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How To Flip Houses: Choosing Your Agent

The selection process for a great agent

Choosing a real estate agent to help you in your search for investment flip houseproperties when house flipping is usually a smart move. A good one will be able to narrow your focus, and run pointed searches for potential investment properties you may not be aware are currently on the market. They also can be invaluable in helping to negotiate your transaction once you locate a potential cash cow of a property. In addition, they can point you to the right local lenders that offer flipping money.

However, how do you go about selecting one, and not get stuck with an idiot? Besides the old tried and true method of having family or friends refer a Realtor they’ve worked with and like, then using that agent to represent you, try utilizing these three methods to select a good real estate agent to help you in your locating process when flipping houses…

Acid test #1

Call them. If your reach them, are they engaging, or do they simply notflip houses have time to speak with you, and blow you off? If you leave a message, will they return your call (either with a text or a call) within 10 minutes? If not, you’re using the wrong Realtor to aid you in your search for flip houses! Even if a Realtor is showing homes, they can easily text you back a template “I’m with clients right now” just to let you know they got your message. The way they treat you will be an easy indicator of how well they will work for you…

Acid test #2

Ask them to run a search for you. Be as specific as possible about what flip housesyou’re looking for….include your price range, areas you’re most interested in purchasing in, as well as type and style of properties you’re looking for.   They should be able to spit out search results to you within an hour. If not, move on to someone else – fast.   Like acid test #1, you’re trying to locate an agent that works hard for your business – and speedy service is a great way to ascertain how willing they are to go the extra mile for you.  In addition, speed is a necessary ingredient when locating houses to flip.

Acid test #3

When you locate a great potential acquisition for house flipping, ask them to run a Comparative Market Analysis (CMA) for you. CMAs takeflip houses a good Realtor a couple hours worth of work to prepare properly. If they are simply using the software program built into their local Multiple Listing Service (MLS) to get their CMA prepared, do not use them! A good agent will take the time to go through and analyze – using their own head – each of many different comparable items (like lot size, building size, date sold, amenities, etc.). Then they will apply an amount to deduct or add to each comparable property relative to the property you’re considering buying (the subject property). It’s this attention to detail that should gain your business – and trust.

 

photos courtesy of tmgnorthwest.blogspot.com, orlando-mortgage.org,  prw.net.au, money.cnn.com

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Filed Under: Build Your Team, Featured Tagged With: flip houses, flipping, flipping houses, flipping money, house flipping, how to flip houses, investment property, property investing

How To Flip Houses

Foreclosure hunting…and the pitfalls

The current trend in house flipping are the return of the daredevil investors who take very large financial risks in order to obtain a very high return on how to flip housesinvestment (ROI).  A tremendous amount of flipping money in the last couple of years has been placed in foreclosed properties. These houses, owned by lenders who went through the judicial process to obtain ownership when their mortgagees defaulted on their loans, represent tremendous potential upside. But they also represent a tremendous ability for financial ruination as well. The reason: most foreclosed properties are sold “as is.” And, this also means that, if services such as electricity and water have been turned off, any buyer has to purchase the house without the ability to test out the plumbing, heating or electrical systems, to say nothing of the inability to test appliances as well.

Expect the unexpected

So if, for example, there have been any winter freeze-ups, and commensurate broken pipes, a buyer will not necessarily be able tohow to flip houses ascertain this without turning the water and electricity on. In addition, some lenders of late are placing their houses on the market and are not allowing actual showings of the buildings! They ask for offers sight unseen. So any investor willing to take the risk of incurring huge potential problems with a foreclosure must accurately bracket for the worst case scenario when they crunch their numbers, and ultimately place an offer on a house. Certainly, this is not for the faint-of-heart investor. It takes guts. And a singular lack of emotion to achieve a successful, financial outcome.

