Some people focus on using real estate as a means of earning an income by buying distressed properties at a good price and then fixing them up for resale. As one might gather, this isnt as simple as it sounds. Many such properties require more than a coat of paint and TLC. That means you have to look really closely at calculations before you purchase anything.

The general rule of thumb in flipping is that you want properties that list at 20 percent below the areas market value for that housing type and location. The best time for seeking such homes is during a buyers market when real estate is soft and sellers more anxious to move their properties.

Even at a good price if the property isnt in relatively good condition, say no. Until you get experienced with flipping and know the problems for which to look that could break the bank, avoid buying such properties unless you have someone you can trust to review the property. What are the biggest expenses? Water damage, hidden structural issues like wood ant nests, bad roofing, and old electric or plumbing lines.

If you need three months or less to flip a property thats ideal. Take your purchase price, add in repairs and then give the house a reasonable mark up based on the current market. If you want the house to sell quickly, you know youve done a GREAT flipping job if you can price it below market costs and still make money. By the way, dont forget to add in the monthly mortgage cost on the house, insurance, closing and the cost of advertising the house when it goes back on the market.