How to Find Houses to Flip

House flipping represents one of the most exciting real estate investing strategies. The idea of buying a worn-out old home and transforming it into a sought-after property can be thrilling. You can also make quite a bit of money in the process. 

However, before you can fix and flip houses, you need to find investment properties that fit your business model well. For instance, you don’t want to take on homes that will be wildly expensive to fix. 

Nonetheless, the properties you choose must be distressed enough to get them at a good price. In this guide, you’ll learn how to find houses to flip so you can minimize risk and increase your odds of enjoying a strong return. 

What Is House Flipping?

House flipping involves buying distressed homes at lower prices and renovating them as quickly and cheaply as possible. You aren’t planning to hold onto the assets as rentals or long-term investments. Instead, the idea behind house flipping is to get your homes on the market fast so you can recoup your money and make a nice profit. 

The best house flippers have an eye for finding assets with lots of potential. They can see through the mess and consider the post-reno value that a home can provide. You’ll need to do the same if you want to succeed in using this high-risk, high-reward investment model. 

Let’s say you purchase a home for $160,000 and expect to spend about $40,000 on renovations. You estimate that it will sell for about $250,000 after you rehab it, which equates to a gross profit of about $50,000. That’s the basic premise behind flipping houses. 

Ways to Find Houses to Flip

Here are some tips on how to find houses to flip:

Hire a Real Estate Agent

A real estate agent can be a great asset in finding flip-worthy properties. Team up with someone who specializes in investment properties and knows the neighborhood you want to target. 

They can locate opportunities via the Multiple Listing Service (MLS). This can give you an advantage over other investors who don’t have access to the extremely useful MLS data.

A good agent will also help with negotiating and navigating the buying process. However, remember that agents typically charge a commission of approximately 2-3% of the purchase price, which could drive up your total cost. 

Connect With Wholesalers

Wholesalers act as intermediaries who find undervalued properties and assign the purchase to investors like you. That process involves the following steps:

• The wholesaler finds a distressed property
• They enter into an assignable contract with the homeowner 
• The wholesaler transfers or assigns the contract to you for a higher price
• They net the difference

For example, suppose a wholesaler gets a property under contract for $150,000. If they assign the contract to you for $165,000, they will make $15,000 on the deal. While wholesalers can be a great resource, ensuring that the agreement leaves you enough room to make a profit is important. 

Attend Auctions

Real estate auctions can be a treasure trove for house flippers. Properties sold at auctions are often foreclosures or seized homes. You can often acquire these properties well below market value. 

However, you may have a limited opportunity to view the home or research the neighborhood beforehand, so make sure the deal gives you plenty of margins to deal with surprises. 

Search for Properties in Your Neighborhood

Sometimes, the best way to find investment properties is to get out and look around the neighborhood. “For Sale by Owner” signs are always worth investigating, as the homeowner may not have their property listed online. 

You should also check out homes showing signs of distress, such as overgrown lawns or neglected maintenance. Be cautious and respectful when approaching homeowners, as they may be experiencing financial difficulties. 

Network

Who you know matters in the world of house flipping. Attend workshops and seminars to expand your knowledge and make valuable connections with agents, contractors and loan officers. Build relationships with inspectors and real estate attorneys as well. All of these individuals can be valuable sources of leads or referrals. 

Look for Foreclosed or Seized Properties

Foreclosed or seized properties are usually sold well below market value. Typically, the lender wants to recoup their losses and settle the delinquent account as quickly as possible. You could land a quality investment home for tens of thousands of dollars below market value. 

Check bank listings to locate foreclosed properties. You should also explore government auctions to find homes that may have been seized due to unpaid taxes. While these options may need significant repairs, they can be worthwhile investments if the price is right. 

Check Online for Real Estate Listings

Thanks to platforms like Zillow and Realtor.com, the internet is filled with real estate listings. You should also explore sites like ForSaleByOwner.com. While it doesn’t have nearly as many listings, it exclusively features FSBO opportunities, which can be a great option for finding houses to flip. 

You can also explore house-flipping websites, but be wary of scams or sketchy listings. Carefully verify the homeowner’s identity; never wire money to anyone without vetting them. Real estate fraud remains a constant danger for investors and flippers. 

Become a Home Flip Guru

Now that you know how to find houses to flip, it’s time to get out there and start looking for your first deal. Don’t rush the process, no matter how excited you may be. Instead, research and thoroughly consider all potential repair costs to maintain healthy margins. 

Keep in mind, too, that house flipping isn’t the only way to invest in real estate. You can also use real estate investing apps to get active in this popular market while looking for your next flip. 

As always, portfolio diversification is key. You don’t want to invest too much of your assets in a single commodity – not even one like real estate, which is relatively stable. 

The bottom line is that house flipping is a popular and potentially effective way to generate significant revenue. It can also be quite risky. Patience and due diligence will go a long way in your quest to meet your real estate investment goals. 

Frequently Asked Questions