How to Find Houses to Flip: 7 Best Strategies and Secrets
You’ve established a budget and saved up some funds, decided on financing, set up your LLC, and started to network in the local real estate market. Now … you just need a house to flip.
Whether this is your first flip, or you’re just looking for more ways to find investment properties, there are a lot of options—and you can use them all.
What’s the best way to find houses to flip? There are seven:
1. Check out real estate auctions.
Any type of property can be sold at auction, but most of these homes are foreclosures. That means you can get a good deal, but it comes with a fair degree of risk—namely because you cannot inspect the property before you buy it.
Foreclosure properties are auctioned off as-is, sight unseen. There is no open house and attempting to inspect the property yourself would be trespassing. (Not to mention very rude, because residents are usually still living in them until the time of sale.)
Still, you can do a little due diligence. Properties are listed in public auction lists several weeks in advance. You can’t go onto the property, but you can:
- Drive by
- Research property values in the neighborhood
- Conduct a title search to check for other liens against the property (which you will be responsible for if you purchase)
- Investigate it on real estate sites like Zillow or Redfin
The other risk at auction is getting caught up in a bidding war. Make sure you know what your ceiling is and stick to your guns. Too many investors get swept away in the bidding and end up paying more than they intended.
Finally, you will need to make sure you have financing in order to buy a fix and flip property at auction. If you win a bid, you need to produce either a downpayment (anywhere from five to 20 percent) or the full price of the property on the spot.
There are six general types of “fix and flip” loans for flipping houses. Each has pros and cons, but finding the right option could launch you into the career of your dreams.
In Texas, real estate auctions are held on the first Tuesday of every month on the county courthouse steps.
2. Work with a Real Estate Agent
We always recommend that flippers (especially if you’re fairly new to flipping houses) work with an experienced, local real estate agent. A good real estate agent is a wealth of local insights and has a robust professional network.
When it comes to finding a house to flip, a local real estate agent will know which neighborhoods are coming up and/or which areas are worthy of investment. They will also have access to the multiple listings service (MLS) and other tools that allow them to search local properties to meet your specifications.
When vetting local real estate agents, be sure to ask if they have experience with investment properties, working with house flippers, and/or working with REO (“real-estate owned”) properties.
3. Look for REO Properties
Real estate owned properties are foreclosed houses that did not sell at auction, and have reverted to ownership by the lender. The lender, however, does not want to own these properties, so they will usually let them go for a deal.
There are lots of ways to find REO properties:
- Lenders’ email newsletters
- Calling local banks or scrolling through the list at Bank REO Real Estate
- Searching County Clerk public records for “Notice of Default (NOD)” or “Notice of Sale”
- Search “bank owned” on real estate sites like Zillow
4. Find Short Sale Properties
A home becomes a short sale property when the owner needs to sell it quickly, at less than the value remaining on their mortgage. It can be a great way to get a deal on an investment property, but the downside is that many short sale properties become neglected. If the owner needs to move quickly, they often so do—leaving the property behind and vacant.
Still, if the property is in a decent neighborhood, or hasn’t been empty for too long, a short sale is a good way to get a bargain on a flip. There are a few ways to find them:
- Talk to your real estate agent. They can easily search the MLS for short sale properties.
- Get a list from a brokerage.
- Search the County Clerk records for “pre-foreclosures.” (Be aware, though, that these don’t always go into foreclosures. Many times, the property owners find a way to start paying their mortgage again.)
- Filter real estate website listings.
You can also advertise, if you have the means, that you’re willing to buy short sale properties. Classifieds (print and digital), local real estate networks, etc., are all good ways to be seen by a buyer with a house they need to sell.
5. Network with real estate wholesalers.
A real estate wholesaler will do the hard part of finding a house to flip, but they’ll charge a fee for their services.
Real estate wholesalers make a living from buying investment properties at low prices and then selling them to other investors who do the work to flip them. That means that wholesalers are very familiar with local markets and neighborhoods, and many of them have experience working with flippers.
They’re going to mark up the property from their purchase price, of course, but they know that you’re making an investment too. Experienced wholesalers know how to strike a balance.
If you want to work with a real estate wholesaler, establish a relationship as soon as possible. You can usually find them online or through local real estate investment groups.
6. Try real estate investment groups.
We always recommend that new flippers get involved in local real estate investment groups. You’ll find mentors, investors, and you may even find good investment opportunities. Many have pages on Facebook or LinkedIn as well as monthly, in-person meet-ups.
BiggerPockets keeps a list of Texas real estate investment clubs you might check out if you’re here in Texas.
7. Search for a HUD home.
When the Department of Housing and Urban Development (HUD) insures a mortgage through the FHA, and the lender forecloses, the property returns to the HUD—the same way that banks end up owning foreclosures. HUD then lists them for sale to the general public.
Your real estate agent can search for HUD homes, but, unlike the rest of the MLS, you can also see these listings for free without a real estate agent. Search HUDhouses.com for any city and state to start looking.
Be aware that HUD homes, like other foreclosure properties, are sold “as is.” They also usually have occupants, so you can’t go poking around.
Still, you can get a good deal. HUD homes are sold through online bidding, but unlike buying a foreclosed property at a live auction, you have about 48 hours to submit paperwork if you win.
Finding Houses to Flip
Once you’re ready to invest in a fix and flip property, there are lots of ways to “shop.” You can use almost all of these options yourself, or you can work with an experienced local real estate agent who can do a lot of them for you.
If you’re thinking about a real estate auction, attend one or two first just to see how it goes. You need to have proof of financing in order to bid, but the auctions are open to the public. You can attend without bidding just to get a feel for the process.
If a live auction is intimidating, start talking to local realtors.
Securing a new investment property to flip is an exciting time! Make sure you stick to your budget and keep as close as you can to your deadlines as you get that house ready for the market.
