Flipping is a two-step process. The first step is to tie up a property. This is otherwise known as making an offer. The second step is to find a buyer. This is known as making money on your deal. This is the point of flipping and is the Quick Cash strategy in action.

When you flip foreclosures, you use the same techniques as flipping non-foreclosures but with a few modifications. In this chapter we will talk about the flipping techniques for all properties and give you the particulars for flipping foreclosures. In fact, the next three chapters all focus on flipping foreclosures. This is where you make Quick Cash in foreclosures.

We will introduce you to our real estate investment axiom: Buy the property first, then get the financing. The foreclosure corollary to this axiom is buy the foreclosure first, then get a buyer. When you follow these axioms, it makes it easier to write offers. As we have said, writing an offer is the way to tie up a property. When you tie up a property, you control a property.

Tying Up a Property

In the 1990s, when we traveled the country teaching real estate investors Robert Allens Nothing Down seminars, we blew them away with buy the property first, then get the financing. In city after city people told us we could not buy real estate this way.

We told them to try it our way and report back to us what happened. Lo and behold, from Seattle to Orlando, from Los Angeles to Baltimore, from Chicago to Dallas, our students found that they could indeed buy the property first, then get the financing.

Most, if not all, retail buyers (home buyers) have this mind-set: How much money do I have to put down, and how much of a monthly payment can I afford? With this mind-set, they go to a lender to get prequali-fied for a real estate loan.

What the real estate lender says determines how much of a house the home buyer thinks he or she can afford. Of course, being prequali-fied means nothing once you actually apply for a loan. You can be pre-qualified for a $200,000 loan and actually wind up receiving only a $175,000 loan at closing.

You are a real estate investor and not a home buyer. You are a wholesale buyer of real estate. You are going to do things differently. Everyone, except us, will tell you to get your financing first, then buy the property.

Buy the Foreclosure First, Then Get a Buyer

Example 1

Buy the Foreclosure First We found a four-bedroom, two-bathroom, single-family home. The property was headed to foreclosure. The retail value of the property was $159.000.The seller had an assumable VA loan with a remaining balance of $129,000. The seller was $3,000 behind in his payments. The sellers equity position was $27,000.

Mind-Set

Sellers Equity Position

First Mortgage Back Payments Sellers Equity

Retail Value

$159,000 $129,000 $ 3,000 $ 27,000