"Fix it and flip it". These five little words are worth millions of dollars to the aspiring foreclosure real estate investor. Yes, you can make $1,000,000 investing in real estate foreclosures by acquiring distressed properties, fixing them up, and then reselling them on the market.
The term "flip", in real estate parlance, means to buy, fix, and sell a property in the shortest time period possible, in as little as 30 days to two years, depending on the market conditions allowable in the real estate cycle at the time.
Many thousands of people have learned how to make money flipping foreclosures and have made tons of money doing so. And attaining these figures are not so elusive as one might think.
Let's put the numbers into perspective: If you can make $10,000 net profit per house, then you would have to flip 100 houses in your lifetime in order to accumulate a million dollars. At the rate of 10 houses per year, it would take you 10 very short years to reach your goal.
Real estate is a numbers game that follows the traditional "funnel rule" of sales marketing: For every 100 leads, you may find only 10 prospects. Out of those 10 prospects, you may find only 3 serious customers, of which only 1 person might result in a sale. So the same goes for real estate. For every 100 houses in foreclosure, only 10 will be worth investing in. Of those, you may only be able to make an offer on 3 (and the other 7 will fall through for one reason or another), and only 1 of those 3 might be accepted. (Notice that I said might, because it is entirely possible that even that 1 deal that you thought was "in the bag" might fall through.)
So if you need to flip 100 houses at $10,000 net profit a piece, then using the 100:10:3:1 rule, you would need to research 10,000 foreclosures, out of which only 1,000 will be worth pursuing. Of those 1,000 houses, you will only make an offer on 300 of them. Of those 300, you might close on 100 of them.
Hopefully, by putting the business of real estate investing into numbers for you, you can see how easily within reach it is. And always remember that financing should never be a barrier to your ability to do deals. You do not need to use your own money nor do you need to take out a conventional mortgage loan in your name. You can use other people's money, whether it is a hard-money loan secured by the property, a private investor, or you partner up with a more experienced real estate investor who is willing to put up the money while you do most of the work, in exchange for a split of the profits. And always remember that you should never do a deal unless the total amount of the mortgages on the property exceeds 70 to 75% of the LTV (loan-to-value) ratio of the house.
