If you're a newbie real estate investor venturing into real estate flipping, it is crucial that you master the skill of finding affordable houses that have high potential. This is no easy task, but it's not an impossible feat.
To find houses to flip, you may want to leverage the internet and public records, collaborate with real estate agents, wholesalers, and investment groups, check out tax delinquent properties, HUD homes, estate sales, and code violation properties, drive for dollars, look for bandit signs and FSBO, and look for homes outside big cities.
In this article, we will explore all these methods and techniques to assist you in finding cost-effective houses to flip. Read the rest of this blog and learn how to find houses that are below market value right now!
Home flipping is the practice of buying distressed or undervalued properties, with the intention of repairing and reselling them. Typically, these houses need minor repairs or upgrades as well as cosmetic improvements.
Real estate investors aims to increase the property's value through making enhancements. This is so they can sell the property higher price than how much they bought their property.
When done right, house flipping can really be a lucrative investment strategy. But keep in mind that it needs careful planning especially in choosing cheap houses, strategic project management, and understanding of the local market.
To start house flipping, the very first step for investors is to identify potential properties that are cheaper than their market value. While this may seem easy, some investors still fail to identify which properties can potentially have a higher repair value.
As mentioned, many real estate investors prefer house flipping over other investing strategies because it offers a lot of potential benefits. For one, you can make money flipping houses in just a few months. We’ve listed some of them here to motivate you to start your house flipping journey.
This is perhaps the primary benefit of house flipping. Since you will be acquiring undervalued properties and make high value renovations, you can sell at a higher price and generate significant returns. If you found a property that only needs cosmetic fixes, you can earn substantially in a short period of time.
If you are a real estate investor who enjoys the creative aspect of renovating a property to increase its value, you would not only earn but also enjoy house flipping. Unlike passive real estate investment strategies like owning rental properties, you have more control of how you’ll earn your money. You can also decide on design and architectural changes.
House flipping can have a quicker turnaround time compared to other investments depending on the scope of renovations and of course, market conditions. It is possible to buy, repairs, and sell a cheap fixer upper within a few months. Since you’ll earn profits quickly, you can take more projects and earn more.
As promised, we’ll help you find cheap houses to buy and flip in your target areas. Here are 13 sources and strategies to start off your search.
Leveraging online resources is a very effective method for finding cheap houses to flip. Here are specific ways to maximize the internet in your search.
There are a lot of real estate websites, such as Zillow, Trulia, Home.com, Realtor.com, and Redfin that can provide you with lists of cheap properties for sale. You can search these platforms based on location, price range, size, and more. In most platforms, real estate listings include both residential and commercial properties. They also provide online and offline tools you can leverage for your flip investment.
Additionally, listings from these platforms include property photos, descriptions, and virtual tours in the form of videos so you can really see the property through your screen. You may also come across websites that offer tools and calculators for the after-repair or rehab value of the property you are targeting. This is useful in ensuring that you’ll earn from each project you will take.
Once you already know how to find these websites you’re going to use for finding cheap houses suitable for flipping, set up alerts or notifications for each of them.
When you search the web, you’ll see a lot of platforms like Realtybid, Hubzu, and Auction.com, which serve as a goldmine for finding cheap foreclosure properties to flip. Note that there is a maximum bid when you participate in the auction for foreclosed properties, but if you win, you can buy the property at a significantly lower price.
On another note, you can also buy a home to flip from foreclosure listings or those that are under short sale. A foreclosed home like the ones in Foreclosure.com, Zillow, and RealtyTrac compile properties that have been foreclosed upon.
Foreclosure listings from these platforms provide comprehensive details about the property, including location, price, size, condition of the house, and types of properties. There are also photos and specific descriptions of the property, so you almost get a virtual tour.
Since you’ll be seeing how the property looks, you can readily identify if they have good potential to be flipped or if the property is too far gone to be repaired.
If you haven’t heard of pay-per-lead platforms that sell motivated leads for real estate, you are missing out on a lot of leads. Generally, these platforms generate real estate leads from their proven methods like SEO, Google ads, etc. so they are arguably the best way to find houses below market value. Once they have gathered their leads, they’ll then identify which ones are motivated to sell.
Many pay-per-lead platforms work by asking their customers to bid on a target area. If they have the highest bid on that area and a motivated lead comes into their system, the highest bidder will automatically get access to the leads.
Another option would be to buy data from real estate data providers online. They’re practically everywhere and they offer the easiest way to find data, so it would not be a struggle to find them. Just ensure that the data provider did not go against any privacy laws in gathering their data on cheap houses.
