Showing posts with label flipping real estate. Show all posts

Monday, October 5, 2009

Tips For Flipping Real Estate

Image by cobalt123 via Flickr

Tips For Flipping Real Estate

7 Simple Tips For Flipping Real Estate

Heather Seitz

Here are 7 simple tips for flipping houses and real estate.

Unless you've been living under a rock for the past few years, you've probably either dabbled in real estate yourself, or at the very least, know someone who has. So, how does someone that's brand new to real estate start flipping homes? (And let's clear the air right now... IT IS NOT TOO LATE to start investing in real estate).

Follow these 7 tips to start investing in real estate today:

1 - Look In Your Own Backyard

The grass is always greener in the other neighborhood, and it's easy to keep looking for the "right" area. The bottom line is that any area is the "right" area. In order to be effective in the steps 2 through 7, you've got to get over the idea that real estate deals only exist in other areas. It sounds cliché, but there are plenty of deals in your own backyard. Not to mention, it's easier to manage and you're likely to know the values in and around your area.

2 - Find the "Right" Property

Not every piece of real estate is a good investment - even if you can "steal" it! Make sure you look at things like: * Property Location - Will you be able to sell the property once you've renovated it? * Condition - How much work- and what kind of work - needs to be done and is it a project that you can afford to take on financially and from a management perspective? * Seller's motivation - Is the seller truly motivated enough to negotiate on price?

3 - Have A Thorough Inspection

Unless you've been flipping real estate for a while or have a background in construction, then it's a good idea to have a full home inspection. It may cost you a few hundred dollars, but will catch things that maybe you didn't know to look for. When flipping real estate, it's the "little" things that add up very quickly and can eat up your profits!

*** Bonus Tip*** Use a home inspection to help renegotiate the purchase price OR ask for a credit toward repairs.

4 - Don't Get Emotional

Real Estate is emotional by nature. Investing in real estate cannot involve your emotions. It's got to be all business. If the numbers don't work, move on to the next. So many times, people are so desperate to flip their first deal that they make bad decisions just to do something at all. Then, they've become so attached to the deal that they try to sell it for higher than the market will bear and end up holding the property longer, reducing their profit and getting left with a bad taste in their mouth.

5 - Know Your Numbers

All of Them! Late night infomercials will hype you up with pipe dreams of flipping real estate for millions of dollars in profits and no work. You've seen the testimonials that go something like: "Mary Smith purchased this property for $100,000. It cost $10,000 in repairs. She flipped the property for $140,000 and made $30,000". Somewhere on the screen, you see in teeny tiny print: Results Not Typical. Your Results May Vary!

Of course results are not typical because those results assume that you buy the property for all cash and pay no closing fees and have no monthly costs. Be VERY cautious of deals that you see that sound like that!

In the real world, costs associated with flipping real estate are:

Purchase costs: Upfront mortgage fees, attorneys fees, regular closings fees, title, survey, etc.
Carrying costs: It's more than just the repairs! When you're flipping real estate, you're likely paying higher interest rates than on, let's say, a primary residence or second home. In addition to the repairs, you've got to consider monthly payments, taxes, insurance, utilities, etc.
Selling costs: Again, you've got closing costs and possibly real estate commissions to consider.

Whether you're flipping a real estate deal here and there or you're looking to make real estate your new career, it's important that you know - and figure - your costs into your calculations. Keeping this in mind will help you keep from getting emotional (See Tip 4)

6 - Keep Track Of Your Progress

You can't improve what you can't measure! Throughout the entire project, you'll want to constantly track your progress. This way, you'll know, at any given time, where you stand on the deal. This will help keep you focused by keeping the bottom line in front of you all the time.

7 - Expect the Unexpected

In virtually every single property you flip, you will run across SOMETHING that you simply didn't expect. Whether it's an issue that pops up 2 hours before closing that needs to be handled or a big surprise when you peek behind the drywall that you had to replace! You'll almost always run at least a little over budget or hold it a little longer than you anticipated. But at the end of the day, you'll have the satisfaction of taken an ugly house and turned it around and depositing a healthy check in your bank account.

