The most common question we get is: Where do you find your houses?
There’s no mystery to it. Like anything else, it takes some time to build resources, but trust me, there are houses in every community in the United States that are ripe for flipping.
Remember this: Finding a house is easy.
Finding the right house is the challenge.
The key to getting the house you want is to stay diligent and when you find a prospective house, check it out immediately because other flippers are doing the same. Don’t let the competition pressure you into making snap decisions to purchase a house, especially if you’re a newbie to flipping, but you should definitely see the house quickly and put yourself in a position to buy.
How to find houses
Friends and relatives – Tell everyone you know that you are flipping houses. Think about people you know who are in a position to unload a home: a relative died, a parent is moved to assisted living, someone who is underwater on their mortgage, etc.
If you can offer to buy the house and they can avoid the aggravation of painting, installing new carpeting and all the hassles a real estate agent will want completed before it goes on the market, they will often jump at the chance to unload it “as is.” This means, they take what they want and leave.
The trash goes in the Dumpster and everything else goes to charity, a junk dealer or the scrap yard. The more people you tell, the greater the odds that you will receive that phone call. Have business cards ready. This is a business, so treat it as such.
Real estate agents – Establish relationships with agents who work in the areas you want to target. Provide them with a list of parameters of the kind of house you want to buy. Include:
- Price range
- Neighborhood or school district
- Size of house
- Age of house (There are huge cost differences in trying to rehab a 20-year-old house, as opposed to an 80-year-old house.)
Note: When searching for a flip house, we recommend searching by school district. These homes are highly sought-after and generally retain their value. We have purchased houses in undesirable school districts, but only when they are a steal. Otherwise, the school district remains a top purchase consideration.
Include any other factors that are important to you. Real estate agents can put you on a list that will generate an email to you every time a house hits the market that meets your parameters.
Over the years, we have established relationships with agents who are very good at keeping us in mind for flip houses. We also reward them by letting them list the house to sell after the renovation. They get to sell the same house twice within a couple of months.
We have worked – or at least tried to work – with agents who promised to keep us in mind, then completely fell off the radar, so it is important to continue your own searches while you build those relationships.
Websites – Searching the web is a great place to start looking for houses. It will give you an idea of the housing stock available. Here are some of the websites that we utilize:
www.hudhomestore.com – HUD homes are generally foreclosed homes that the government puts back on the market. Many are inexpensive, but they are inexpensive for a reason. They tend to be rough. Still, there are bargains to be had. This site allows you to narrow your search by city and county, which enables you to target specific areas of interest. When attempting to buy these homes, you will still need to contact your real estate agent and allow them to make your bid. Most of these homes reserve a period of time when they are available for owner-occupied purchases. You have to keep an eye on the house and go after it once it clears this hurdle.
www.realtor.com – This is the website for the National Association of Realtors. It is a very complete site and easy to navigate. You can sort your search by lowest price to highest, open houses, newest listings and price reductions. Viewing from the lowest price gives you the best chance of finding a flip house. Of course, you get what you pay for.
www.mls.com – MLS stands for Multiple Listing Service. This is a comprehensive website used by real estate agents to list their properties and search for other properties. This site has a mortgage calculator, information on real estate training, and other helpful functions. It also has the category called, Find Foreclosures, which is a good place to look for flip houses.
www.craigslist.com – You can sometimes find a for-sale-by-owner bargain on this website. The sorting options make searches convenient.
Auctions – Auctions are a lot of fun, but they can be extremely dangerous. It is very easy to get caught up in winning an auction and allowing your competitive juices to lead to a bad business decisions. It is best to attend an open house prior to the auction where you can examine the house, estimate the cost of rehab, determine its rehabbed value, and set your maximum bid. Once you have established that maximum bid, stick to it!
Also, auctioneers almost always add a buyer’s premium to the price of the house. It may be a percentage of the purchase price, or a set fee. Remember to add that premium to the amount you can afford to spend.
You can find out about local auctions by going online and typing: real estate auctions in YOUR CITY, or YOUR STATE. Develop a list of auctioneers in your area who specialize in real estate and check their websites regularly.
Williams & Williams Auctions is an auction house that conducts auctions all over the country. Auctions are listed by state on www.williamsauctions.com, where you can find information on both onsite and online auctions. Williams & Williams has an efficient team and has streamlined the purchasing process.
Sheriff’s Sales – They are actually sheriff’s auctions. The sheriff’s department is charged with auctioning off foreclosed.
There are two primary differences between a sheriff’s auction and a private auction. The most glaring difference is that you cannot go inside a home before a sheriff’s auction. You can walk around the house and look in the windows, but you cannot legally enter it. Therefore, the basement walls may be collapsing and you won’t find out until you take possession.
The second difference is that you will be bidding against the bank holding the mortgage. The opening bid for a sheriff’s sale property is generally two-thirds of the assessed taxable value. The bank will almost always offer the amount owed on the mortgage, pay the taxes, and attempt to resell it.
Visit your sheriff’s website for more information on sheriff’s sales. Almost all require cashier’s checks for purchase, and you won’t receive a set of keys.
(Note: If you want to buy a repossessed home directly from a large bank, try this instead: go to a corner and beat your head against the wall for a couple hours. It will be less painful. Banks have a process and they rarely deviate from that process. If you’re interested in the house, it is usually easier to wait until the bank turns it over to a real estate company and it goes on the market.)
The Old-Fashioned Way: Newspapers – People still advertise in papers. However, classified sections have been decimated by the Internet in general, and by www.craigslist.com., in particular. It’s still worth a scan.
Leg work – Or, car work. Get out and cruise the neighborhoods where you are interested in flipping. If you see a house that looks empty and you’re interested, check out your county auditor’s website. There is generally online information available that will help you track down the owners. They may be looking to unload the property.