One of the growing trends in real estate investing is to buy a property for a lower then market value price and re sell it quickly. This is known by most investors as property flipping. Flipping is not a sure fire way to make money and has its own positives and negatives that need to be
understood before you try to do this on your own.Be aware that, as appreciation rates decline or level off, you run the risk of being unable to "flip" at a higher price.
If you can show that the prior sale was a "distressed" sale many times a lender will not have a problem with the quick sale of the property for a higher sales price in such a short time. A distressed sale may include one where the previous homeowner had to sell quickly due to financial difficulties, divorce, moving to a retirement center, etc... This can still be considered property flipping but lenders do not usually have as much of a problem with this. However, the home needs to be worth the new sales price too and the appraiser should comment on the "distressed" sale.
Always keep in mind your budget and timeframe when flipping a property. If you hire cheap labor that takes long to finish the project you run the risks of making multiple mortgage payments as opposed to hiring licensed contracts that know how to get the job done fast at a higher price.
Most lenders are very cautious when loaning on a flipped property. They will research the title chain to determine if the new value is legitimate, sometimes even making the property owners produce reciepts documenting improvements done to the house.
Make sure you check with your mortgage broker on loan programs you will qualify for before making an offer on a property with little "title seasoning."
Some investors will fix up a property and sell it on a land contract or lease option as opposed to trying to re sell it right away.
Make sure to take before and after pictures.