Strict guidelines

Making matters even more difficult, investors need to stick to their how to flip housesguns when making offers. Banks have very strict guidelines when they place a foreclosure on the market. And every bank has their own internal set of guidelines. For example, I know some lenders won’t negotiate more than eight percent off their current asking price on a property. And they stick to their guns, that’s for sure…The main reason is that they are trying to unload an inventory of thousands of houses at one time.  Other internal guidelines include the length of time a property stays on the market at a given price before a price reduction is made. Also, the percentage amount of that price reduction is another guideline, which is different for each lender.

Staying focused

So trying to purchase a foreclosure when flipping houses is a tricky proposition. It requires discipline, smarts (to crunch your numbershow to flip houses and feel confident you’ve done a good cost analysis of repairs and renovation that are not only needed, but can be reasonably expected to be necessary as well – and include a large amount for an emergency overage slush fund too. The daredevil investors that flip houses tend to be very confident, and know that flipping is not for the weak investor. Ultimately, you need to decide if you have the deep pockets, as well as the correct temperament to invest in foreclosures for the express purpose of house flipping.

 

photos courtesy of tmgnorthwest.blogspot.com,  foreclosuredatabank.com, cbsnews.com, forsalefortcollins.com

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Filed Under: Featured, Marketing Tagged With: flip houses, flipping, flipping houses, flipping money, house flipping, how to flip houses

Beware The Biggest House Flipping Danger

Perfecting your house flipping business model

flipping housesI’ve found through all the house flips I’ve done that the biggest danger is going in with a flipping business model that is destined to fail.  Just know that when you are learning how to flip a house, you may execute a business plan poorly, but if it’s a good model, you still have a chance of succeeding financially, and pulling out a profit.  It’s when you have a poor house flipping business plan, even when executed well, that can’t possibly achieve success.

The budgetary process

From the outset, you’ll need to create a pro forma budget for your real estate investing project.  This is the easy part.  Acquisition costs, tentative rehab costs, and carrying costs until you sell it need to tallied up.  Be sure to be conservative  in all areas, and don’t forget to add 10% as a overage factor when investing in real estate.  Then, figure on a realistic market value for the property once it’s all fixed up to determine your net income projection.

Doing your due diligence

Make sure you use a local contractor to obtain accurate quotes on the work you need to have done for your renovations.  Also, once you have a very good idea of the total work to be done, write it up!  You can then bid out the work to several contractors (or, to disparate tradespeople responsible for their own individual parts of the whole rehab).  And you’ll at least be comparing quotes with exactly the same work to be done.

Buying and selling at the right time of year

House flippers know that seasonality is extremely important in any flippingflipping houses business model.  Look to acquire properties in the late Fall and dead of Winter.  You’ll find sellers tend to drop their prices right after Thanksgiving and Christmas…Likewise, try to have your renovations completed by the Spring to take advantage of the best time of year for any seller to place a house on the market.  This is because most homebuyers come out of the woodwork in Spring, having stayed on the buying sidelines during the middle of Winter.

Knowing your local marketplace

flipping housesThis is the largest component to your house flipping business model.  With research done online (for example, web sites such as Realty Trac, Zillow – http://www.zillow.com/ – or Trulia supply excellent data for your area) you should be well acquainted with the average sales price of like properties.  In addition, you should know off the top of your head how many houses for sale there are in your town this month, how many there were last year, and what the overall change was.  Likewise, you need to be very familiar with the most important statistic of all to a house flipper:  the average number of days houses stay on the market in your area.

The greatest danger

Any experienced real estate investor will tell you that the greater the average number of days average that a house remains on the market in your area, the less of house flippinga proper chance for your flipping business model to succeed.  House flipping requires as short a time as possible between your acquisition of the property to the date you actually have it sold.  In my business model, I won’t even consider purchasing an investment property to flip if the average number of days on the market for house sales in my area runs over one year.  I would prefer six months or under.  And I would take a very long look at my net income projection numbers on any given project for each month over six as an average time on the market in a given area.