Recommended Resources:
Finding Deals: www.motivatedsellermarketing.com
Estimating Repairs: www.fixingandflipping.com
Finding Contractors: www.servicemagic.com

About the author: Heather Seitz

Heather makes it easy to get to the bottom line.

Learn how to evaluate a real estate deal in less than 15 minutes. Get your FREE video on flipping real estate and uncover the top 5 secrets that you need to know to double your profits on every single deal.

Get your free video and 5-part mini course at www.fixingandflipping.com

Sunday, September 27, 2009

Flipping Real Estate: What's it About & How can I Do It?

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Flipping Real Estate

By Heather Seitz

Flipping Property: What's it About & How can I Do It?

Your Quick Guide to Making Money Flipping Real Estate in 7 Simple Steps...

Every time you turn your head, someone else is talking about flipping property. What are they really talking about and is it something that YOU can do and
make money doing?

First, let's define the two types of "flipping real estate".

Assignment Of Contract: This is ofter referred to as Flipping The Contract. You find a property for "pennies on the dollar", put it under contract and then "flip" that contract to, most likely, someone that is going to do the rehab, or renovation on the property. Another term used to refer to this type of property transaction is wholesale real estate investing.
Flipping Real Estate: Buy a property, fix it up, and resell it to an "end buyer". This is known as "flipping real estate", "rehabbing", or "retailing" to name a few.

OK, now that we've gotten the terminology out of the way, I want to first start by telling you that real estate is simple, but not easy, so if you're looking for a get rich quick scheme, you're probably going to get yourself into trouble.

Now... on to how YOU can make money flipping real estate.

This article focuses on the second definition of flipping real estate: buying, fixing and reselling.

Step #1 - Find the Right Deal

If I made a dollar every time someone told me there were no more deals, I'd be a multi-zillionaire by now! Here's the thing and I want you to get it through your head! There are PLENTY of deals - even where you live! Make a consistent effort to really look for houses that are overgrown, in need of paint, possibly boarded up, etc.

These are going to be your best bet for flipping real estate.

Step #2 - Estimate the Repairs

You can either go ahead and bring a contractor or handyman with you or you can get a simple calculator that will figure out the "rough" numbers - like the one found at www.fixingandflipping.com or you can read more about the costs involved when making real estate flip at Calculating Profits when Flipping Real Estate

Understand, however, that more often than not - like 99.99% of the time - your budget will come in lower than your actual costs! You may also want to have a home inspection to check out the major items: foundation, roof, plumbing, electric, HVAC, etc.

For an example of what can go wrong when you are hoping to turn a quick profit see the risks involved in flipping real estate.

Step #3 - Negotiate the Contract

This is where many people run away from real estate. "Contract" is not a four letter word! In fact, it is your best ally when you are negotiating!

Use your contract negotiations to pay for the repairs by getting seller contributions and repair credits. This will keep you from having to dip into your own pockets for repairs!

Make sure that you have a way out in case the deal isn't going to work for you. Some "escape" clauses that you can handwrite in are: - "Subject to satisfactory appraisal" -"Subject to partner's approval" - "Subject to satisfactory inspection"

Step #4 - Find Your Money

Don't get caught up on this one! Finding money is really much more simple than you might imagine if you've followed steps #1 - #3! I know it sounds cliché, but it's true: Find the right deal and the money will come.

You can use private lenders or hard money lenders if your credit's a little shaky, or in some cases, you may even be able to use a regular mortgage company to get the deal done! Just make sure it all makes sense financially!

Step #5 - Get Your Contractors in Place

You should have your workers ready to go before you even close the property. Think about this: what if your monthly payment on the property is $1500/month? That's $50 each and every day out of your pocket while the property is just sitting there...

Be ready to start the moment you close!

Step #6 - Manage the Renovation

Unfortunately, you MUST stay on top of your workers! Use a solid contractor agreement that protects you and follow up on them daily. Stop by every couple days minimum and push, push, push until the job is done!

Step #7 - Market and Sell the Property

Put a For Sale By Owner sign in the front yard immediately to start building a buyers' list.

Once the job is complete, call all the interested parties back and invite them to an open house and accept offers! Make sure you've kept all of your receipts so you can prove any repairs to the buyer's mortgage person and/or the appraiser.

