I get this question a lot and wondered if it’s also a concern that you have about flipping houses:
“I want to start flipping houses, but I want to start with a low-risk flip. I want to flip a cheap house as my first flip and then go from there once I get a deal under my belt. Where can I find cheap houses to flip?”
You might be struggling with the thought of putting all your chips on the table with your first flip.
Fortunately, there is a way you can acquire a property very inexpensively, sometimes as low as $500 or $1,000.
In the interest of full disclosure, getting houses this way requires more patience than if you buy from the MLS. You also have to be willing to put up with a few inconveniences.
Where do you find these bargain houses?
You find them at Tax Deed Auctions.
This is hands down the best source of (very) inexpensive houses.
A tax deed auction is the only place where a seller’s asking price has nothing to do with the value of the property.
The “reserve” or minimum bid, is usually equal to the amount of the back taxes.
– A property is worth 100k.
– 5k is owed in back taxes.
– The minimum bid would be 5k.
If you bid 5k and you’re the only bidder, you get a house worth 100k.
(Each county has its own rules, regulations, and policies. Some counties have no reserve auctions. This is where you hear about people getting property for just $1.)
Obviously it is extremely rare to get a property for a dollar. However, it is quite common to find a fixer-upper for
$500 or $1,000.
Case-in-point: The house pictured below is a tax deed house with no reserve. The bid is currently at $300 Why are tax deed houses so cheap?
Most counties do a poor job of getting people to the auction. For example, some counties require people to mail a request just to get the auction notices.
This extra hurdle turns people away and reduces your
Here are a few other hoops you have to jump through to get these bargain properties:
1. Tax Deed Houses have no inspection period. You buy “as is.”
2. Provided a property is unoccupied, you can only get access at a pre-scheduled date and time. Even then, you might only have about 15 minutes to look around.
3. You work around the County’s schedule. You have to show up when and where the County says to show up.
It is almost always during business hours. You need to have a flexible schedule if you want to see the property and attend the auction.
How do you pay for a tax deed house?
If you win, a down payment is required the day of the auction. This might be 10% for example. Some auctions allow you to pay the down payment with a debit or credit card.
You then have time to pay the remaining balance. Depending on the County, you’re given 2-4 weeks to come up with the rest of the funds.
If you think a tax deed auction could be where you get your next property to flip, make sure you are prepared.
One of the DVDs in the Pro House Flipping Guide is fully dedicated to how to conduct a walk-through.
You can watch it and have the unique ability to identify any major issues with a potential property before you bid on it.
This is critical skill to have when buying tax deed houses. Our Pro House Flipping Guide also gives you access to
our list of 162 nationwide private lenders and sources of hard money loans.
Or Call: 1-844-240-2399
If you’re going out to look at potential houses to flip make sure to always take these four things with you.
I look at several properties every week. I always make sure to carry these four items with me.
1. Flashlight – this is probably an obvious one to you, but it’s very important.
A flashlight with a nice bright bulb helps you spot plumbing issues, water damaged areas, etc.
This is especially important when looking at vacant houses and foreclosure properties.
These houses won’t have power so you’ll need a flashlight to make your way around.
2. Tape Measure – this is important so that you can accurately estimate your repair costs.
Jot down the exact dimensions of any area that needs renovation work, i.e. the dimensions of a room that needs new flooring for example. This allows you to calculate the cost of labor and materials and avoid unnecessary trips out to the property.
3. Camera – this is another obvious one, but a very important thing to take with you.
If you’re using hard money or a private lender, they always want to see photos of the property.
Since hard money loans are based mostly on how good of a deal you found, the photos are a big part of getting the green light on funding. (Photos you snap with your smartphone are great as long as you’re using a relatively new model.)
4. Notebook – use this to record what you see, hear, smell during a walk-through.
It’s tough to remember everything you saw during the initial walk-through. My memory isn’t good enough to remember all the “mental notes” made when looking at a property for the first time. Making simple notes of the things you see will help you determine whether to pass or go further with a deal.
Your walk-through can be a very exciting experience. The feeling you get when you know you discovered a home run property is exhilarating.
Our Pro House Flipping DVD Package gives you the thorough step-by-step process our team uses to flip houses. (Customers often tell us they picked up more house flipping tips from the DVDs than they did from attending multi-day seminars.)
Or Call: 1-844-240-2399
Do you know of people who flip houses and wondered how they got their funding?
Have you thought about the opportunity that would open up if you had the cash to flip just one property?
Our team is currently working on fix and flip projects in more than a dozen different cities.
Many of these deals involve people who needed help getting funding. And we helped them do that.
We often meet new investors who feel they are being held back.
This is what they say to themselves:
“I don’t have lots of cash and my credit isn’t that great. I’ll never get funding.”
It doesn’t have to be this way. There are several ways to get funding that you probably never thought about – or knew even exist.
This is why we refer people to non-traditional private individuals and lending groups.
For example, let’s look at a group called “Loans 4 Investors”.
Here is why a lender like this could be a good fit for you:
1. They are actively looking for new rehabbers to provide loans to.
They are eager to start arranging your funding. They are always looking for new projects to fund.
This means you don’t have to cold-call a private lender and ask for money.
2. Loan amounts are based on ARV (After Repair Value) instead of the purchase price.
In other words, the amount of the loan is based on what a house should sell for after you fix it.
For example, let’s say you can buy a house for $50k that you can fix and sell for $120k.
The amount of money you can get is based on $120k.
This means that, compared to other lenders, you can qualify for more money.
3. You can roll additional rehab costs into the loan.
In some scenarios they can roll your rehab, construction, and closing costs into the loan.
This means you pay more interest, but use less of your own money.
4. You can have multiple loans at once.
(This is for experienced investors or for people with a track record with them.)
This means that once you develop a track record you can have multiple projects going on at once.
Why not use other people’s money and double or triple your profits?
5. They accept collateral that other lenders will not.
For example, you can secure a loan with a savings account, a CD, or other real property.
This is a great way to get financing if you’re currently short on liquid funds.
6. The minimum loan amount is $20k.
Some lenders have high minimum loan amounts. High minimum loans only work if you plan on flipping high-end houses.
However, a company with low minimums is perfect if you plan on getting started with a low-cost flip such as a tax auction house or a HUD House.
This is just one example of the 162 lenders we give you when you invest in the Pro House Flipping Guide. The list you get has 162 different lenders on it. You get their name, email address, website (if they have one), phone number, and loan terms.
You cannot find these guys by doing a Google search.
You can also call to order: 1-844-240-2399