Posted by Paloma on January 29, 2004 at 15:43:02:
That’s a great suggestion, but I don’t have a buyer’s list yet. That’s what I’m trying to learn about.
Steps to Quick Flip Properties to Rehabbers - Posted by Paloma
Posted by Paloma on January 29, 2004 at 10:39:57:
I am a newbie. I’ve put together some of the steps I believe I should be taking. Would appreciate any feedback. I know this is very simplistic, but I need to start somewhere. Thanks.
Steps To Quick Flip Properties to Rehabbers
- Create an LLC
- Find a good lawyer (one who works with investors currently)
- Create business cards
- Call existing “We buy houses” newspaper ads to build potential buyers list
- Join local REI Club- education, support, network for potential buyers, lawyers
- Pick up state approved sales contracts at local RE broker
- Place ad in paper to encourage potential property owners to call you.
- Decide on how to find comps. - ???How
- Decide on how to evaluate rehab costs. ???How
- Drive your targeted neighborhood and investigate potential properties
Goal Properties-
Properties needing a lot of work
Motivated owner
High equity ownership by owner
Asking price less than 70% of ?fixed up? market value
Re: Steps to Quick Flip Properties to Rehabbers - Posted by John (CA)
Posted by John (CA) on February 02, 2004 at 01:52:09:
Here are my suggestions. Take them for what they’re worth cuz I haven’t flipped one deal yet. Here ya go…
Create a Corp. I read and learned from our CPA that LLCs are good for holding property, but not for flipping.
Business cards - don’t forget to hand them to EVERYONE.
Place an ad to find motivated sellers too.
Marketing and locating motivated sellers will be one of your most important tasks in this business.
To find comps, make friends with a mortgage broker or realtor or escrow/title officer. All have access to comps and can pull them up in a matter of minutes.
Rehab costs - I’m guessing having a few contractors available for estimates for the first few deals with help you get an idea.
Have funds available - yours or financing - in case you can’t flip a deal to a rehabber and have to rehab it yourself.
Asking price is a function of what your profit and expenses are. I’ve done a couple examples that are hard and fast 70% ARV can leave you short. I just pulled these numbers out of thin air so I’m sure they’re a little off, but show how not being diligent about your costs can get you in trouble.
For instance…you find a property for sale that’s worth 100000 after it’s fixed up. You have to take away repair costs, holding costs, selling costs and profit from the sales price.
100000 selling price/after repaired value(ARV)
-6000 selling costs
-4000 holding costs(financing)
-2500 financing costs(closing costs/points)
-8000 repair costs
-20000 PROFIT for investor
-5000 PROFIT for you, the wholesaler
-2000 unforseen crap (utilities, time delays, etc)
52500 maximum purchase price. This is 52.5% of ARV.
Offering $70,000 (70%) on this deal would have cut your and your investor’s profits short by $17,500.
But this % can be different for higher priced homes.
500000 selling price/ARV
-30000 selling costs
-20000 holding costs
-25000 financing costs
- 8000 repair costs
-20000 PROFIT for investor
-5000 PROFIT for you
-10000 unforseen crap
382000 Maximum purchase price (76.4% of ARV)
Offering 70% or $350,000 will make you more money here - $32,000 more.
Both scenarios net you a $5,000 profit as the dealer.
If you haven’t read a couple courses or have a mentor who can walk you thru all this, then I suggest William Bronchick’s course on flipping or any other flipping course you can find. I have 3 books including William Bronchick’s.
Hope this helps…
Re: Steps to Quick Flip Properties to Rehabbers - Posted by jasonrei
Posted by jasonrei on January 30, 2004 at 15:29:44:
Start at #4.
Comps- when i started i got comps by paying a realtor to pull them for me. think i gave him $100 bucks here and there.
Rehab estimates- this was something i already knew starting out. i don’t know how a beginner with no rehab background would do this. you could pay a rehabber to do an estimate for you, but it’d probably be WAY high. still, it’s something.
Re: Steps to Quick Flip Properties to Rehabbers - Posted by Kawika Ohumukini
Posted by Kawika Ohumukini on January 29, 2004 at 14:03:32:
I agree with most of that but you might consider an abbreviated list.
- Drive, or hire someone for $10/house, your targeted neighborhood and investigate potential properties.
- Worry about the rest later.
Re: Steps to Quick Flip Properties to Rehabbers - Posted by William Wylie
Posted by William Wylie on February 03, 2004 at 22:02:04:
Flipping is one of the easiest ways to make money in the real estate business. I did eight last month and it gets easier all the time. You are on the right track find a deal and do it. They are out there in abundance.
Re: Steps to Quick Flip Properties to Rehabbers - Posted by Paloma
Posted by Paloma on January 29, 2004 at 15:14:14:
That’s an interesting perspective. I’d feel kind of frustrated if I found a property but didn’t know what to do about it. I get your message - find the property first.
Re: Steps to Quick Flip Properties to Rehabbers - Posted by John (CA)
Posted by John (CA) on February 04, 2004 at 11:17:42:
William. That’s awesome…How do you get your deals and where are you located? Did you start out wholesaling or rehabbing? If you went for rehabbing, where did you get the money to start? Hard money?
Re: Steps to Quick Flip Properties to Rehabbers - Posted by Kawika Ohumukini
Posted by Kawika Ohumukini on January 29, 2004 at 15:26:28:
I agree with you on that one. I’d be panicky. I think you’ll find lots of help here when you do find one though, this is a great board. Also, if you do find a deal your rehab/buyer would be very motivated to help you get the thing closed.
As long as you have minimal earnest money on the line, say $10, then your loss is limited to money for a nice lunch.
Re: worst case - Posted by mikeW
Posted by mikeW on January 29, 2004 at 15:22:05:
If you find a house and you don’t know what to do or are too overwhelmed, just bird dog it to someone and get a quick $500.