House flipping is one of the most profitable ventures in real estate foreclosure investing. To house flip means buying cheap bank REO houses, repairing them a little and re-selling them for a substantial profit.

However, just like any other investment ventures, house flipping may have its own risks. The good news is, these risks can easily be circumvented if you take time to identify them in order to avoid them.

Where to Find Properties to House Flip?

Smart investors find bank REO houses to house flip during the pre foreclosures and at auctions.

Pre foreclosures – during this stage, the troubled homeowner is in desperation to sell his distressed property in order to pay off his loan balance and save his credit rating from complete ruination. However, the desperation can work for and against you. You can bargain for the price that you want especially if you have arranged your finances before the negotiation. But you must take some measures to ensure that there are no hidden debts attached on the property.

The homeowner may most likely withhold information that may jeopardize his chances of selling the property. The same goes true with the condition of the house. Make sure that you are getting true value for your money by hiring a home inspector to give you a professional opinion on the real condition of the house.

Auctions – you can find many cheap foreclosure homes to buy at auctions. The process works with the property going to the highest bidder. Before the auction, make sure that you set the amount that you are willing to pay for the property. It would not do you any good to overbid. Keep in mind that the higher the cost of the property, the lower you can expect in return when you decide to sell it later.

In a nutshell, bank REO houses are the best candidates to house flip because they are cheap and require only minor repairs.