Some just see a shack next to a tree. (Photo: mhall209)
I would like to tell you about another valuable step to investing in real estate: Creating and Enhancing Equity. During this stage, I buy the property and do things to make it more valuable. Then, I can sell it for a profit or refinance and keep it with an equity position and positive cash flow.
There are actually three different techniques to create and enhance equity: flips, flixers, or fixer-uppers. Today I will focus on flips. There are two premises to flipping a property that make this a valuable program.
The first premise is to buy the property for less than its appraised market value. I can teach you how to find properties at a discount below their market value. Three situations enable you to buy below market: distressed sellers, distressed properties, and cash.
- Find distressed sellers. Sellers become distressed in various situations. Divorce, property management issues, bankruptcy, foreclosure, death, health and job loss can all result in discounted sales prices. Finding distressed sellers is an extremely productive art that I would like to teach you.
- Find distressed properties. Distressed properties exhibit any or all of the following characteristics: poor landscaping, bad structure conditions, holes in the house, broken windows, piled up newspapers, trash and debris in the yard, notice stickers on the windows and doors, boarded up windows, broken-down vehicles, blinds always open or shut, missing parts or holes in the roof and appliances in the yard. I can show you how to turn these distressed properties into real investments!
- Use cash. Cash allows you to have a quick closing and more earnest money. Cash can also help you avoid appraisals, remove financing contingencies and make the seller feel very secure. Cash purchases have allowed me to have some of the biggest discounted sales prices in my career. Again, call me and I will show you how to become a cash buyer!
The second premise of Creating and Enhancing Equity is to sell the property for much more than you purchased it. If you put an assigns clause in your purchase agreement, you can even flip the property before you own it! I always recommend that you look for properties that are discounted at least 20% below the appraised market value. This price allows you to sell the property for a handsome profit or keep the property with an excellent equity position.
Finding discounted properties gives you many options. Call me soon to set up an appointment to look at properties that you can buy under market. Then, leam how to sell the property for a profit or refinance for an equity position. The possibilities are endless!
Happy Investing,
Kendall E. Matthews, CRMC
Phoenix, Arizona Investment Real Estate