When buying real estate inorder to make a profit or gain networth, there are several exit strategies one may choose to obtain your goals.
One strategy the Fix and Flip
Steps:
- Find and buy a home below market value (20%-50%).
- Get home into a "move in" ready condition by cleaning, and making repairs or upgrades.
- Sell home at or near market value.
| The monetary difference between the purchase price (below market value) and the potential re-sale price (at fair market value) is called "the spread" and can be considered potential profit. Repairs to the home need to be considered when figuring the spread since these costs will add to the money you put in to the investment. |  |
A fix and flip is one of the quickest exit strategies used by real estate investors who want to see instant gains from real estate. Typically speaking, one must buy the home using private money, hard money, or personal cash. This is because homes at 20%-50% below market value are not being sold by the home owner. Usually it is a bank owned home, short sale, auction home, or home purchased and being sold by a wholesaler.
Due diligence is a must when using the Fix and Flip strategy. If one is not careful, they can buy a home with not enough spread to make a profit. Using the Real Estate and Beyond Network partners such as real estate agent, home inspector, general contractor, and personal research, can help you avoid buying a home with a little to no spread.