As someone who invests and also handles real estate transactions in which my investor clients purchase properties, my best advice would be the following...
- You can actually get into real estate flipping with LITTLE TO NO MONEY OF YOUR OWN. This is probably the easiest way to do so, as most don't have a ton of money just sitting around to dump into an investment property. And most investment properties that you'll see good margins on as far as fixing them up, you'll never be able to get a bank loan on because they won't pass inspection, so you'll need to buy cash. So how do you get into the game without having to do that? Go out and try to find distressed properties that look like they haven't been maintained and see if the owner would be willing to sell the property for immediate cash. Or you can spend a few hundred bucks on those signs you see on the side of the road that say things like "We buy houses cash", etc. When you're drawing up the contract with the seller, make sure the contract is assignable and can be terminated by only the buying party at their leisure. Also make sure the closing date is wayyyyy out into the future. Once you're under contract with the seller, you need to assign the contract. This means that you need to find a buyer who is going to pay money to YOU just for taking your place in the contract. If the deal you negotiated with the seller is good enough, any buyer will gladly come in and give you a decent assignment fee AKA finder's fee to take your position in the contract.
So how this typically works is this: You find a house that: A) the owner died and the house belongs to his/her heirs and they want nothing to do with it and just want to sell it asap without having to go through the hassle of listing it with a realtor, etc. B) the owner is behind on his payments and he has been getting foreclosure letters from the bank and he's all but given up on saving the property and is just waiting to be foreclosed on at that point or C) search the county property tax auction list. It'll tell you which houses are going to be sold at auction in the future, so you can contact those owners and tell them you'll offer them like $15k for their home or they can lose it at the auction next month and not get anything for it.
These are just some examples, but this is how it typically happens. Now, say you're under contract with the seller for a property going to tax auction at $15k but the property could be worth $80k after $10k of work is done to it. There's a ton of cash investors who would gladly pay YOU $20k just to take your position as the buyer in the contract. So on the day of closing, you'll get your $20k, the buyer you assigned the contract to has paid you $20k + $15k + $10k to fix it, so $45k, and he can sell the property for $80k. The seller would have gotten nothing if the property was foreclosed and sold at auction, and he gets $15k to move somewhere. So everyone wins.
This is just an example, but these transactions are happening every day. If you can simply find motivated sellers who are looking to get rid of their houses ASAP, you can make a lot of money in real estate without ever having to put up money of your own. Once you've done that and made some money, then you can just do the same thing as far as finding the properties, but just buy them and fix up the properties on your own and sell them, you'd make an even bigger profit.
