Posted by SCook85 on October 08, 1999 at 21:15:30:
Talking with the REO manager is usually a difficult task, they are hard to get in touch with and often 1000’s of miles away. Make your offers through the appropriate channels and you will usually get in touch with them.
Steve
Making money at Flipping house HOW? - Posted by Mark - IL
Posted by Mark - IL on October 08, 1999 at 06:36:06:
Over the last 6 months I have been looking for house to flip. But I am not haveing much success. I did come across 1 piece but I don’t know if it’s worth going after. It is a REO and they are asking 50,000 for it. The inside is trashed and needs about $10,000 - $12,000 worth of work. Houses in the area go for about 60,000 - 65,000.
Is this deal worth going after or are banks motivated to move houses like this? Has anyone ever dealt with a REO like this but needs a ton of work? How low of a offer will a bank take to get this off their books? I know that question can almost be a open-ended, but hey what ever respone I can get will help.
Also, where else can you find houses to flip, and make enough money in the process. I have looked around with agents and FSBO. But they are always asking close to market price. Maybe I need to dig a little deeper, but how do you go about doing that.
Do you have a rule thumb as far as how much you need to make in flipping?
Sorry for all the questions, any info is helpful.
Re: Making money at Flipping house HOW? - Posted by SCook85
Posted by SCook85 on October 08, 1999 at 21:22:19:
First question, Have you made any offers?
Forget about the list price, offer what works for you, and offer often. The more offers you make the more you will buy. I make a ton of offers, have no idea which ones I’m going to get, but the most motivated sellers come back and accept my offers or counter offer very close. When dealing with REO’s don’t worry about insulting offers, they get them often. They are not emotionally attached to the properties. Make the offers and see what comes back, but make sure your offers are right. The deal that you metioned in your post I would use my formula which is $65,000 (ARV) - $25,000 (my profit, holding costs, and mistake margin) - $12,000 (repairs that you estimate) = $28,000. If I didn’t get it, no sweat, I’ll just offer on another property.
If you do enough of these you will get them. I make many offers every week and take what comes with no regrets. You can’t ever get emotional about the process. I hope this helps.
Steve
Re: Making money at Flipping house HOW? - Posted by Bud Branstetter
Posted by Bud Branstetter on October 08, 1999 at 16:05:08:
The question of how much you need to make in fliping is not the question. The question is is there enough room for the investor to make his profit and you some also. In your example the investor wants to make 12-15K. After subtracting what the repairs etc are, you have what they are likely willing to pay. Anything under that that you can contract it for is your profit.
As always you need to find a motivated seller. Many times that $10,000 of work you know you can do for $5K. A bank may not be motivated to discount the price one month but may the next. A realtors job is to get the most for the property they can. Because of that buying from owners is more productive. The saying that the uglier it is the better it is. Ugly vacant houses are the place to start.
Re: Making money at Flipping house HOW? - Posted by RRSmith
Posted by RRSmith on October 08, 1999 at 11:18:35:
Read the transcript of Steve Cook talking about flipping houses in Baltimore. It is pretty fantastic, and if you are a seasoned veteran very risky. (But boy does it work. Twenty offers a week??) Steve does not do drive bys, or walk throughs until his “standard offer” is countered. His standard offer seems to be on SFHomes of >$85k 70 PER CENT OF FMarketValue minus fix up costs. He is on a roll, I WAS TALKING TO HIM LAST NIGHT. His methods are turn key, and his mother does a lot of his paper work (after she got her Real Estate Lics.) It was extremely hard to believe, cause I am from the old school. My method can be described as : Buy with less than $3000, at a discount (with cash flow from the start), fix-up on the run, and move on (find more). Steve writes a ton of offers (12-25 per week) and his average deal only nets $4-10K, BUT he does 4-5 deals PER MONTH. I have been trained to do $20K and greater deals, one every six weeks or so. I go by the book, Steve is a student of Ron LeGrands (or he is writing his own book as he goes). Reading though the (16pg) Chat Room Transcript Steve Cook is like reading about some geologist who found the mother lode (pretty unbelievable) when the rest of us are just still (persistently) panning for gold. It is the reason I bought the basic course, good ideas and mentoring have paid for the course (basic CSheets) before it even gets here.
Re: Making money at Flipping house HOW? - Posted by Mark Mallen
Posted by Mark Mallen on October 08, 1999 at 11:00:48:
Some banks will negotiate. The price they will take depends upon how much they have into the property, condition, the market, their inventory of REO’S, your relationship with the bank, and how close it is to the end of their accounting period. A local bank I deal with will negotiate prices and will sometimes even finance their REO’S and provide money for fix up. Find out the person who makes the decisions on the banks REO’s and try to meet with him. Some banks will tell you a commitee decides. That may be true but they usually decide on the recommendation of one person. I would not pay more than $40,000 for that property based on the information you gave. Fixer uppers are usually the best type of property to buy from banks because they are more likely to deal. If you cannot work a deal on this property with the bank, give them your card and ask them to call you if something else comes up. A good contact at a bank could be a great source for future deals.