Finding a cheap house can be a challenge. However, the good news is that there are more resources available now than ever before. In this guide, we present some of the best online and offline options for finding a suitable property.
Table of Contents
Choose The Right Location
To find a to flip, you have to choose the right location.
For instance, Hawaii and California are well known for being extremely expensive states for purchasing and . By the same token, cities like Manhattan, Seattle and Boston are also known for boasting some of the most expensive in America.
This is important, because if your goal is to find affordable houses to flip, there are a number of states and cities that you can pretty much eliminate from your wishlist.
To help narrow down your search, it’s worth keeping in mind that activity is prolific in the following states:
All of the states listed above are brimming with opportunies for a . Furthermore, we also have a state-by-state guide to , which may help you decide on the right area to focus on.
The last point on location is that an intimate knowledge of the area is irreplaceable, and this is why so many investors choose areas that they know well. So, if your current city or state is relatively affordable, this is often the most useful place to start your search. However, if you live an expensive area, you might be forced to flip houses out of state.
Leverage The Power Of The Internet
FlipScout By New Silver
FlipScout is particularly good at finding properties that are in the ‘pre-‘ status, and also allows you to get estimates for construction.
It also gives you access to the current listing price, assessed value, predicted ROI and the potential .
In order to use FlipScout, you simply need to sign up for a profile, after which you can start searching for a opportunity.
Zillow's Foreclosure Center
While most investors are well aware of Zillow’s extensive database, they might not be privy to some of the features that can make it a valuable resource for flippers specifically.
The primary resource is Zillow’s . center
This allows you to quickly search Zillow’s entire database of pre-foreclosures, auctions, and bank-owned properties in your area. These are the types of properties that often sell below their market value, which presents a unique opportunity for specialists.
If you can spot a margin pre-built into the deal. Furthermore, if you execute reasonably affordable high ROI renovations, you can further increase the gross that could be made when the is resold. with an asking price that is below the market value, there is effectively a
MLS stands for Multiple Listing Service, and it basically the mother of all databases in the US. The MLS was created by brokers, realtors and professionals to help faciliate sales throughout the US.
The main reason to consider using the MLS is because it is likely to have the highest number of listed properties, and it is populated with more information than you are likely to find on other websites. In addition, properties listed on the MLS tend to sell faster than homes sold by the owner directly.
However, there is a catch with the MLS that you need to be aware of. Access is limited to agents and there is a monthly fee involved. Due to the access limitations, it is often best to partner with a realtor that has access to the MLS in order to take advantage of this resource.
With such an extensive range of properties that can potentially be purchased below their market value, foreclosures.com can be a very happy hunting ground for flippers.
There is just one catch that you need to be aware of with this particular site. It is open to members only, which means that you have to pay a monthly fee in order to access the listings. At this moment in time, it costs less than $50 per month to view the listings, but this could change in time.
More importantly, if foreclosures.com can help you find a profitable to flip, the cost of the membership well effectively pay for itself 50 times over and then some. Also, you don’t necessarily need to pay on a month-to-month basis. They offer weekly pricing as well, which can be the better option if your plan to do most of your searching in short batches of time.
There is one primary reason that homeowners choose to forego a entirely and sell their home themselves: to avoid paying realtor commissions.
While the exact commission percentage of each realtor may vary, it is most common for the realtor fee to be in the region of 5%. When selling a $200,000 home, that works out to a commission fee of $10,000. It’s easy to understand why homeowners are attracted to the possibility of avoiding this fee altogether.
More importantly, when homeowners choose the FSBO (For sale by owner) route, it introduces wiggle room to strike a deal.
Firstly, because you can make contact with the homeowner directly, it is feasible for you to make an offer for less than the listing price. Even if your initial offer isn’t accepted, it can still serve as the first step in a price negotiation.
Secondly, because there is no commission fee involved, homeowners might be more willing to accept a slightly lower price.
Tap Into Your Network (And Grow It If Need Be)
Your personal network can often offer the fastest way to find cheap houses to flip. Within this network, there are effectively 3 types of professionals that you should consider reaching out to.
1. Fellow Property Investors & House Flippers
You might surprised at how easy it is to connect with like minded investors.
Even if your colleagues don’t reveal all their secrets to you, there’s a good chance they will be able to offer extremely valuable insights that can accelerate your search for a suitable . It could be extensive knowledge of a particular area, a strong track record of predicting what markets are likely to do in the next 12-24 months.
The point is, each fellow professional in your network may possess market knowledge that you can leverage to your own advantage. Just remember that it’s a two way street. You can’t just leech off the experience of others. You also need to provide value and insights of your own, creating a partnership dynamic that serves both parties rather than just one.
2. Realtors & Real Estate Agents
Imagine if you spent 40+ hours per week analyzing local markets, connecting with homeowners, and using sophisticated software to help you connect buyers with sellers. Pretty soon, you would develop a level of expertise that part-time investors can only dream of possessing.
