Conclusions of Investing in Turnover (or Flipping) Properties

In many ways, real estate investing for quick, turnover profits is much more surgical form of investing. It involves choosing a property in an area that is attracting a lot of buyers,  whether homeowners or rental investors, and making extremely specific improvements to the property for very thoughtful reasons. There's no room for error with turnover properties; you have to know exactly what improvements you'll make, what the property will cost to improve, who you'll sell it to (generally speaking), how long it will take to market and sell, and for how much you can expect to sell it.

In business, the best method of doing almost everything is systematically. So, take a few moments to calculate your costs and expectable profits from any given deal, with predetermined minimal profit margins. Add the following costs to estimate potential profits on a turnover real estate deal:

Cost to Purchase (including referral or bird dog fees):
Closing Costs (to purchase):
Renovation Costs:
Carrying Costs:
Marketing Costs (fees paid to realtor, etc):
Closing Costs (to sell):

Total Costs:

Estimated Selling Price (low end):

Total Profit (pre-tax):

By way of advice, I recommend only doing turnover deals with a bare minimum of $10,000 estimated profits. Only by following this very specific formula can you calculate a reasonable estimate of what your true costs will be, and what kind of profits are reasonable to expect from a deal.

It's not as easy as some real estate investors make it sound, but with the right people in place, these deals become easier and easier. Good contractors can do the work inexpensively and effectively, good realtors can find you buyers and good deals, good lenders can help you settle immediately to take advantage of that last-minute deal. Which brings us to the next chapter: real estate networking.
 

Rental agreement forms

Previous Section: Selling Real Estate in any Market

Next Section: Real Estate Networking

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