Mid-Market Residential Real Estate Flipping

There are basically two strategies in residential real estate that can make you a lot of money in any market.

Both strategies are about flipping properties. (Flipping is a term used for buying and reselling a property right away at a profit).

The second residential strategy is about flipping Mid-Market properties.

The Definition: Mid-market means the average priced single-family homes that are at least 3 bedrooms and 2 bathrooms. (No condos, no small homes and certainly no vacant land, as these do not resell as fast).

The concept is to focus on the price range and the size of homes that sell the fastest in a particular market.

The business model using the FACTS system works as follows:

Find: You find these at the bank’s non-performing asset department also called REO or real estate owned. You can find them at the auctions. Or listed as short sales or bank foreclosures on the multiple listing services.

Or if you build good rapport with several active realtors you can get some listings as soon as they hit the market and sometimes even before they hit the multiple listing services (MLS)

Analyze: The idea is to get the property way below comparable sales in a market that does not have too much inventory sitting for sale.

Control: the way to negotiate and put these properties under contract is to show proof of funds and usually pay cash.

Time the process of due diligence and financing by having a team of contractors and potentially architects that can work with you on the rehab and can give you a quick estimate. You may want to line up a group of investors or get your own cash to pay in full and get the best price.

Strategize: The best strategy is to do the rehab that has the biggest impact on the price and desirability of the property. A major focus should be on adding square footage or improving the configuration, then stage the property and resell it fast at top dollars.

No easy terms and no seller carry back. Just conventional, traditional resale methods to get the cash and repeat.

Your buyers will usually be those that could qualify easily like professionals with good credit, who can place a large down payment and get a good long-term loan.

The idea is to focus on desirable neighborhoods with good school districts and easy transportation as well as growth of employment.

Make the home look like new, stage it and use a well connected broker who can create a website and a full disclosure packet on line. Do a great promotion and a couple of open house events. In the right market, a nicely rehabbed, well priced home in a good neighborhood will have couples competing against each other to pay top dollars.

You can grow faster by getting a group of investors to pool their money together and put a team of experts together to track the properties coming up in the auctions and search title and verify properties and areas before bidding, rehabbing, staging and reselling at high profits.

Application for Success: I have created a great system for this method of transacting residential mid-market properties specifically in the bay area of San Francisco California. I teamed up with a group of professionals that are ethical and experts in the business. I set up a private fund called MIGSIF (Medawar International Group Secured Income fund). Since 2009, we raised several millions and created a strong momentum with steady high profits to benefit all involved.

The method we use is the FACTS system and it is practically on automatic now that the team has been at it for a few years.

Through my training and investment company CMREI, we are looking at scaling the process even further with the qualified and accredited students who wish to multiply their returns.

When you buy and sell real estate back to back you are usually classified as a “dealer’ by the IRS but with the proper back up for expenses you can write off a lot of expenses and continue to grow your business at a fast pace and with great margins of profit.

Here is to profitable flipping!

Cherif Medawar