Buying and selling distressed real estate is a great way to make steady, consistent profits. With time, your flipping skills will be honed to the point where you know in advance how much you should pay, how much the repairs will cost and your final property repairsselling price.

In fact, anyone gets better with experience.  Sometimes though you find a property that has you in a bit of a quandary. A prospective purchase obviously needs some work but you don’t want to overdo it, eating away at your net income.

Your goal as an investor is to acquire real estate at a below market price then prepare the property in such a way that a buyer can obtain conventional financing. Most distressed real estate is in such poor condition that a bank won’t make a loan on it until certain repairs or modifications have been made.

Private lenders will finance your purchase along with the necessary funds needed to rehabilitate the property. Once the rehabilitation is complete, then a bank can step in and ultimately provide a mortgage. For example, you see a three-bedroom brick home that has signs of foundation issues. There are continuous cracks in the brick mortar on one side of the house. You determine that it will take $15,000 to level the house and stabilize the foundation in addition to other needed repairs.

A bank won’t provide financing until the foundation is fixed, but what about the “other” needed repairs? What else on your list should be fixed so that a buyer can get a mortgage on the property? Typically such issues that need attention are those that make the house unsafe or uninhabitable. The house needs utilities, the roof needs to be in good shape and the rooms in the house need to be completed.

Aren’t sure what needs to be fixed before a bank will issue a mortgage? Then call the bank and ask them. With your property inspection in hand, call your loan officer that you use regularly and have them tell you what is required and what is not required in order to obtain a home loan. There’s no reason for guesswork.