You can read more about house flipping, see the article

7 Simple Tips For Flipping Houses.

Sure, it's possible to go ahead and turn property over VERY quickly.

My record from closing table to closing table (the time I bought the property till the time I sold the property) was 53 days for a quick $10,000.

But, make NO mistake, those types of deals are few and far between, so be forewarned - Flipping real estate takes work... But the rewards can be HUGE!

Recommended Resources:
     Finding Deals: www.motivatedsellermarketing.com

     Estimating Repairs: www.fixingandflipping.com

     Finding Contractors: www.servicemagic.com

About the author: Heather Seitz

Heather is the co-creator of Fixing and Flipping software, takes the guesswork out of estimating repairs. Learn how to estimate repairs and calculate profits in seconds.

Go to: www.fixingandflipping.com for your free video and mini-course.

Freedom Steps With Property Investing

Flipping Real Estate | Make Money Flipping Property | Flipping the Contract | 7 Tips for Flipping Real Estate | Calculating Costs & Profits when Flipping Real Estate | The Risks Involved in Flipping Real Estate |
The Aftermath Of The Real Estate Bubble | Wholesale Real Estate Investing | The End Of The Real Estate Bubble - Is It As Bad As They Say?

Flipping - Make Money Fliping Property

Image by Getty Images via Daylife

Make Money Flipping Property

Would You Like to Make Money Flipping property?

Many beginning real estate investors get started by flipping real estate to make quick cash.

If you would like to make more money by investing in real estate, you need to know a few essentials.

A Simple Definition of Flipping: Buying property and reselling quickly, hopefully for a large profit. Usually, people think of flipping houses, or the buying and selling of a home fast, as the only way to make money flipping real estate. However, some investors specialize in other types of real estate such as land or strip centers.

Some confusion arises over the process of making money flipping property.

People who specialize in finding bargain real estate, obtain a purchase contract, and then sell the contract before taking title to the property are known as Bird Dogs.

These beginning real estate investors get started with no money down by:

Finding a seller under stress with a bargain property
Securing a sales contract
Selling their contract for roughly $500 to $5,000 to a seasoned real estate investor

Isn't real estate flipping illegal?

Flipping real estate isn't illegal. However, many unscrupulous investors committed mortgage fraud to make fast money.

Some of these investors, working with mortgage brokers and appraisers, resold houses to unqualified buyers inflating the property value and home buyer's qualifications. Often these home purchasers had no money or little money down.

When these new home owners defaulted on the mortgage payment, the mortgage lenders lost money because the house wasn't worth the inflated purchase price.

To avoid legal problems in real estate flipping, don't commit mortgage fraud.

To Make Money Real Estate Flipping

Prepare your financing so you can close on a deal quickly.
Learn your market so you know what makes a good deal.
Find a bargain property owned by a seller under stress to sell.
Secure a purchase contract in your favor.
During escrow, plan your selling actions.
Close on the property on time.
Immediately set your selling plan into action. If the property needs fixing, be prepared to get this done right away.
Market your property to your target market. Don't just list the property and hope for the best.
Find a qualified buyer. Have a loan officer check to make sure your buyer meets all the mortgage requirements.
Stay legal. Don't use an inflated appraisal. Don't help your buyer create false W2s, write phony credit letters, or prepare any false documents. You can pay many of your buyer's closing costs to make the purchase easier.

Buy low, sell for full-market value, avoid mortgage fraud, and enjoy your profits!

You can make money Flipping property.

Buy low, sell for full-market value, avoid mortgage fraud, and enjoy your profits! See the article on
Equity Discount Property Investing

-- to discover how you can increase your net worth by $20,000 to $100,000 on every deal that you do.

About the author: Jeanette J. Fisher

Jeanette teaches beginning real estate investors how to find, finance, fix, and sell houses for top dollar.

To find out how to make more money using interior design and get a free ebook on Flipping Houses, see: www.doghousetodollhousefordollars.com.

Go from this page
Make Money Flippiong Property
To Flipping Real Estate: What's it About & How can I Do It?
Or go to Risks Flipping Property

Friday, March 20, 2009

Understanding Your Costs To Help You Calculate Profits Flipping Real Estate.

