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Appraisal and the Flip
One of the most well known strategies of real estate investing involves finding an ugly property at a good cheap price, you pay someone a few bucks to clean out the trash that was left then you resell the property as a fixer upper. It's called the flip. People do these all the time. You should be aware of a potential hurdle that you have to get over on this type of deal.
If you are selling the home you will need the appraisal by the lender to say that the house is in average condition. This means the house doesn't have to be in perfect condition but it can't be a total mess. Nor can it have significant repairs that need to be made. Basically, it needs to be reasonably fit for someone to live in it.
The average appraisal could sink some deals. If you get picky appraiser he might not give you a poor condition appraisal. If that happens, the lender will require you to fix all the problems before the loan is made. You do have some choices at this point. You can fix the repairs or try to get another appraiser. You can make the deals work, but it is best to do whatever needs to be done to get the average appraisal before putting the house on the market.
When you flip properties that really needs a significant investment to get into acceptable condition for a lender's appraiser, then try to sell to investors. If you are going to fix a long list of items, then you might as well fix everything and sell it as a rehabbed property. Investors usually don't require the house to be in move in condition. Only thing is investors won’t pay as much as an owner occupant will.
A quick flip is one of the most fun real estate transactions. You can make almost as much on some of these then if you rehabbed or resold the property.
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