Social media platforms like Facebook, Instagram, TikTok, and LinkedIn are not only used for networking with other investors. They can also be a valuable resource when looking for cheap off-market deals.
For instance, there are certain groups on Facebook that can provide access to exclusive listings on the MLS. The people from this group can also provide industry insights so you can analyze the areas ideal for flipping or when it is the right time to sell a flipped property.
Aside from joining groups, you can also market yourself on these platforms as an expert flipper. Be a content creator focusing on this niche and people will automatically flock to you when they are ready to sell their fixer upper house for cheap. You can also find a buyer and lender here.
The MLS or multiple listing service is a platform used by real estate agents when listing properties for sale. Although this can only be accessed by real estate agents for security and budgeting purposes, you can still get access to the MLS listings in different ways and this is a great way to find leads when you flip houses. For example, you can use a public MLS service, partner with a real estate agent or realtor who has access to one, and research MLS listings on online real estate websites.
An MLS listing is probably the most detailed source of property information so you can easily identify which are selling for cheap and can be flipped. Some of the details included are the property address, type, location, square footage, pricing, number of bedrooms/bathrooms, photos, listing agent details, property features and amenities, related taxes, and of course, relevant disclosures.
Working with real estate agents when you flip houses is also a clever strategy. These professionals have access to property listings and they also have a network of professionals that can lead you to potential opportunities. Moreover, they are more well-informed about the local real estate market conditions so you can make informed decisions like how to price and when is the right time to sell.
Another great thing about working with real estate agents when you fix and flip is that they know a lot of off-market properties that are not listed on the MLS. This means you get first dibs on exclusive opportunities. They can also connect you with a hard money lender or a buyer after the renovations.
Note that working with a real estate agent or realtor, you have to specifically communicate your target properties. This is to save them time in searching and to provide you with cheaper properties.
Wholesalers are a type of investor or buyer who sources or makes a contract for off-market properties and then sells them to home flippers, real estate investors, and other real estate professionals. Compared to all the other sources from this list, wholesalers have the most effective strategies for discovering undervalued properties.
Working with a wholesaler as a buyer means you can save time since they will do the legwork for you. They will find and vet potential properties through comparable properties so you can flip and they’ll do this effortlessly since they already have established systems in place. Buying contracts from wholesalers may mean you have more time to focus on other aspects of your real estate business. They can also connect you with a good lender to finance repairs if you want to sell fast.
Also, once you have already established a relationship with a wholesaler, they’ll keep on notifying you about new properties they have discovered that suit your flipping objective.
Real estate investment groups are organizations formed by investors or companies who have a shared interest in real estate investing and flipping. These groups not only provide networking opportunities but also access to cheap houses.
Though joining real estate investment groups, you can collaborate with other members to pool resources (leads on a seller and lender) and invest in flipping projects with partners.
However, if you want members of investment groups to trust you with property data, you have to actively involve yourself within the group. Keep attending meetings, connecting with other members, and actively engaging in discussions.
At the same time, conduct your own due diligence when getting leads from investment groups. Verify property information first and carefully assess the profitability of a distressed property. Evaluate the member that would serve as your partner, too.
HUD homes are properties that were financed with an FHA loan but were eventually acquired by U.S. Department of Housing and Urban Development (HUD) because of foreclosure.
HUD properties are sold via an online bidding process and most of them are sold for cheap. Note, however, that HUD homes are typically sold "as-is" so you are really required to make renovations to increase potential profits.
If you choose to look for HUD homes, you’ll be presented with a wide variety of property types sold for cheap. There are single-family homes, multi-unit properties, and even townhouses. What this means for you is that you can diversify your portfolio and get a high ROI at the same time. You can also choose between smaller renovation projects or larger flips.
Tax delinquency in real estate occurs when a homeowner was not able to pay property taxes. This may eventually lead to a potential auction of the property to pay for the unpaid taxes.
Public auctions or tax lien sales provide an opportunity for flippers to acquire a house to flip at a discounted price. Real estate investors can bid on properties during tax lien auctions and buy them for cheap.
The best thing about tax-delinquent properties is that they are often distressed. This is because the owners may have neglected maintenance because of financial difficulties.
Since the properties are not well-maintained, these properties are sold below market value during auctions - a great opportunity for real estate investors to buy properties with high potential profitability when flipped.
Code violations occur when a homeowner fails to comply with local building codes. Properties with code violations are often distressed since the violation indicates neglect or lack of maintenance throughout the years. Most of the time, these are also intentionally neglected because of the perceived hassle of dealing with code violations.
