I have a very, let’s call it, colorful work history.  My earliest jobs, those prior to my college graduation, were perhaps the most colorful.  They included such duties as manning the aisles of a hardware store, chasing around two-year-olds at a daycare, serving dinner guests eager for breadsticks and Alfredo sauce, and well, you get the idea.  But what all of these odd jobs had in common was a time clock.  I was paid for time given, a concept prevalent in much of corporate America.

There’s been a trend developing, however, of people breaking out of this eight to five mentality and into the realm of alternative sources of income.  Some are turning to network marketing, some to independent entrepreneur ventures, and still others to creative investment options like real estate.  The latter option, particularly real estate investing, is a personal passion and will span the rest of this article.

While there certainly are several ways make money through real estate, I’d like to talk about the practice of flipping homes, also known as rehab investments.  For anyone who has not turned on the television lately and seen the plethora of home improvement shows geared towards this very venture, flipping a home for profit is just that: an investor purchases a home below market value, fixes it up a bit, and sells it for a higher price than the purchase price plus repairs.

The concept is basic but much more difficult in practice than in theory; the process can become quite elaborate as unplanned surprises pop up.  So, to assist the novice rehab investor, I’d like to pinpoint a few qualities to look for in a potential investment.  Please keep in mind that this list is geared towards the beginner investor.  Some investors don’t mind, and in fact, specialize in gut rehabs so they will not mind major repairs.  But I would never recommend such a fixer upper for the beginner, especially to one who is not working with a mentor.

Qualities to Look For

*A somewhat steady market.  While you can make money in any type of market if approached correctly, it is more difficult for the beginner investor to get started in a slower market.  (If you have some experience and can discern a truly discounted property with potential, then this rule may not apply to you.)

*Evaluate the needed repairs with respect to its surroundings.  Don’t spend the money repairing your property to sell for $200,000 if the median price homes are selling for in that area is $125.  Chances are you won’t get many offers exceeding the average neighborhood selling price.  So, look for a home you could purchase at a true discount, and with the cost of repairs figured in, and sell at the average market value while making a descent profit.

*Recognize if this is a cosmetic or gut rehab by ordering a proper inspection.  My father is a home inspector so I might be biased, but please pay the extra money (small in comparison to the rest of your closing costs) for an inspection.  Too many end up choking on buyer’s remorse when they discover leaks, mold, or other major problems.  A thorough inspection reveals such problems and allows investors to find nice cosmetic rehabs instead.  A cosmetic rehab, simply put, needs only minor repairs such as a new coat of paint, descent landscaping, new carpet, or a good cleaning.

So, if you and the time clock are in constant disputes, consider real estate investing as a viable, alternative source of income.