Real estate investors relish staying ahead of the curve and taking advantage of new trends and technologies. And the one we are going with is micro-flipping. Micro flipping investments provide flippers with profits in a short period of time. Savvy investors looking for profit and capitalization on new real estate investment strategies are turning to this profitable niche. We will discuss micro-flipping in real estate, its differences from other investment tactics, and how to get started through this article.
What is Micro-flipping in real estate?
Micro-flipping is the digital form of real estate wholesaling. It is a fast and virtual process with a low-profit margin and volume-over-profit strategy. After identifying an undervalued property it’s necessary to turn around before selling. The term “micro” describes the speed of transactions.
In micro-flipping, you do not hold the property for long. Moreover, it does not involve any major renovations. Micro-flipping is a method of locating, purchasing, and speedily selling undervalued properties by leveraging technologies and easily procuring data.
Micro-flipping vs Fix & Flip
As a beginner, you might get confused between micro-flipping and fix-and-flipping. In fix-and-flip, you purchase a distressed property, renovate it and then sell it. The property can require extensive renovations and also months. Fix-and-flip needs large capital investment. The profit margin depends on the value of renovations. This procedure can be highly profitable but also consist of risks if things don’t work.
Whereas in micro-flipping you don’t need to renovate the property. You only need to purchase the property, turn it around and sell them. Moreover, in micro-flipping, the risk factors are less.
It’s vital to have a vivid idea about the market and have buyers lined up. Therefore thorough research is essential for lowering the risks and maximizing profitability.
How to get started with Micro-flipping in real estate?
If you think micro-flipping is appropriate for you, here are a few pointers to get you started and give you a decent understanding of commencement.
1. Find a proper network –
The very first step to micro-flipping is to find a property for possession, they must already have potential buyers lined up. You won’t have to worry about negotiating your carrying costs in such a scenario. Transactional funding can help you to buy and sell the property on the same day. However, finding proper buyers and sellers is very important in flipping real estate.
2. Choose the correct software –
To find an undervalued property you need to access the market data. Technology is the most vital aspect of micro-flipping. Market research with an understanding of the values of individual properties requires proper real estate software. You have to judge surplus deals to identify suitable properties. You’ll have to conduct some research to work out which one is best. If you find the best deal then the investment will be worthwhile.
3. Find the best sellers-
Once the property is analyzed it’s time to find the sellers. Micro-flippers need a motivated seller because to make a profit they must bid with the lowest sale price. An appropriate analysis of the data helps in identifying owners who are facing foreclosure. These motivated sellers are willing to sell their property below market price. Be sure to give the sellers space to rethink your offer. Provide them with support and assurance whenever needed. By these, you can achieve a good profit margin when you sell.
4. Fixing up the financing strategy and building up your real estate team –
Lastly, it’s important to secure funding. Most flippers use either transactional funding or a hard money loan to fund their properties. Since there are pros and cons to each, so select carefully before deciding which financing approach you’d prefer. After finalizing the financing strategy, collaborate with a local lender who works with your preferred funding and has proper knowledge of wholesaling. You can also take the help of a real estate agent in case you don’t have a license.
5. Terminating the deal –
The emphasis is on research and data analysis. After the identification of the property, the owner agrees to sell the property and finds the buyer. Micro-flipping deals can close in as little as a week if all goes well. Therefore, as a real estate investor, you have to put a few hours of effort into the transactions since they can be operated from a computer with a quick turnaround. Proper execution and fast transactions are necessary for investors to make a big profit.
How much can you make with Micro-flipping in real estate?
The micro-flipping gives a high return when done over a larger volume. While a decent fix and flip could net you $50,000 or more, the process could take a year. It takes a little effort and a few hours of work to make $5,000 -$10,000 or more per transaction. It’s simple to make this real estate investment strategy ideal for you only by quick turnaround times.
One successful micro flip per month can exceed an investor’s day job. And a full-time micro flipping can be lucrative.
Pros and Cons of Micro-flipping in real estate
Every investment has its benefits and drawbacks. Micro-flipping has got some too. Investors must cautiously look into both to see if it’s a fitting investment choice.
Pros
- It’s a passive form of investment therefore, a little sweat equity is involved.
- Investors have possession of the flip property for a few days to a few weeks, which determines a rapid turnaround.
- Real estate micro-flipping is a hands-off process. They do not take part in the fixing of the house. They act as the middleman between interested buyers and motivated sellers.
- It’s portable since real estate agents can get involved in these flips through an online process by residing anywhere.
- Flipping real estate using a micro-flipping investment strategy involves low startup costs. You don’t require a high volume of financing to buy the home, and also no money is requisite for extensive repairs.
- It’s a process of relative ease since it can be executed by only analyzing data sets. Knocking on doors, cold-calling, or driving around looking for properties with profit margins are not mandatory.
Cons
- Investors must use micro-flipping software, which requires competency in technology to manipulate the system fast. Therefore real estate investors must be tech-savvy.
- There’s a heap of competition in this market since the initial expenses are less. And the market remains saturated with the masses since many of investors have discovered this real estate investment strategy.
- Micro flipping gives fewer profit margins. Since they intend to close the sale quickly, they make less money than the wholesalers. But if a lot of deals are made then flipping gives a high return
The Lilypads Bottomline
Micro-flipping in real estate is the latest investment trend. The global pandemic has changed the working procedure. Now it’s mostly preferred to work safely from home. The important aspect of micro-flipping is to analyze various data to find out the best deals through the micro-flipping software. Huge capital is not needed, be tech-savvy to micro-flip fastly and effectively. And always remember to do your due diligence before investing.