BiggerPockets

1. High end blue collar areas – High end blue collar areas are ideal for finding prospects to flip. Warzones will not work and the nicer suburbs will have too much competition from owner occupants who are willing to outbid you and pay retail. These areas represent the largest portion of the population, thus you have the most houses to choose from and the most buyers.
2. Big discount for distressed sales vs retail sales prices – Identify areas with a big difference between retail sales and distressed sales like REOs. You will find in suburbs that the discount for a foreclosure is not too high and the numbers usually don’t work. Certain areas though there is a huge gap in price between REOs and retail sales, this is your goldmine. For example, we have located 3 flips in a neighborhood where purchase is in the 30s and retail sold comps are 80-120K. That leaves plenty of room for big profits after rehab.
3. Number of sold comps vs for sale comps are close to even – This is very important, you may be getting a big discount but you may have 20 for sale properties in the neighborhood and only 5 sold comps. This means way more supply then demand, your flip could take forever and you may have to drop your price a lot to sell. Make sure there are close to as many sold comps and for sale comps. If more sold comps, even better.
4. Mostly home owners – Make sure the area is mostly home owners. Some renters are fine, but too many renters and the area could take a turn for the worse. Buyers will sense this and may not pull the trigger on an offer.
5. Pride of ownership – The owners in the neighborhood must take care of their property. Beat up houses scare people away, nice houses and recent improvement show pride and attract buyers.

These keys are very important to finding flips. It is highly recommended to do some research and find these areas to target then take massive action. You can easily set up a mailer campaign to foreclosures and other lists in these zip codes, use bandit signs, buy REOs, buy at the auctions, etc. This is all very targeted marketing, which will lead to much better results than doing this everywhere.

Now, good real estate agents can help you identify these areas. You can also research yourself by analyzing sales from public records, use zillow and drive the neighborhoods yourself. The deals are out there. Identify these flip goldmines and you may be the next expert flipper in your city.

1. 70% max LTV – Make sure you have plenty of room for surprises, overages, etc. The higher the discount, the lower the risk and higher the profit. Use sales comps from the last 3-6 months and within .5 to 1 mile.
2. Cash flow positive – The property must cash flow to provide multiple exit strategies. Flips require more expertise, have more risk and multiple exit strategies are a must.
3. Do things in 3s – During due diligence, get 3 rehab bids, talk to 3 property managers, 3 listing agents, 3 opinions from fellow flippers, etc. One is not enough, to be thorough these items must be done in 3s.
4. Align your goals – This is very important. You are building a team and systems so you can do the best job and duplicate deals over and over. Conflicting goals can destroy a deal, make sure your contractors, agent, teams, etc all have aligned goals.
5. Reserves & Backup Plan – Do not ignore the inevitable. There are surprises, delays, over budget items, extended market times, etc related to rehab flips. Always have reserves and backup plans that you can execute when appropriate.

A lot of factors impact property values, some of the key factors are foreclosures, unemployment, population, vacancy, etc. Basically it comes down to supply and demand. More demand and property values rise. Right now however there is significantly more supply than demand and there is a ton of supply that still needs to hit the market. Values dropped off the side of a cliff and now in many places we have hit bottom. FACT: The supply created from the real estate bust has created the opportunity of a lifetime! Opportunities like this have not occurred since the Great Depression.Additionally, the most self made millionaires made it by investing in real estate. Savvy investors realize this and are running to the US from all over the work.

That is not everything though. The fallout has crippled the value of the US dollar. Currencies exchange rates from other countries are significantly higher than historical averages. So not only can you buy low with tremendous returns, but foreign investors have a much much higher buying power due to the strength of their currency compared to the US dollar.

This is almost too good to be true for foreign investors. They are running to the US to invest in real estate at record pace. There is still an absolute ton of supply that needs to work its way through the system ensuring opportunities for the next 3 maybe even 5 more years. Is everything a good deal in the US? Absolutely not!

There are good deals and bad deals everywhere. I’ve heard good stories and horror stories in every market and every strategy. Savvy investors will crush it, if they invest right. Stay away from warzones, stick to your criteria, do your due diligence and make the best informed business decisions. For many, the best way to invest in the US is to seek local experts who often offer full service, turnkey, hassle free solutions. So find these experts with a solid track record and ethical business practices. Then continue to do your due diligence. Every decision must be justified by facts and due diligence. Feel free to contact us with any questions regarding the US market, we are here to help!

Also, Learn what is a great cash flow deal and read our guide on foreign and out of state investing in the US.

