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How to Succeed When Flipping Income Property

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I know several income property investors who have made a mint on flipping houses.  Although this is not a core aspect of my own rental property investing strategy, I have done it twice with moderate success.  Here are some factors to consider if you want to dip your toes into this strategy. 

There’s an old saying in real estate that touts “location, location, location,” and this same principle is the key to a successful property flip.  The bottom line is that you will want to make sure the property is located in a decent area or neighborhood.  There are a few factors to help you determine the desirability of any given area.

First, you will want to make sure that property sales are on the rise, both in terms of the number of sales and the prices paid.  Your rental property agent should be able to help you determine these trends for a particular area.

You will also want to make sure that investment properties are selling quicker.  A key number here is “days on market” (DOM).  You want to pick an area where the DOM numbers are trending down.  Again, ask your agent for advice.

Another desirability factor is population growth.  Are people moving into the area or moving out?  Are the population numbers trending up or down?  Obviously, you want to see them going up.  You can usually find this info via the Census Bureau’s website or at the local Chamber of Commerce.

Finally, you’ll want to try and determine the overall economic growth of the area.  An improving local economy means more jobs and hence more buyers for your fixer upper.  The local Chamber of Commerce is your best bet for finding this info.

So to sum it up, look for areas where sales numbers and values are rising, where DOM numbers are falling, where the population is growing, and where the economy is sound.

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