Calculate Profits Flipping Real Estate

By Heather Seitz

If you've been in the real estate investing business, or more specifically been flipping real estate, for more than a few days, you've inevitably gotten an email that reads something like this:

"Investor's Dream. This property will go QUICK."

Property Address: 1234 Main Street
Asking Price: $100,000 (Add or subtract zeros!)
Value After Repair: $150,000
Less cost of Repairs: $15,000
Profit: $35,000
Details: Needs paint, carpet, tile, new kitchen, update bathroom, some
roof damage.
Tenant occupied. Need to evict!"

STOP! Before you read on...

Take a guess at what you think the "real" profit's going to be on this real estate investment...

If you haven't ever gotten an email or fax broadcast like this, then rest assured, you will! I'm about to probably tick off all of the late night infomercials and pitchmen out there!

Sure, I understand that when you've got 30 minutes (or 90 minutes, for that matter), that you've got to sell what's sexy... not what's real!

Now it's my turn to expose the real deal on real estate investing!

This goes for flipping real estate itself (i.e. properties) or simply flipping the contract (also known as assigning the contract).

When you're flipping real estate, you need to be able to calculate the real bottom line and if you're assigning the contract, you need to know your numbers so you don't get blacklisted from investors!

This one piece of information will keep you from getting into trouble because of any "real estate bubble"!

Purchase Costs

Here goes... Have you EVER purchased and sold a piece of real estate for FREE?

If you're not sure what the answer is... It's an emphatic NO...

You are going to have costs to buy, costs to hold and costs to sell. This holds true even if you are buying a property for all cash. (Think title fees, attorney's fees, recording fees, etc.)

If you're not getting a mortgage, your purchase costs are obviously much lower, but nonetheless, there are costs associated with any real estate transaction. Plus, more than likely, if you're relatively new, you're probably not paying all cash for property anyways. You're probably going to be using a hard money investor for your initial real estate investing financing!

For a quick calculation, you can estimate anywhere between 3% - 5% for closing costs to just acquire the property. That's 3%-5% of the purchase price.

Holding Costs

How much is it going to cost you each and every day to own this piece of real estate?

See, if you're making money in real estate, you'd better believe that there are a lot of other people that are going to expect to get paid and they get paid in the form of mortgage interest, property taxes, utilities, property insurance, etc. Each of these is an expense each and every day that you own the property.

Here's an example...A hard money loan on a bread and butter type piece of real estate might run you 15%.

Let's say you got the property for $100,000.

Every month, you are paying $1250 in interest alone.

Let's say that taxes and insurance are another $200/month and then utilities at $100.

Right there, the property is costing you $1550/month - or roughly $50/day.

See, why it's important to know your not only your holding costs on a real estate investment, but also how long it's going to be on the market before you can flip the property.

Selling Costs

Here's the third part of the real estate investing puzzle.

When you want to turn around and sell this piece of real estate, it's going to cost you yet again!

Are you going to use a real estate agent and pay a commission or 3-4-5% or even more? On $150,000, that's anywhere from $4500 to $7500 chopped of the top. Then, you can figure 1-2% in closing fees.

If you can remember this... and apply what you've just learned to each and every real estate deal that you do, you'll be safe flipping real estate in any market.

You see, if it's a hot market, you can calculate less time for holding cost. But, in a slower market, make your offer based on 6 months or 9 months of holding costs. It's really simple math! And real estate really is a numbers game...

Recommended Resources:

Finding Deals: www.motivatedsellermarketing.com

Estimating Repairs: www.fixingandflipping.com

Finding Contractors: www.servicemagic.com

About the author:Heather Seitz

Heather is the co-creator of Fixing and Flipping software. It takes the guesswork out of estimating repairs.

Learn how to estimate repairs and calculate profits in seconds. Click below for your free video and mini-course: www.fixingandflipping.com

Return From Calculate Profits Flipping
To Flipping Real Estate
Or go to Freedom Steps With Property Investing

Freedom Steps With Property Investing

Steps to Freedom

Monday, October 5, 2009