a buyer you are. If you're "pre-approved not pre-approved" it
simply means that you have given a letter to a potential seller that you can
afford their property. It's nice, but it doesn't mean much. If you're
"pre-qualified" it means that you have a letter from a mortgage broker saying
what he thinks you can afford. This is better than not having a letter, but you
can do better still. If you're "pre-approved" it means that you not only have a
letter from a broker, but everything in the letter was shown to be true by a
lender and most of the work for a loan has already been done. You'll have a
MUCH better chance of getting the house you want if you're "pre-approved" than
if you are only on one of the other stages.

Choose the right lender. One of the phrases you're bound to get sick of hearing
when you're thinking about buying a home is, "do the research!!" This can't be
emphasized enough since banks offer different rates across the board. The more
banks you visit, the better the chances are of you getting a better deal.

Make sure that you plan for possible delays in processing. Any business that
deals in red tape is going to have problems getting things done on time. Real
estate purchases are no different, so make sure you factor these likely
problems into your plans.

While none of these tips are fool proof, they can help you through a very
stressful time. No doubt you will still have times where you feel like putting
your fist through a wall, but a little common sense goes a long way when
dealing with real estate, and the more you know, the better off you'll be.

The Prediction Game

While discussion on the state of the current US housing market is pretty much
finished, experts have turned their attention from Is the housing market
falling to Where is it going to fall first? And hardest?

There are many methods to predicting, and while none of them can even be
qualified as scientific, there are trusted voices in the din that people look
to to see a glimpse of what might happen with real estate markets around the

Mark Zandi is one of those voices. He works for Moody', and he has
taken it upon himself to attempt to formulate a prediction as to which housing
markets are doomed and which may get off easy.

The results? Zandi predicts dire results in Cape Coral, Florida, where he sees
a decline in home values of almost 19 percent. Reno, Nevada will be hard hit as
well, with a predicted 17% drop in housing prices. Stockton, California will
also be creamed, suffering from a 15% drop. How did Zandi come up with these
numbers? His recipe consisted of a few heaping helpings of supply and demand, a
generous serving of changes in local mortgage rates, a smidge of demographic
trends, a teaspoon of job market analysis and a pinch of new housing numbers.

A second, and far less analytical prediction method is floating around, too.
Traders at the Chicago Mercantile Exchange can actually trade real estate
futures in ten different housing markets. Their findings? San Diego will be the
hardest hit, with declines around 8 percent. Los Angeles won't be much better
off, with an expected decline in value of just under 7 percent. Las Vegas,
which many people see as being over valued because of the endless influx of new
residents in the last 20 years, is predicted to see a drop of almost 8 percent.

There were several areas where the two predictions matched. Both predicted
almost the exact same decline in San Diego and in Washington D.C.

But there were also major differences. Boston, which has already been taking
the brunt of the current housing market is predicted by Zandi to only see an
increase of just over 2 percent in value lost. The CME traders, however, see a
continued decline of 7 percent.

While no one knows for sure what's going to happen, the one thing pretty much
everyone agrees on now is that the market is headed south. The best choice
might be to just hang onto that property until things start going your way
again, but it's anyone's prediction as to how long that is going to be.

The Incredible Falling Mortgage Rate

Of all the factors that helped push the recent real estate boom of the last 5
years, low mortgage rates were perhaps the biggest. A recent climb in mortgage
rates was also thought to be one of the big reasons the market can cooled so
quickly. But with recent economic news showing a drop in rates, does that mean
the bust is coming to a premature end?

Not so fast say the experts. Housing inventories are through the roof across
the United States, and sales are down in most of those same markets. Recent
rate news is good, however, with mortgage rates peeking in July of 2006 at 6.79
percent for a fixed mortgage (30-year), while rates in mid-October have slid to
6.40 percent. While that may be cause for relief on the surface, if you take a
look at where rates were last year at the same time, they are up from 5.8

Rates were at their lowest in the last 5 years during June of 2003 when they
sat at 5.2 percent.

The reason the mortgage rate has such an impact on housing sales is because the
rate has direct bearing on how much a person's mortgage payment is going to be.
The higher the rate, the more the payment and vice versa. Most industry experts
believe, however, that if the mortgage rate continues to fall and return to its
2003 lows, the housing market will recover nationwide sooner rather than later.

Many experts, however, point to the longer trend in mortgage rates and point
out that while rates are up a bit over the last three years, they are still
extremely low compared to trends in the last 50 years.

Adding to the pessimism is the absolute glut of inventory on the market right
now. There is an increase of almost 40 percent in inventory available compared
to last year, and while lower interest rates may persuade first-time buyers to
take the leap, it's convincing those that helped fuel the boom the last five
years (people that bought homes for either investment purposes and people
buying second homes) to re-enter the market. This, as they say, is easier said
than done.

Taking a broad view, the mortgage rate is an essential part of a healthy real
estate market. But its impact can be overstated. There any many other factors
that would need to line up for the current housing slump to evaporate. If some
of those other factors can line up, than a lower mortgage rate can help lead
the real estate market back to the promise land.

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