What's different about flipping houses in today's market? While some market conditions remind seasoned investors of flipping HUD repos in the eighties, there are some investing principles that have changed.
Because investors went crazy buying houses for no money down, banks have tightened up their lending practices.
Sellers also are more careful about turning over their title without a secure down payment.
However, many beginning real estate investors will make a fortune in 2008.
That's because they will learn how to invest from professionals who made money "in the old days" -- before the recent skyrocketing frenzy.
AND, these beginning investors won't let fear keep them from taking action.
If you have courage and will take the time to learn your local real estate market, here are five problems and solutions for flipping houses in 2008.
1.
Prices keep dropping in a declining market.
The problem of declining prices means that you must know your market.
You must be able to buy low and sell higher.
You must know how much repairs and holding costs will be for properties.
Smart investors will track every penny, save money on repairs, and fix the houses in a way that tempts home buyers.
2.
Loans are harder to secure.
Investors will find it extremely hard to find 100 percent loans.
You will need ten to thirty percent down depending on your credit score.
If you don't already own your own home, you still can get 100 percent financing for owner occupied, which is how many beginners get into the market.
You must keep your credit in perfect condition.
3.
Larger reserves needed to qualify.
Lenders require about three monthly payments as cash reserves in the bank.
Lenders know about tricks like borrowing money and will look at how long the funds have been in your account.
Keep your bank accounts solvent.
4.
Houses take longer to sell.
With fewer qualified buyers and more houses on the market, it will take longer to sell most houses.
The houses that are selling either offer deep discounts or features beyond ordinary.
Interior design and home staging strategies will make a huge difference.
Agents will show the houses that look great and typical buyers will pass on fixers.
5.
Agents will bend over backwards to sell to you.
If you're a qualified buyer, real estate agents will work hard to find you what you want.
On the other hand, you will need to watch out for desperate agents who might paint a positive picture or gloss over problems.
Learn about your real estate market, short sales, REOs, and desperate sellers who are willing to give up equity to move.