But how can an ordinary person flip houses and make a substantial amount of money in today's real estate market? What are the main things you need to understand before going to flip a house? And why it important to educate yourself before flipping a house? In this article I will go over 6 tips that will assist you in your house flipping venture.

Tip number 1: Find motivated sellers

In order to make money flipping houses you have to understand that working with motivated sellers is the way to go. What is a motivated seller? A motivated seller can be anyone who is in distress financially, or physically. An example of a motivated seller is someone who is getting a divorce, going into foreclosure, paying 2 mortgages, need to rehab their property but don't have the cash, going bankrupt, and so on. Therefore, in order to get a great deal when flipping houses you have to find someone that falls within this category. You can find these sellers using various forms of advertising.

Tip number 2: Get the information

When your advertising is working and the motivated sellers are calling, in order to really get a good house flip you want to get as much information from the seller as possible. You can do this by asking the seller for information on their property. You want to find out what type of condition the house is in as well as the asking price of the property, but the most important question you need to know is why the seller is determined to get rid of their property.

Tip number 3: Run the Comps

Once you have all of the information that you need from the motivated seller, the next thing you need to do is run comparable sales to see if the deal will be a good house flip. You can do this by going to sites like realquest.com, zillow.com, bank of America has a home value estimator and you can find it by going to Google.com and punching in Bank of America Home Value Estimator. You can also use sites like Investorcomps.com, or consult with a realtor. There are many ways to run comparable sales when you're looking to find out what a house is truly worth.

Tip number 4: Work the numbers

After you get the comps for the house the next thing you need to do in order to flip a house is work the numbers. You can do this buy understanding the MAO formula. The MAO formula is as follows: You take the ARV (After repair value) and you times it by 70% and that leaves you with the amount that you're willing to pay for the house. Then you subtract the rehab cost, closing cost and overhead and that leaves you with the MAO or (Maximum Allowable Offer) that you can make on the house.

Tip number 5: Make offers

Once you have the Maximum Allowable Offer the next thing you do is make the offer. Your offer should be less than what your maximum allowable offer is. The best thing to do in this case is to subtract and additional 10% off of the MAO and start you're bidding with the motivated seller from there. Negotiations can make or break your deal when it comes to flipping houses so make sure that your sincere and very clear with the seller from the very beginning.

Tip number 6: Find Buyers

After it's all set and done, you need to find a buyer in order to flip this house. You can do this by running newspaper ads, building a buyer's list, auctioning the property, selling below market value for a quick sale, rehabbing the property and then selling it, and many other ways. The best strategy to use if you ask me would be to sell the property less than the market value without rehabbing it. This is called wholesaling the property.