Flipping Properties: Generate Instant Cash Profits in Real Estate [Paperback]

The author doesn't promise instant riches or make it seem so easy that you can do it without any work, in fact, he advocates that this is a lot of work to do it right. The sections on prospecting for houses to buy and how to approach potential sellers is also very good.

What I didn't like about the book, is his treatment of the infamous "due on sale clause" for those of you who don't know what this is, it is a clause in most mortgages that says if an owner sells you a house and he still owes money to the bank you can't just "assume" his loan, in other words you can't just take over the loan and start making the payments...at least legally. The authors advocate doing it anyways and hoping you don't get caught by the bank and making sure you explain it to the sellers, what he says is that if the bank is an out of state bank they will probably never know you have taken over the payments so don't worry about it. What he doesn't tell you is that if the bank does find out and they do decide to force the issue they can call the entire balance of the loan due at once, possibly putting the investor in a bad situation, which could also affect the original sellers since they are still listed on the loan.

The second issue about the book is the creative financing aspects of the book, it is not that these techniques don't exist, becasue they do, but understand that only about 1 in every 100 people who agree to sell to you would be interested in some creative financing, especially if they are distressed buyers. Most distressed buyers will want out of a bad situation right now with all their money (if any is left). They need cash, not some payments over time. Second the zero percent interest situation will work, sometimes, but it is even more rare than the general creative financing techniques. Most houses you buy this way will require you put some cash into the deal (or find a partner who can) and finance the remainder through a private mortgage broker paying interst rates of about 15-18%. Most banks will not lend money on these types of property because they may need a lot of work. So your three options are creative financing or private mortgage lenders, or the third is put all the cash in yourself.

The last comment is that the book doesn't discuss tax ramifications of doing flip deals at all. If you are successful and flip 3-4 properties in a year for 10-20K in profits you will be facing some mighty tall tax consequences and it would have been nice if the author had discussed this a little and some common techniques for dealing with this.

This may sound like a negative review, but it's not meant to be. The book has some great information and the author's writing style is easy to understand, but it is just meant to let you know that there are clearly some down sides to the author's suggestions that you need to be aware of before rushing into this form of investment. I would recommend reading Kevin Meyers book "Buy it, Fix it, Sell it, Profit" This is fantastic book that will compliment this book very well. I would also recommend the real estate investor's tax guide, both would be needed to give this book a balanced view.