Always do your research before you buy

house flippingSo make sure you do your research into your geographic area as intensively as possible before looking to buy  investment property for flipping.  Keep a keen eye on the most important statistic:  the average days on the market in your area.  If it’s too high, consider purchasing in a more fertile area for flipping…Even if it means you’ll have to travel farther each day to oversee the renovations.  Just don’t get stuck holding a flip property in a bad economic environment.  Your carrying costs (taxes, insurance and mortgage) will eat up all your potential profits – and then some.

 

photos courtesy of tmgnorthwest.blogspot.com, cbsnews.com, metrosdrealty.com, foreclosurequestionsguru.com, foreclosuredatabank.com

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Filed Under: Featured, Locating Property Tagged With: flip houses, flipping houses, house flipper, house flipping, how to flip a house, how to flip houses, investing in real estate, investment properties, investment property, investment property advice, investment property information, investment property locating, investment property searching, investment property strategies, investment property tips, investments, property investing, property investing advice, property investing information, property investing strategies, Property Investing Tips, property investor advice, property investor information, property investor strategies, property investor tips, real estate investing, real estate investing advice, real estate investing strategies, real estate investing tips, real estate investors

Best Renovations For House Flipping

Learning from other’s mistakes

As a licensed real estate broker, I recently had to offer my opinion to a client as to a current market value for a home that had recently been renovated. On the surface, flipping housesand from the photos and listing data, it appeared a professional flipper who knew how to flip houses had purchased this unique lakefront home in order to rehab and then place back on the market for a quick sale. It had been purchased only two years ago from an estate, the house needed work, and now after renovations were done, the house was back on the market – for more than double what the seller bought it for. However, upon going to inspect the house as a preview for my client, I instantly could see that the seller was no flipper. Rather, they were simply stupid, short-sighted sellers, who bought the run-down home in a good location, but then proceeded to over improve the house to their own personal likes. In property investor parlance, this was a “vanity project.”

Avoid personal taste decisions

In the first place, the entire renovation and materials used were highly personalized to the owner’s tastes. The granite countertops in the kitchen were not a style aflipping houses flipper would choose. When buying property flips, you should always consider selection of materials that will appeal to the largest segment of buyers – not a small niche who might also happen to coincide with your own design sense. In the case of the kitchen counters, a highly stylized granite top was used – and a whole lot of it to boot – meaning, if a buyer didn’t like it, it would cost a ton simply to re[lace it. Otherwise, any buyer is going to learn to have to like it. Or pass on the house. Which, sadly in this case, most will do.

Adding insult to injury…

Creating further turmoil in this particular rehab, was adding a new radiant heating system to the entire house. While very energy efficient, this kind of upgrade is certainly far above the style of most homes in the area. Unless many other homes on an area of the property you’re considering flipping already have this upgrade – your investment in something so expensive is downright foolhardy. Especially if the house can’t take the extra cost, relative to the neighborhood it sits in.

What not to do

Another example of over spending in this particular rehab that screams “vanity project” is that the owners removed the former floor to ceiling massive stone fireplace to allow for their large, 100K plus kitchen redo, then added steel interior flipping housesexposed girders for extra support afterwards. This smacks of an overzealous owner who is simply not in touch with the real estate market next door to them. This also told me they weren’t professionals when it came to flipping houses.

Ultimately, the seller must have run into financial issues, since they are trying to sell it, and also trying to recoup their renovation cost (in this case, probably close to 300K). Of course, this seller now owns the most expensive home on the block. And one of the basic tenets of property investing is to never get stuck buying or owning the most expensive home on the block.

To make matters even worse, this particular house is a Contemporary – which also negatively affects market value, since most buyers prefer Colonials.   From the granite countertops to cherry cabinets and top of the line appliances, radiant heating, new floors throughput and new high end bathrooms added as well, the seller went seriously overboard in the renovations.

