Flipping Property
I'm just starting out in REI. I found a house for 180,000 appraised value at 200,000. I was wondering what is the best thing to do, purchase the home and then sell it, or just get a contract and assign it to a buyer? Any info will help me out a lot.
Since appraisals can commonly be off by 10%, before you get to involved, I'd do a thorough market analysis to make sure the house will most likely sell for 200k.
Then, I'd try to tie-up the property (by working with the owner and letting them know you'd like an option) and start selling. even if there is 20k of 'profit' to be made, you won;t be able to affort getting a new loan and reselling at 200k and still make any money.
On creative REI, I came across one book, and it suggested to get REAL cash profit from flipping not paper profit because your REI buyers can do the same thing and you can end up in trouble if they default on your notes.
How is it normally done in the business?
A house for 180K that is worth 200K
Keep looking you will find deals that have much more room than that.
Look at it this way, it take you three week of looking then you find a deal it takes another six to 20 weeks to sell it.
You better have enough room to cover all unexpected problems and still make a profit.... or it's just a lesson and it cost to learn