Thankfully, you don’t need to change your occupation in order to capitalize on this expertise. Instead, you simply need to make it your mission to connect with a that has highly specific knowledge of the area that you are targeting. In so doing, you can capitalize on all the time they have spent analyzing that very market.
The underlying objective of a wholesaler is to find a that is below market value, and then sell the contract to buy that to a . In other words, wholesalers specialize in finding properties that are worth more than the listing price.
While there will be a fee involved if you decide to purchase a contract through a wholesaler, there’s a good chance that you can cover the cost of this fee easily when the is eventually resold after the renovation work is complete.
Like realtors, wholesalers also spend a huge amount of time pouring through listings searching for diamonds in the rough. As a , you can use the time and skillset of a wholesaler to help you find a brimming with potential for a successful .
Do Not Dismiss The Power of Direct Mail Marketing
With direct mail marketing, you aren’t just sending a bunch of mails to a random collection of properties.
Instead, each and every criteria. This means that if one of your prospects responds to one of your direct mails, there is potential to move swiftly from that point onwards. on your list should be pre-vetted, so that it already meets your
The due diligence on the is usually the fastest way to finance a deal, and loan is far more likely to approve your application for financing. has already been completed. It then just becomes a matter of vetting the in greater detail, and organizing finance for the deal if the ticks all the boxes on your checklist. To this end, a
Use Traditional Techniques For Finding Cheap Houses To Flip
Like direct mail marketing, you might not be overly familiar with how to purchase a fix and flip at an auction. However, don’t let your unfamiliarity deter you from pursuing this particular method for finding affordable houses to flip.
In most cases, houses are put on auction because it is one of the fastest ways to sell a . It could be that the has fallen into , or that the homeowner is recently deceased, or simply that the current owner needs to execute a quick fire sale. The point is, houses are put on auction in order to accelerate the change of ownership.
This is good news for investors, because it means that fetching the highest possible price isn’t necessarily the top priority. There are many auctions where the owner is willing to accept a below market price, in order to take the asset off their books
There is just one key risk that you will face if you choose this route. When you buy a at auction, you aren’t able to inspect the prior to purchasing it.
If there are flooring issues, electrical problems or general repairs needed, you will only discover the true condition of the after the sale has concluded. In most cases you should be fine, but the possibility of an expensive repair job is something that you must be aware of.
Find Foreclosures Offline
While Zillow, FlipScout, Foreclosures.com and other websites make it relatively easy to find a online, there are other ways to identify properties offline as well. This includes:
- Newspaper listings
- Searching for a notice of default (NOD) at your County Recorder’s Office
- Driving through the neighborhood looking for properties with a ‘‘ sign
- Chatting to agents that specialize in the area
- Attending auctions in the area
REO stands for owned . It most cases, REO homes are owned by a bank, that either didn’t get auctioned, or failed to sell at the original auction.
To sell these properties, most large banks list their entire inventory of REO homes online. This includes:
If you are in search of a large list of REO proprty resources, this resource on Bigger Pockets should come in handy.
HUD homes are quite literally owned by the US government. They are comparable to REO properties (bank owned) except in this case, the FHA (Federal Housing Administration) owns the rather than a bank.
Fortunately, it is just as easy to view all HUD homes in the area that you are targeting, using the HUD.GOV online platform.
Appreciate That After Repair Value Is The Ultimate Key
The secret to successfully lies in your ability to spot diamonds in the rough, meaning that has huge potential. You need to see beyond the current condition of the , and envision it’s idyllic post renovation state.
To get good at , you need to hone your understanding of which renovations increase home value the most before you put a single dollar into the rehab work. You also need to be able so spot a using online tools and offline methods.
In addition, to make , you also need to become an expert at analyzing (s), because comparable properties are literally the best predictor of the net you can expect to make during a flip.
in that area. So if a well maintained 3 bedroom, 2 bathroom, 1000 sqm home sells for $200,000 in West Hartford Connecticut, there’s a good chance that a with similar specs in the same block will sell for a similar price. comps serve as the best indicator of what the is likely to be once the repair work is complete. Each recently sold home serves as a benchmark for the
ARV Determines The Purchase Price
The last point on ARV is that is that it plays a large role in the 70% rule to when setting the offer price. that you offer to the existing homeowner, and therefore the amount of you can make in the deal. For instance, it is common for investors to follow the
Crucially, you have to have a very accurate prediction of the ARV, in order to use this rule (or a tweaked version of this rule). On this point, it’s worth noting that you can use New Silver’s ARV calculator to get accurate pricing data on comparable properties throughout the US. Then it is also possible to use Zillow’s recently sold filter to source this information. Alternatively, a can also supply you with accurate sales price data in their area of specialty.