Setting the asking price

Another important point to remember when learning how to flip houses, is to never let your own vanity come into play when setting your asking price. The market always dictates the price. And most certainly not the cost of your renovation. In fact,flat world 3 - ocregister.com the cost of your rehab should have no bearing whatsoever on the final asking price you set for the property come time to place it on the market. It is the comparable properties in the neighborhood that will ultimately help to set your asking price. As well as the final market value, once it is sold. Never go into a project with your own blank check for renovations. You must make the most tasteful design decisions at the right price. Rehabbing an upscale home with top flight materials makes a lot of sense. But doing so in an area of lesser priced homes would be foolhardy. The rehab would dictate a lesser grade of materials.

Pricing correctly

Remember too, that when it comes time to put your flipper on the market for sale, pricing it too high can have disastrous results. When a property is priced unrealistically high (for example, more than 10% over market value), most buyers don’t want to even make offers, for fear they are too “insulting.”  Thus potential buyers may stream in to view your property, but you’ll end up with no offers on it. This is because you’ll have scared them off with too high an initial asking price.

The best renovations

Keep in mind the basic rehab areas listed below when trying to flip houses. These are the simplest ways of adding value to any rundown home. But always remember you’ve got to improve to the level of the next door neighbors – and not way above them. This is the safest way to keep your renovation costs in check.

The kitchen rehab

flipping housesKeep things simple if possible. If you can get away with sanding and painting the existing cabinets, and then replacing the old appliances, do so. If not, keep your kitchen redo budget in line with like homes’ kitchens. Don’t forget that new track lighting, a new sink and new faucet can really spruce things up inexpensively. Laminate countertops are OK, unless everyone else on the block has granite. Then you must spring for the granite. Avail yourself of planning and design help from local home improvement centers.

Bathroom remodelingflipping houses

Again, try to keep things simple. If you can just change out existing toilets, sinks and towel bars, you’re lucky. But sometimes old tile walls look terribly dated, and/or you’ve got to spring for a total gut renovation. Keep the material costs down by using Lowes or Home Depot materials. Some of their cabinetry can look as good as designer cabinets at half the cost.

Plumbing upgrades

If a house hasn’t had any plumbing upgrades in the past 20 years, you really need to consider changing out all lead pipes to the more recent plastic tube piping of today. While the labor cost is high, the materials cost is low. In addition, any dated plumbing fixture should be upgraded as well – from dishwashers to washing machines, and everything in between.

Flooring changes

Carpeting is still the cheapest way to go – but it has no “wow” factor to it. Refinishing old wood floors is a great way to go – if the existing floors are hardwood to begin with. If not, consider using some of the new engineered hardwood flooring available on the market today. Or, one can simply upgrade with the “look” of wood, using laminate hardwood flooring. This is what most buyers today expect. Naturally, if you do go with any carpeting, keep it very neutral colors – beiges or grays, to appeal the largest group of buyers.

New interior paint

Like carpeting, stick with lighter, neutral, off-white colors. The more extreme the color you choose, the narrower the range of buyers who may fancy it. Also keep in mind that light equals bright. And bright is a flipper’s moneymaker. Remember too, that keeping the whole house the same shade of color keeps an evenness to the potential buyer’s eyes as they move from room to room. This makes for another positive impression on any house you’ll be flipping.

Putting it all together

flipping housesIf you utilize all these suggestions for the best property flipping renovations, you will invariably be playing it safe. I can’t overemphasize the need to keep your vanity out of your design decisions. Especially when it comes time to place your investment property on the market for sale, and setting a realistic asking price. A price that will absolutely invite many offers. If you can get buyers into a bidding war, you’ll have done your house flipping renovation job properly.

 

photos courtesy of brokersbestmtg.com, tmgnorthwest.blogspot.com, realestate.msn.com, cbsnews.com, ocregister.com, article.wn.com, vimeopro.com, foreclosuredatabank.com

 

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Filed Under: Featured, Fixing Tagged With: flip houses, flipping houses, house flipping, house flipping advice, house flipping information, house flipping strategies, house flipping tips, how to flip a house, how to flip houses, investment property, investment property advice, investment property ideas, investment property information, investment property strategies, investment property tips, property investing ideas, property investing information, property investing strategies, Property Investing Tips, property investment, property investment advice, property investment ideas, property investment information, property investment strategies, property investment tips, property investoing advice, property investor, property inveting, Real estate, real estate investing, real estate investing advice, real estate investing fixing, real estate investing information, real estate investing strategies, real estate investing tips, real estate investment, real estate investment advice, real estate investment fixing, real estate investment ideas, real estate investment information, real estate investment marketing, real estate investment recommendations, real estate investment strategies, real estate investment tips

Is Flipping Houses Right For You?

