House Flipping & The Art of the “Blue Pen Flip”

“Do not try this at home . . .” There’s a reason those guys on television ask you to not do the things you see them attempt to do. They’re risky or downright dangerous, and for a novice to do whatever it is they’re doing on the screen is just an accident waiting to happen.

Have you watched any of the “house flipping” shows on television lately? They’re very entertaining and the profits sure do look big and easy. But is flipping houses the way they do on TV the way a real estate investor (that means you) should do it? Heck no, I wouldn’t go anywhere near those things.

No way, Jose

Spending lots of money to get deeds on houses that need even more money isn’t smart–it’s risky. And as a rule, smart investors avoid needless risk.

Ask anyone who’s spent six months on a rehab project and knows he has no prayer of coming close to breaking even, and he’ll tell you about the real world of fixing up houses: Rehabs are NOT the easy money they make them out to be on television.

Smart investors have figured out better ways to flip houses–ways that require little, if any, out-of-pocket money. And another project to take on? Not a chance!

The Blue Pen Flip

Smart investors make money with nothing more than a shiny, blue pen. That’s it. Just you and that pen of yours is all it takes once you understand that “getting deeds” and getting dirty is the very last thing you need to be thinking about doing.

A Blue Pen Flipper knows that the money is in the deal making. That means doing deals and passing them on to the fellas with borrowed hammers who learned how to rehab on television.

The rules have changed

It’s a down market in many areas of the country, and property values aren’t even close to what they were just last month. Investors with deeds in their pockets are getting hit by declining values and stuck with properties they can’t give away for what they owe, and that ain’t good.

Forget about getting deeds. Another deed is the last thing you need right now. You don’t need a deed to get paid any more. Deeds are problematic, expose you to all kinds of risk, and make profiting harder, not easier.

Stop chasing deeds!

Once you realize there’s a tremendous demand for fixer properties and see that fellas with borrowed hammers will pay you a premium for the chance to put that hammer in motion, you make it your job to provide them with something to hit.

Get out there and do a Blue Pen Flip!Here’s how it works . . . You find someone who really wants to sell, and you Investor Up, that is, you tell them up front you’re an investor, you need to make a quick profit in order to even consider doing a deal with them, and you ask if that’s “okay.”

Once the seller agrees that making a profit is not a problem, everything falls into place.

Marketing the property

Showing the property to perspective buyers? Sure, why not? The seller understands your game plan, knows your intention is to resell immediately, agrees it’s cool,and is completely on board with it. Marketing that property with a sign in the front yard, a classified ad, or even listing it in the MLS?

Absolutely. That’s all part of the “quick profit” story the seller signed off on. And because he’s in complete agreement, doing whatever it takes to get that property resold (and him paid) is pretty much green lighted from there on out.

And when that new buyer shows up and says he’ll pay way more than you’re paying, does the seller go nuts? Of course not. He’s been on board every step of the way. He knows the plan was to resell at a profit from the first moment you opened your mouth, and he’s agreed that “quick” was your objective all along.

Put away the smoke and mirrors

Listen, there’s no need to pretend we’re taking title ourselves. There’s no need to hide our profits. And there’s no need for silly double escrows or simultaneous closing to keep the seller from finding out about our double-dealing ways.

Forget about playing games with sellers. There’s simply no need for smoke and mirrors in your real estate investor’s tool kit because once you Investor Up?, making a profit is merely the next step.

No buyer?

And when you can’t find a buyer? Sure, that happens. But it’s not the problem it used to be. When the seller has agreed that making a profit is your requirement, and then sees a profit isn’t possible at the current agreed upon price, there’s no problem not following through to closing.

That’s always been the fear: What am I going to do if I can’t find a suitable buyer to assign this thing to?Well, when it’s been agreed, up front, that you won’t close if you can’t make a profit, then walking away from a deal that doesn’t make sense isn’t somehow pulling the rug out from under the seller; it’s merely doing what was agreed upon from the very beginning.

Securing your profits

But Investor Up is only one of the first steps in the Blue Pen Flip process. It’s an important step since it establishes your position and allows virtually everything needed to make a profit fall into place from there on out. But it’s still just one step.

A Blue Pen Flipper also understands that securing those potential future profits is critical as well, and that becomes the next step.

When your new buyer shows up and all of a sudden there’s tens of thousands of dollars on the table, you’d better be certain you’ve got a stranglehold on those profits. If you don’t, you can pretty much figure that someone will try to snatch them away from you.

Smart investors address any profits in advance of those profits happening, and getting a stranglehold on profits is a step in the process as well.

A dozen steps in the BPF process

There are a dozen steps in a Blue Pen Flip, each designed to get you to closing with the least amount of risk, resources, or problems.

We Investor Up: We get a stranglehold on our profits; we put the properties into play by listing them with agents in the MLS; and when that new buyer shows up with an acceptable offer, we get it into the hands of our seller; and he puts our profit in writing, so there’s no wondering about getting paid.

Yes, you can

Once you understand how to pull it off, you too, can make real profits happen. You don’t need to write checks or swing hammers anymore. You’re a dealmaker and dealmakers know the ONLY thing you need to create real estate profits is one shiny, blue pen. And yes, feel free to try this at home.

By CREOnline Contributor

A content contributor to the original