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Flip homes for profit even now

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If you can't come up with it any other way, consider putting together a consortium of investors -- either share the cost of the project or divide the responsibility by contributing the manpower while your investor brings cash to the table. But when partnering on such a deal, Sassaman cautions, remember that the process has changed.

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"In the last 10 years, any dummy could make money in real estate. Now you must buy sharp, do a professional finish job on your product, (and) you must create something very special," Sassaman says. "You must have the staying power and the stomach to go with it all."

3. Cut your costs creatively
Flipping in an economy that's not terribly user-friendly takes guts and creativity. Home flipper and Internet entrepreneur Scott Patterson says he increases his chances for success by breaking as many rules as possible, including making aggressive "low-ball offers" on potential flips.

"(I) offered $80,000 on a house I would have offered $100,000 (on) a year earlier," Patterson says. His strategy worked and he sold the renovated home for a tidy $160,000 a few months later.

Patterson also hopes to cut the middleman by obtaining his real estate license, letting him pocket the commission he would normally pay to sell his flips. He actively seeks capital via Internet and e-mail lists, marrying projects to the right investors.

"The stock market tanking has more people thinking that real estate is looking good right now," Patterson says.

He also expands his chances of selling his flips by targeting VA and FHA homebuyers. "We are concentrating on the first-time buyers market (and) will offer to pay closing costs where possible," Patterson says. He plays up a home's VA or FHA eligibility when advertising.

But buying and selling aren't the only places where a flipper needs to become adventurous to succeed. It also helps to get creative with materials.

Think good secondhand appliances or new ones sold as scratch and dent models, refinishing old cabinets by painting them and changing out the hardware, purchasing leftovers from rolls of carpet, close-outs on tile and fixtures, clearance items and even recycled stuff. By cutting renovation costs, you can keep your asking price low and make your property attractive to more potential buyers.

4. Consider it a long-term investment
Real estate consultant and mortgage broker Todd Huettner of Huettner Capital says changing markets have forced his clients to alter their business practices. Huettner says that while a quick flip is possible, investors should be prepared to hold the property for several years as a rental.

"If they flip it at their price, then they made their short-term gain. If they can't sell it at their price, then they will have a good long-term flip investment and just sell it in a few years," he says.

Huettner says renting protects investors from losing properties they can't sell. "Some complain they tie up too much money if they hold a property, but I point out they will be much better off with money tied up with a return than losing money." In other words, a positive return is always better than a negative one.

Huettner concedes it's more difficult now to qualify for loans and the terms are not always as favorable to buyers, but that well-qualified investors can still make a profit if they meet three criteria: Understand their risk tolerance, know their market and come prepared to hold a property long term if needed.

The journey from Point A to Point B may take more time, but in the long run, there's still profit to be made in flipping homes.'s corrections policy -- Posted: Nov. 13, 2008
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