Flipping houses for profit can be very lucrative if done right. It can be a huge nightmare if you don’t know what you’re doing. My name is Tyrus Gross and I have been buying and selling real estate for over 25 years. This article is a step-by-step blueprint to help you avoid the headaches I went through and to shave years off your learning curve. My sole purpose for writing this is to make sure you know exactly what to do to succeed at real estate investing. The material I’ve provided here is a brain dump of over 25 years of experience (both good and bad). In other words, I want you to avoid the mistakes I made and become as successful as possible as quickly as possible. If your plan is to buy a house (actually take title to it) and then turn around and sell it, I’m going to show you the fastest, safest way to do that. But first, I’m going to give you a little background on myself and teach you what not to do.

I started investing in Los Angeles in 1989. Like many people, I spent a lot of time and money on real estate material. One so called guru taught me to get the list of pre-foreclosures and then go door-to-door. He instructed me to literally go knock on the door of people that were about to lose their home. Surprisingly, there were a few people that let me inside their house (as a side note, many people are very emotional when they’re about to lose their house). I had a friend that got invited in and he found out the hard way that the homeowner had a loaded shotgun in the back room and was extremely emotional about the fact that he was going to lose his home that he had been in for over 20 years and raised his family in. For the record, I’m instructing you to never go door knocking uninvited. There’s a much better way to buy houses. Never put your life in danger when buying houses. There are a ton of opportunities to buy discounted properties and I’m about to share with you much of what I’ve learned over the years.

The fastest and most streamlined way to buy houses at a discount is to buy them from wholesalers. Before I explain the wholesale buying process, I would like you to envision what I was doing before that. I was told by several gurus that I needed to get a list of REOs (Real Estate Owned - an REO is simply a foreclosure that has gone back to the lender) and then buy the house from the bank at a deep discount. Let me tell you from experience, that is not an easy process unless you already have an established relationship with the REO manager at the bank. Even then, it’s a real challenge to get the bank to come down to a price you want to pay. Many times, door knocking and trying to buy REOs from the lender is a complete waste of time. I spent hours and hours, even months and months leaving voicemail messages just to get someone to call me back. I lost track of the number of voicemail messages I left for REO Managers (I don’t even know if I had the right person) and I called and recalled at least 40 different lenders.

Let’s stop and think about that for a minute - months and months of time flushed down the drain. I don’t know about you, but I can’t stand to waste time. Even when you get a decision-maker on the phone, you still have to negotiate them down to a price that makes sense for you. Now let’s compare that to buying from a wholesaler, but first I want you to know exactly what a wholesale deal is. A wholesale deal normally is 70% of ARV (After Repair Value). So if the ARV is $100,000, a wholesale deal is no more than $70,000, which after you have made the repairs, leaves you with $30,000 in potential equity or profit. My personal philosophy is that if I can’t buy it wholesale, I’m not buying it. The average wholesaler gets five deals a month, every month. In addition, the wholesaler doesn’t make any money until he/she flips the property to an investor like you. In other words, they want to do business with you. When you call them, you’re not trying to sell them anything, you’re calling to make them money. That’s a call they enjoy taking. You may be asking how this process works and why the wholesaler is willing to do this. Using our example above, the wholesaler has the property tied up at $65,000 and flips it to you for $70,000. He/she is going to make $5,000 for every deal he/she flips without taking ownership of the property (they’re really just flipping/assigning their right to buy the property over to you). The wholesaler puts up very little money, usually $100-$1,000 to tie the property up and makes a nice chunk of change on the backend. Rinse and repeat. Keep in mind, the wholesaler is doing all the time-consuming activities and negotiating a great deal. I don’t know about you, but I’m fine with him/her making money as long as it’s still a wholesale deal. I suggest you get on the wholesaler’s email list to get first crack at these deals.

I also suggest you also do an Internet search for wholesalers and let’s say you’re investing in Phoenix, AZ. Type the words ‘wholesale houses for sale in Phoenix, AZ’. Here’s a website that I recently located and gives you some idea of what I’m talking about. http://phoenixwholesalehomes.com/ There are many ways to find wholesalers and I’ll go into greater detail on how to find them in my next article.