Paper Flipping Houses: A Low-Risk Way to Flip Real Estate

When you think of house flipping, you probably picture buying a rundown property, fixing it up, and selling it for a profit. But did you know there’s a way to flip houses without ever owning them? It’s called paper flipping houses, and it’s a lesser-known but highly effective real estate strategy.

In this post, I’ll break down what paper flipping houses is, how it works, and why it’s a great option for investors who want to get started in real estate with less risk and upfront capital.

What Is Paper Flipping Houses?

Paper flipping houses is the process of buying and selling property contracts rather than the properties themselves. Instead of owning the actual real estate, you flip the contract that gives someone the right to buy the property. This is also known as "wholesaling" or "property wholesaling."

Here’s how it works:

1. Find a motivated seller: The first step is to find a property owner who is eager to sell, often due to financial difficulties, foreclosure, or other personal circumstances. These sellers are typically willing to accept a lower price for a quick sale. Check the local tax assessors office, bankruptcy lists, estate sells, and probates to find these motivated sellers.

   
   

2. Negotiate a contract: Once you find a property, you'll get them to sign an agreement to sell. This contract is typically 30 days and allows you to find a buyer.

   
   

3. Once you find a buyer: You'll sign a purchase agreement with the seller. In this agreement, you’ll lock in a price, usually below market value.

   
   

4. Assign the contract: Instead of buying the property, you sell or “assign” the contract to another buyer, typically an investor who plans to renovate, fix and flip, or hold the property as a rental. You charge a fee, usually a percentage of the property's value, or whatever you determine that the buyer is willing to pay for facilitating the deal.

   
   

5. Profit from the assignment fee: The difference between the contract price you negotiated with the seller and the price you sell the contract for to the buyer is your profit. The best part? You never take ownership of the property, meaning no closing costs, mortgage fees, or renovation expenses. The buyer, seller, and YOU are happy!

The Benefits of Paper Flipping Houses

There are several reasons why paper flipping houses is appealing to both new and experienced real estate investors:

• Low risk: Since you don’t own the property, you’re not responsible for repairs, mortgages, closing costs, or any of the financial risks that come with traditional flipping.

  
  

• Minimal upfront capital: You don’t need a large sum of money to get started. In many cases, all you need is marketing costs (postage, yard signs, website, etc.) to attract both buyers and sellers.

  
  

• Quick turnaround: Because you’re flipping contracts instead of properties, the process is much faster. Deals can be closed in a matter of weeks (most investors that buy have cash), rather than the months it often takes to flip a house.

  
  

• No property management: You don’t have to worry about maintaining the property, property renovations, or dealing with tenants, making this a great hands-off investment strategy.

How to Get Started with Paper Flipping Houses

If you’re interested in paper flipping houses, here are a few steps to get you started:

1. Learn the market: Research your local real estate market to identify areas with high demand for investment properties. This will help you target the right sellers and buyers.

   
   

2. Build a network: Success in paper flipping houses depends heavily on relationships. Build connections with motivated sellers, real estate agents, and buyers. Networking with other investors is key to finding buyers for your contracts. Use social media to attract both.

   
   

3. Master negotiation: Knowing how to negotiate a deal is essential. You need to be able to lock in a low purchase price with the seller while leaving enough room for a buyer to still make a profit. Sometimes you may have to reduce your assignment fee in order to ensure the deal goes through.

   
   

4. Understand contracts: You’ll need to be comfortable with real estate contracts, especially how to assign them to another buyer. Consider working with a real estate attorney to ensure you’re doing everything by the book. Once you get accustomed to how everything works. You will consider juggling contracts a breeze!

Paper flipping houses is a powerful strategy for anyone looking to get started in real estate investing without the high risks or large capital requirements of traditional house flipping. With the right knowledge, negotiation skills, and connections, you can make money by flipping contracts—without ever having to swing a hammer or locate a contractor!

The information in this article are the opinion and experience of the author. Due diligence should always be done before investing in real estate.