As a house flipper, this presents a great opportunity for you to acquire a distressed house to flip at a very low price. Once you have addressed the code violations and ensured that all parts of features of the property comply with standards, you can resell the property at a much higher price.
To find houses with code violations, you can connect to local government agencies that enforce building codes and regulations. They sure maintain a list of properties with code violations.
By driving through your target neighborhoods, you can easily identify properties that can be potentially sold at a lower price. These properties are the ones that show signs of distress and neglect like dilapidated structures, overgrown lawns, boarded-up windows, etc. These are great candidates for flipping, as their current condition means they can be improved to increase their value.
When you go driving for dollars, you’ll also find homes for sale that are not listed on the MLS. Since they are off-market, you have a competitive advantage among other real estate investors who are looking for owners who plan to sell properties for cheap.
Of course, driving for dollars has its own challenges like identifying property owners. But thankfully, there are now different driving for dollars app you can use to identify owners and skip trace their contacts so you can connect to them immediately.
Bandit signs are road signs designed to capture the attention of someone passing by whether on foot or on wheels. This is a common technique used by investors when selling their properties but you can also use it to find cheap homes to flip.
By strategically placing bandit signs in your target areas, you will attract property owners who are interested in selling their homes fast and as-is. Just make sure that these bandit signs have high visibility. They should be placed near crossings and other areas where people can really notice them.
Through bandit signs, sellers reach out to you directly so you get more deals that are not actively listed on the market. These motivated sellers may be open to negotiation and more flexible pricing terms.
Public records allow you to find properties for flipping since they have every possible record of property ownership. You can easily leverage these records if you want to buy a house that you can flip since anyone can access them.
Some examples of these public records are tax records, property assessment records, assessor's office records, and deeds. Note that each jurisdiction may have different systems in place in terms of accessing public records so you have to be careful to avoid any legal issues.
Another thing to consider is that not all properties listed in public records can be flipped and are sold for cheap. You have to do market analysis and assess the potential profitability of each the property before buying.
An estate sale is basically the liquidation of the deceased person's property. The assets typically sold are houses, condominiums, vacation houses, etc. Since the goal is to liquidate the assets fast and distribute them to the heirs, these properties may be sold at a lower price - a great opportunity for house flipping.
That said, you might want to consider attending estate sales or monitor estate sale listings because some of the real estate owned properties there are actually amenable for flipping.
Also, since the original owner or seller already died, many of the properties have been neglected or not maintained. Their heirs are probably too busy with other things to make repairs and study the ways to flip, too, and they need to sell fast so further issues with distribution can be avoided. In other words, they are perfect for house flippers.
When flipping properties bought from estate sales, however, check for potential code violations and find people who have stayed in the property before to identify some specific issues.
FSBO or for sale by owner properties are houses being sold directly by their owners. In these sales, no real estate agent or broker is involved so you get a deal without paying a real estate commission which often increases the sale price.
Another factor that makes FSBO homes listed for sale a lot less expensive is that you can directly communicate with their owners and build rapport with them. When this is already established, you can potentially enjoy flexibility in negotiations when purchasing a home. The homeowner or seller can also give you insights into the flipping potential of the property.
To find an FSBO real estate deal, check out deals using online platforms, local community boards, or rely on word-of-mouth referrals. Keep on reaching out to property owners directly or cold-call your contacts for potential FSBO leads that can lead you to a successful house sale. Through this strategy, you’ll also have less competition because you’ll be able to uncover properties not listed on the MLS.
Properties in smaller towns or rural areas are often sold at a much cheaper price compared to those in big cities like New York so they are another great option if you want to find houses to flip profitably. Generally, the purchase price of land in these areas as well as the costs of construction materials and contractors are more affordable. What it means for you is that you can acquire investment properties and earn more by flipping homes.
Similar to buying low cost FSBO homes, buying REO properties from smaller towns and rural areas means you would have competition. Many real estate investors favor houses on big cities so you can secure more deals more easily.
To find REO listings outside big cities, go driving for dollars. Bring your trusty driving for dollars app so you can contact property owners immediately.
Through this blog, we have explored various strategies to find cheap properties when you want to flip a house. Note that not all the strategies listed above may work for you in maximizing your profits. You have to choose a specific strategy based on your location and the current market in the area.
Nevertheless, if you are into embracing technology to enhance your search for cheap properties to flip, check us out at Property Leads. We generate leads from SEO and sell them exclusively, so you would have less to no competition when trying to buy cheap fixer-uppers.
Ready to use Property Leads in finding cheap houses in your target areas? Fill out the form below!