Zombie House Flipping? It’s not just house flippers on Halloween. This type of investment is actually a perfect way for house flippers to make quick money in unexpected ways! This is one of the oldest styles of flipping in the book, but recently is the talk of the town.
Real estate investors and house-flippers can easily take advantage of this real estate investment. Moving quickly these flippers can take zombie properties and make large profits on low-value homes!
Looking to make money with zombie house flipping? We cover everything you need to know about this special house flipping and finding your own zombie properties below!
What Is Zombie House Flipping
‘Zombie properties’ are simply homes that have been abandoned by their owners in the midst of a foreclosure.
These are sometimes referred to as zombie foreclosures, where homeowners abandon a property as soon as they receive a foreclosure. For zombie properties, the foreclosure process can be delayed or canceled. It could be that the title is never transferred, the lender determines they don’t want the property, or it may not be worth the cost to repossess, or the value has fallen too much.
ATTOM Data Solutions stated that zombie foreclosures increased to 3.1% Percent Nationwide. According to the report, about 282,800 homes are in the process of foreclosure, with about 8,700, or 3.1% percent sitting empty as zombie foreclosures for the first quarter of 2020.
For smart investors, this 3% is a great opportunity to start zombie house flipping!
These zombie properties can then sit vacantly, falling into a state of disrepair, and dropping in value. For real estate investors, Zombie foreclosures can actually be a great way to find undervalued properties, for cheap!
For Real estate investors, house flipping is a great way to make large profits on undervalued homes. In the right location and the right repairs, house flippers purchase these properties, repair them, and increase the home value and sell for a profit. (Our home rehab valuator is perfect for estimating repairs on investments, get it for free here!)
Flipping these foreclosures can be a lucrative way for real estate investors to find the properties in the perfect locations in need of repair, and make a quick turnaround and profit.
How To Find Zombie Properties
If you want to start zombie house flipping, you have to know how to find zombie properties. While you could drive through your city in hopes of finding a home with boarded-up windows, newer technologies, and property management is a far easier way to find these properties.
There are a couple of ways you can find homes for zombie house flipping. You can easily work with realtors, or a mortgage company to see what properties they may be looking to move.
Lenders may have a list of zombie properties that are ripe for the picking. Realtors with access to the listing will know of the recent foreclosures or pending listings that may require a nudge to get listed.
Another great source of inventory for zombie house flipping? Property management companies. These companies work closely with lenders, investors, and realtors. They may know of the local eyesores or want to see a profit to come in from the properties they watch for the banks.
Some real estate investors use other sources, such as mortgage brokers, title companies, and local government authorities. City tax offices or county cities could all be great resources for real estate investors looking to find these zombie properties.
Zombie foreclosures can hurt the community as the home drops in value and affects the surrounding homes. Those with the Zombie properties are more likely to help get the property moved. Zombie house flipping will help the community at large by making a profit and increasing the home values of that community.
By working with the lenders, realtors, and local authorities who can easily locate and inspect the properties and start zombie house flipping.
Ways To Invest In Zombie Properties
While zombie house flipping is a great investment, there are many ways that real estate investors can use these properties. Depending on the investment the investors may be able to make more of an income by either lipping, renting, or using a buy and hold strategy.
3 Ways To Invest In Zombie Properties:
- Zombie House Flipping
- Rentals
- Buy And Hold
As we covered before, Zombie house flipping is when an investor buys a zombie property, repairs it, and sells it for a profit. They make large one-time repairs to maximize the home value and appeal to new buyers. This is a great way to make a large one time profit of a property. When zombie house flipping, it is ideal to make the right repairs and keep costs as low as possible. Oftentimes real estate investors use a fix and flip loan from hard money lenders to finance the flip.
Real estate investors may also choose to rent instead of zombie house flipping. By renting a property, they can generate passive income, and in some areas may be able to make more money from renting. Those that are renting zombie foreclosures will still need to make repairs and get proper financing. When renting it is important to have a property management system and make sure you follow all legal requirements and paperwork.
In lieu of zombie house flipping, other investors may choose to buy and hold a property. They may do this to slowly update the property, and to build the real estate value over time. For some investors they may not have the funds on hand to complete all the large repairs for a property, waiting for a more motivated market, or are waiting for city developments to be complete.
How you choose to invest in zombie house flipping depends on the city, market, and location of the zombie property. While all these methods have their pros and cons, investing in zombie properties is a great way to acquire low-cost properties.
How To Fund Your Zombie House Flipping
After locating, and finding the perfect property, finding the perfect loan for your investment is key.
Traditional lenders may be willing to lend on a foreclosed property, but others looking to unload the property may not want to finance, or have stricter lending criteria. If a traditional lender is willing to finance, they will base the loan off the borrower’s credit and employee rates. These can delay the closing process, and if the borrower has a bad credit history, they may not qualify. These types of investments may use private or local hard money lenders.
How Do Hard Money Loans Work
Hard money lenders make it easy to invest in zombie house flipping. Hard money loans are used by real estate investors to quickly close on real estate investments. These are sometimes referred to as private money loans. Unlike traditional mortgages, hard money loans are based on a property’s underlying value. Some hard money lenders, like Prime Plus Mortgages, used the estimated after repair value for the basis of the loan.
After repair value or ARV, it is calculated by the properties’ current value, with the added value of the repairs. For zombie properties, The ARV is the value of a property after it’s been improved, and renovated.
Hard money loans are faster to fund and can fiance flips for the cost of the purchase and repair of a property. Private money loans can approve in as quickly as 12 hours, and fund within 2 days. Hard money loans also offer loans for any type of real estate investment.
Types Of Hard Money Loans
The most popular hard money loans are fix and flip loans, bridge loans, and home rehab loans. Fix and flip loans are used to finance the purchase and repair of a flip, perfect for zombie house flipping. Bridge loans are used for covering funding gaps in investment properties. For those that are renting, or utilizing the buy and hold strategy, home rehab loans are the best for you. These loans are perfect for making one time repairs to a property to repair before selling or renting.
No matter how you decide to start zombie house flipping, you can easily find the funding you need.
Summary
Whether you are looking to flip, rent, or buy and hold, there are endless ways to start zombie house flipping.
If you are looking to start zombie house flipping, this is what you need to know:
- What is zombie house flipping: ‘Zombie properties’ are simply homes that have been abandoned by their owners in the midst of a foreclosure, that investors can purchase to flip!
- How to find zombie properties: Work with local lenders, realtors, and property management companies to start zombie house flipping.
- Ways to invest in zombie properties: Smart investors know their market, and use these properties to flip, rent, or buy and hold to maximize their profits.
- Find funding for zombie house flipping: Lenders want to get zombie properties off their hands so working with a motivated lender who understands the value of these properties is key. Many work with hard money lenders, or use their own capital to finance these investments.
Have you ever flipped a zombie property?
