How to Find the Best Fix and Flip Properties
Buy a distressed house for cheap—Fix it up—Resell for profit—Repeat.
This is the cycle of investors who fix and flip distressed properties. But how do you find a home at a low price so you can see a good return on investment (ROI)?
8 Tips for Finding Properties to Flip
1. Find an awesome investor-friendly Real Estate Agent
Teaming up with an Agent that specializes in REO (bank owned) properties can increase your chance of seeing a home as soon as it hits the market. These Agents will also be able to help you analyze the best neighborhoods for flips and offer advice when you need it. They are also likely to have relationships with lenders who specialize in investor-financing, contractors and team members that specialize in investment properties.
If you have the capital to pay cash, all the better — your Agent will help you close quickly and perhaps help some of their other clients who need to sell quickly. Forming a strong partnership with your Real Estate Agent is beneficial for both of you. Since you are buying and flipping homes to resell, that's two transactions for a Agent in a relatively short period of time.
The best advantage of teaming up with an Agent is having access to the Multiple Listing Service (MLS). Here you can find nearly every house available on the market in your desired area. If you have certain criteria you look for in your flips, you can ask your Agent to set up a search for you to receive automatic notifications the second a home that meets your criteria comes on the market. Your Agent can help you find homes where the price may be negotiable due to extended days on market, or even reach out to owners whose listings have expired from the MLS.
2. Join real estate investment groups
Joining real estate investment groups helps you learn about the process and tips of the trade while meeting people and networking. You’ll have more exposure to houses on the market that make good rehab investments. You may even find a flipping partner. A quick Google search will provide you with groups to join. You can also find forums and groups to join on Linkedin, Facebook and Meetup, to name a few.
3. Form partnerships
You can find partnerships in the investment groups you join or on your own. Form relationships with professionals like:
- Probate attorneys - who deal with people liquidating assets
- Bankruptcy lawyers - who deal with people filing for bankruptcy
- Divorce attorneys - who deal with people going through a divorce
- Real estate lawyers - who help people having real estate issues
- Wholesalers (mentioned above)
- Other investors
Why other investors? Sometimes investors have to back out of some deals in order to save others, which can be of benefit to you if the property is one that meets your criteria.
4. Probate/estate sales, trust sales, tax auctions, foreclosure sales, etc.
As we talked about different situations a person may find themselves in when contacting certain lawyers, you may find the process escalating to probate or estate sales.
You can also find good deals at tax auctions and sheriff sales when a property owner is delinquent on their taxes. If attending a foreclosure auction, be weary of overpriced homes. Make sure you do research prior to attending the auction, and stick to your limit that you set.
There are some risks to consider, such as the possibility of losing a down payment if you cannot close, and unknown defects in the property, among other risks, but you might have the chance to gain a property at a discount by going this route.
5. Ask for referrals, place ads, get yourself out there
A good way to find properties is to ask for them. Make sure everyone you know knows what you do and what you are looking for so that if they run into something, you will come to mind and they can reach out to you.
Post ads about what you are looking for. When someone has a home to get rid of, they may find you through an ad. You may even consider putting up signs throughout your desired location. But be sure to read up on the neighborhoods’ sign laws or restrictions which may prohibit this.
6. Search classified ads
While asking for referrals and placing ads, also search ads. The sales and auctions are typically printed in the papers and posted on city and county websites as a requirement. Read the newspaper ads and search websites such as Craigslist where many post as For Sale By Owner (FSBO). You can search the obituary section where you may find someone who needs to sell their home due to death. You never know what you will find while looking through ads.
7. Traditional methods such as sending mailings and door knocking
Finally, you can always find properties to fix and flip in more traditional ways. You can send mailings either through lists that you have acquired or as you are driving, look for properties in bad shape and send them a letter. It’s that simple. You can also try knocking on the door and having a conversation.
Final thoughts
A few things to keep in mind when searching for the right property to fix and flip:
- Know where to find the lists you need so you have a database to reach out to. You can find lists of people going through foreclosure, those who live out of state or not in the property that they own, Landlords and non-owner occupied homes, those going through probate court, those who have inherited a property, those who have passed away, etc. This is where your connections come in handy. You may have to pay for some of these lists. Just remember that even if you are attending an auction or sale, you can only look at the home from the street. You cannot trespass.
- Do your homework. Research the area, gather comps, and prepare yourself prior to placing a bid or making an offer on a property.
- Consider renting instead of selling. If it’s a tight market and even rehab properties are selling for higher than normal, try renting out the property for a few years prior to reselling.
- Follow your timeline and budget to a T. If you go over budget or take longer than anticipated, you could dig into your profit. Know when to walk away. It is better to walk away with no profit than to keep going and lose money.
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