For many people looking to invest, flipping contracts is a huge attraction. Considered by many investors as a quick way of making a profit, this has become a lucrative niche for many in the real estate industry.
Yet, for flipping real estate contracts to equal monthly profit, it can take a little bit of prep work beforehand. It also helps here to have a good deal of knowledge of the real estate marketplace itself.
Here we discuss the process of flipping real estate contracts, offering advice on how to do it successfully. We also consider those areas where you may need to pay more attention to. This means concentrating solely on achieving that fantastic $5000 to $15000 monthly profit each time.
How to Make $5000 $15000 Month Flipping Real Estate Contracts
The Process Involved in Flipping Real Estate Contracts
It’s worth noting that the process involved with the flipping of contracts differs from that involved with flipping actual physical properties.
Thus, we need to differentiate between the two:
Flipping Houses: More of a long-term strategy, flipping a house typically means you buy it, fix it up and flip it to a buyer. This means factoring in time to do all this work – alongside then waiting while it’s listed and sold. Making a profit this way can take some time, and this profit most likely won’t be achieved in the space of a month.
Flipping Contracts: Sometimes referred to as wholesaling, rather than buying the house, you tie up the purchase contract instead and then sell this onto another investor. This allows you to make a quick profit. Thus, there’s no need here to buy a physical property, no need to spend time or money fixing it up, and you don’t have to list it to receive payment. Thus, this is a shorter-term strategy.
Why Do People Prefer Flipping Real Estate Contracts?
Besides making a good quick profit, there are also several benefits and advantages involved in flipping real estate contracts:
- Flipping contracts is usually the best way for many to get started when first beginning in real estate
- There is no need to obtain a license to begin flipping in this way
- You don’t necessarily have to have previous real estate experience
- You don’t need money to start as you won’t be purchasing physical property
- You don’t have to commit time to work on a property
- House flipping can in many cases offer you money in your hand within 30 days
- You can make more and more deals in the space of one month
- Contracts can be flipped in other virtual markets
- You can look toward teaming up with other investors to flip contracts
- Flipping contracts tend to work well, regardless of how the market is behaving
- This can be the first step toward fixing and flipping
How Do I Flip Real Estate Contracts?
For many experienced real estate contract flippers, the key to making a success here is marketing. In fact, because of the extent of marketing required, most refer to investors here as marketers, rather than real estate investors!
Overall, the concept here is to find those good deals, put those deals under contract, and then flip them to get paid.
The process of doing this is actually quite commonplace – when you know-how.
Step One: Do Your Market Research
This includes finding out where all those areas are where the investing activity is occurring, which is buying and selling. This will allow you to find that most ideal property to work with here.
The best property type is one that offers a more compelling value for the money that’s being requested. Notably, those ideal investor type properties aren’t always the ones that are publicized the most. So, you’ll need to hone your research skills here. This can include searching online adverts, classified adverts, direct mail, or even word of mouth from those in the real estate industry and reputable sources.
Step Two: Attract Those Cash Buyers
When you do locate that ideal property, you’ll need to put it under contract. This now means you’ll need to market again, but this time it’s for the property itself to cash buyers. This will usually be other investors or landlords.
To make your profit, you’ll need to mark up the property price by a few thousand. Or, if the property was contracted at a very low price, market appropriately here. However, this figure will need to account for some room for the buyer to see how they could make a profit also.
Step Three: Select That Best Cash Buyer to Complete the Process
Once you find yourself with an immediate cash offer, you’ll need to get the buyer to sign a contract with you. This will agree on the purchase price alongside an assignment contract. Then, once the closing has been handled, you will receive your cash profit for the deal.
What to Consider When Flipping Real Estate Contracts’
Though most people find flipping real estate contracts the more exciting and profitable of avenues, there are several things to bear in mind when attempting this.
Firstly, it’s crucial to ensure that several conditions are put into place, which will allow you to exit without a penalty or fine.
This can be done by way of writing in a clause that the flipper can edit the contract without losing money during the contingency phase. This is that money allocated to the earnest money deposit.
Also, it’s important to remember here that before you close the deal with a seller, you remain fully capable of assigning the contract to the new buyer. By failing to do this, you may be left on the hook and face the price dictated by the initial contract.
Finally, it goes without saying that, like all investment types, real estate contract flipping too can also present its own degree of risk.
Final Thoughts on Flipping Real Estate Contracts
In concluding, a short term strategy that allows you to get in, get out, it’s entirely possible to make $5000 to $15000 per month this way.
Flipping a piece of paper rather than actual property, this entire method requires you to offer up that best deal possible to those looking to spend their cash.
Ultimately, this method of flipping is selling the ownership of a real estate contract.
So, if you can find the right property, get the right assignment contract written up and approved, once you’ve found that right buyer, you can collect your assignment fee.
Thus, you can then move on to the next month’s real estate contract – flipping all over again for your next monthly profit!