1. Avoid the wrong market – This is very important. Tons of investors flock to the hyped markets without doing any due diligence. Everyone is doing it so they follow the herd. Well, everyone is wrong. The popular markets right now are the worst markets in terms of returns and risk. Let everyone else take high risks for low returns. Simply do your research to find markets where you can minimize risk and maximize return. You will find the under the radar markets are the best markets to invest in.

2. Never Speculate for appreciation – Plan and simple, speculation is foolish. Can you make money? Sure. Can you lose money? Sure. Will you lose money? More often than not. The market is out of our control, find deals with tremendous cash flow and tremendous equity and control your success. Appreciation is an extra bonus, do not gamble.

3. Never Decide without justification – Always do your due diligence and justify your decisions.Savvy investors do not make uninformed decisions, fall for sales tricks or become a follower. They gather information and make the best informed business decisions. They are investors who are accountable for their decisions so they understand the risk.

4. Don’t be a sucker – Like any business, there are good services and bad services. There are shady, unethical services that use slimy sales techniques to trick suckers into poor decisions.These services usually do not last but the fact that they exist makes me sick. If it sounds too good to be true, do some due diligence and avoid being a sucker.

5. Don’t make it complicated – Avoid over doing it by trying to invest everywhere, with every strategy and as fast as possible. Keep it simple. Focus on 1 market, 1 strategy, build a team of experts, systems and duplicate over and over.

5 Tips for Where to Flip:

1. Target high end blue collar areas – These areas are perfect for flips and without the competition of the nicer suburbs. Often called transitional areas and they are often just outside the rental areas and just outside the nicer suburbs.

2. Large difference in REO vs retail sales prices – REO sales have to be a fraction of retail sales.In our case, REO sales are in the 30s and retail sales 80-130K which is great.

3. Sold comps vs For Sale comps – Too many for sale comps is not good. There must be close to as many or more sold comps as for sale comps or you are looking at a rental area not an area to flip.

4. Pride of ownership – Make sure there are not too many rentals and there is pride of ownership.If this is not the case then the area is likely better for rentals instead of flips as long as it is not a warzone.

5. Focus has to be on annualized return – It is very important to focus on volume and annualized return. A 5% return in 1 month is a 60% annualized return where a 15% return in 6 months is only a 30% return. If you can flip it quick then do it and move onto the next deal. You will improve your annualized return by quick flips and volume.

Now, we have 2 more properties under contract in the same neighborhood but one we project to be in 10K less and it is bigger and has 1 more bath then the other property. It could be the first flip plus 20K profit. Again there is only 1 for sale property and now 5 sold comps (tip #3) and the pride of ownership still exists with few rentals (tip #4). The 2^nd deal has a huge lot and 5 car garage and we will be in 15K less with the same value. Both home run deals, but we want to sell quick in order to focus on annualized return then do more flips for volume (tip #5). So here is what we plan to do.

3 Tips for Quick Sales:

1. Weekly price reductions – We want activity all the time. So to keep our property in front of buyers agents we do a small $250 weekly price reduction. This works brilliantly as we had 4 times the traffic and go our offer after only 2 reductions.

2. Give free stuff – Offer a free flat screen TV for a sale by X date, 1-2 weeks out and see what happens. It will cost up to $1000 but that is fine with us if we get that quick sale at or near our asking price. You may sell in half the time which could double your annualized return for only $1000.

3. “List High Rehab Drop” – List the property at the highest for sale comp during rehab then when rehab is done you drop it to your initial asking price and market a huge price reduction. It can produce a really fast sale which is incredible for annualized return.

For this deal a realistic salesprice is 90K. We are only going to be in around 50K so 90K would be a tremendous profit especially if we can sell it fast. So our initial list price is 90K but during rehab we wish to list it for the highest for sale comp.

If I go back another month to 7 months, there are sold comps for 114K and 127.5K. WOW, that is awesome. In addition, you could throw a baseball and hit the roof of both houses. One is across the street and 2 down, the other directly behind the house across the street. Even more good news though, our property compares favorably. We have an extra bath compared to the 114K comp and we are bigger and with an extra bath then the 127.5K one.

So we don’t have to use a for sale comp, rather we can use a sold comp, 2 to be precise. Now our high list price during rehab actually may get some activity as the price points in the neighborhood can support it. But we are not expecting activity. We plan to complete rehab in 1 month and drop the price to around 100K. Then we will market this huge 27.5K price reduction, will go fast, bring all offers, free flat screen tv if sold within 10 days from now, fully remodeled, etc etc etc. We think this will work. If no we are 10K above our initial listing price and can start with the weekly $250 price reductions as normal. So no disadvantages and we may be looking at a huge profit really fast. I can’t wait to calculate the annualized return on this one.

I hope these tips are helpful. So what quick sale strategies do you guys use? And how to you target areas prime for flips?