Five Obstacles That Investors Must Overcome When Flipping Properties

To read most of the property-flipping books, you would think that flipping a piece of property is as easy as changing clothes. I hate to be a spoil sport, but in reality nothing could be further from the truth. The fact of the matter is that most authors fail to point out the potential deal-killing obstacles that investors must overcome when using conventional property-flipping strategies. And they never bother to mention anything about:

1. Title seasoning.

2. Loan seasoning.

3. Property appraisals.

4. Overzealous scrutiny from lenders and title and escrow agents for possible fraud.

5. Stringent financial tests, which investors must pass in order to qualify for a mortgage or deed of trust loan on a non-owner-occupied property.

I can tell you from firsthand observations that most of the investors who try their hand at flipping properties usually end up spinning their wheels. While I was writing this chapter, I received a telephone call from an investor here in Tampa who wanted to know if I was interested in buying a small commercial property that he had under contract to purchase. As I found out, this guy was unable to finance the purchase of the property, and his purchase agreement was due to expire in five days. He was in a panic mode, frantically trying to find someone to buy his agreement before he lost his earnest money deposit and the seller filed a lawsuit against him for failing to purchase the property as agreed. I passed on the deal but took down the property's street address for future reference. Who knows, if the property fits my needs, I may contact the owner later on and try to negotiate an option to purchase.

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