 The art of the flip renovation

flipping housesThere is such an abundance of television programs that show you how to flip houses, you’d think everyone in the free world would be house flipping by now. But realistically, it ain’t for everybody. And more to the point, deciding if flipping houses is right for you by simply viewing television shows on the subject is akin to thinking you can learn how to play piano by just listening to a great concert pianist. Obviously, not gonna happen.

Devotion to house flipping

Having a true passion and devotion to the flipping process is integral in doing it correctly, and more importantly, making a profit at it. You’ll first need to ascertain whether you have the time and inclination towards flipping. In addition, ask flipping housesyourself if you have the stomach for the risks involved in such an undertaking. If you’re paying all cash for a property to flip, you’ll be tying up a huge amount in investment with no leverage. And that’s even before you put more into the project in renovation costs…sometimes renovation costs are double, triple and even quadruple acquisition base costs for the property.

Keep in mind that if you take on a mortgage for a house flipping project, you’ll be taking on a large amount of extra closing costs.  And those costs will be paid back in (hopefully) a short period of time when you place the house on the market again, fully renovated.  A quick turnover is great.  But keep in mind the financing costs are magnified when paying the mortgage off in a short period of time.  I’m a big proponent of using other people’s money for leverage.  Just be sure you’ve researched the lowest cost alternatives for a short-term financing goal.

Basic questions to ask

Will you be doing the work yourself, or hiring a crew of tradespeople to oversee? Or, flipping houseswill you hire (at a premium) a full contractor who will be in charge of hiring subcontractors to perform the necessary renovations. Do you have any design sense to pull off a large scale renovation? Most beginning property investors leaning how to flip houses will certainly make mistakes early on. Mistakes like not understanding the need to design and renovate with as little of your emotional self as possible. Learning that an investment property is not a home, and certainly not a vanity project. Renovating a downtrodden house just so you can be proud of how it looks after you’re done does not a profitable property investor make.

Your first foray into house flipping

The first time project in house flipping is the most important. It’s where you’ll makeflipping houses your costliest, most egregious mistakes. But if you have the passion, and have allowed a wide berth of a financial cushion for yourself. When buying the property (by purchasing a house substantially below market value, for example), you’ll have a canvas on which to paint your first property investment masterpiece. Even if it ends up looking like a pre-school exercise in finger painting. Just consider it a great learning experience. Then move on to the next project with lessons learned from experience.

 

photos courtesy of  islaythedragon.com, askmen.com, cbsnews.com, home.howstuffworks.com, foreclosurequestionsguru.com

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Filed Under: Featured, Fixing Tagged With: flip houses, flipping, flipping houses, flipping houses advice, flipping houses ideas, flipping houses information, flipping houses tips, flippping houses strategies, house flipping, house flipping advice, house flipping for beginners, house flipping how-tos, house flipping information, house flipping strategies, house flipping tips, how to flip a house, how to flip houses, investment property, investment property advice, investment property education, investment property ideas, investment property information, investment property recommendations, investment property strategies, investment property tips, investments, property investing, property investing advice, property investing education, property investing ideas, property investing information, property investing recommendations, property investing strategies, Property Investing Tips, property investment, property investment advice, property investment ideas, property investment information, property investment recommendations, property investment strategies, property investment tips, Real estate, real estate investing, real estate investing advice, real estate investing ideas, real estate investing information, real estate investing strategies, real estate investing tips, real estate investment, real estate investment advice, real estate investment information, real estate investment recommendations, real estate investment strategies, real estate investment tips

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