Flipping Houses: Beginners Can Do It Too!
by:
L J Sutherland
Flipping
houses; you hear the phrase all the time, and for good reason. Flipping
properties is becoming big business in the world
of real estate investment.
Unfortunately, flipping houses is just like every other business
adventure. All
types of ‘flippers’ are out there; some successful
and some not so successful. If
you are going to get into the business of
flipping houses and want to really make it work for you by building a
solid
reputation and producing quality results, you need to be aware of some
of the
most basic and important details of the business:
1)
Have the
integrity to do what needs
to be done. Don’t cut corners that could put the family that
purchases your property
at personal or financial risk. Create a safe home for the next owner.
You do
not accomplish this by taking shortcuts and using shoddy workmanship or
non-licensed workers.
2)
Avoid spending
money that doesn’t
need to be spent. Cosmetics and updates may be necessary, but some new
flippers
spend money just creating more work. Ripping out walls or changing
floor plans
may be your idea of an improvement, but keep in mind that everyone has
different taste and this is not going to be your home. It is going to
be sold
to someone else who may have completely different ideas. As a rule of
thumb, spend
the bulk of your money updating kitchens and baths. Small improvements
in these
areas are best known for bringing in higher profits.
3)
If
it’s not broken, don’t fix it. There
is a lot of wisdom to be gained from this old saying. Sure, you may
think
crystal doorknobs will look fabulous, but stick to the facts: If it
will not
greatly improve the value of the home, move on to the important
projects.
4)
Always work
within a budget and do
everything you can to stay under budget. Most people set a budget when
planning
to flip a house, but very few stick to it. This is the difference in
making the
profits you expected and putting the whole venture at risk.
5)
Create a home
for the buyer, not for
yourself. You should never flip a house or design a
flip according to your personal
taste. This is a recipe for disaster in more ways than one. It only
sets you up
for hurt feelings if a potential buyer rejects any of your ideas. Also,
it
often leads to unnecessary expenses, which defeats the purpose of a
quick flip
type of project. When painting the interior, think neutral. Neutral
color
schemes, warm tones. Keep in mind that the buyer will probably repaint
the
house anyway.
6)
Time is money.
Remember this in all
things. The more time it takes to complete the flip, the less profit
you are
going to gain. Plan small changes that have a big impact and can be
completed
quickly.
7)
Never attempt a
high end, high cost
flip unless you have the budget to back it up and you are sure to recoup the
investment. Just as flipping above the market is
an unwise move it is equally
unwise to flip a property beneath your target market as well. Do not
attempt to
flip a house in an upscale neighborhood if you can’t manage
the upscale
building supplies and appliances that will be expected for that type of
clientele.
With this solid flipping advice you will greatly minimize the risk factor that is faced when flipping properties.
Multiple
Streams of Income in Real Estate Investments Makes Sense
Regardless
of the type of business you are in, it’s almost always a wise
idea to have
multiple
streams of income. This maximizes your profits
and earning potential while
spreading your risks. Remember the old saying,
“Don’t put all your eggs in one
basket.” It is so true in the business world. Even within the
world of real
estate investing there are different types of investing
that can help you
spread your risks and your income when certain markets meet turbulent
times. This
proves to be a very wise safety net for those who do not want to feel
as though
they are risking everything in one fickle market.
There are
two main ways to bring in multiple
streams of income when building your investment
portfolio. The first is to spread your real estate investments
across several
different types of real estate options. There are a few types that come
immediately to mind:
·
Rental
properties. You have two
options even with these. You can either choose to rent the properties
outright
to families or individuals in your town, or you can offer a lease to
own
situation for those who are responsible, but can’t be
approved for a mortgage
just yet.
·
Have a few rental properties
and
couple those with a few flips that you are currently working on,
perhaps a
commercial property
or two, and a pre-construction
deal or vacation condo. Always
be on the lookout for your next real
estate investment decision. Keeping
several things going at once is necessary if you really want to make good money
in this business while having added security as well. Rentals are passive
income, especially if you hire a solid property manager to
take care of the
details.
Diversity
is the name of the game if you want any type of solid security. You can
also
include a few investments that aren’t related to real
estate investing. While I
am firmly convinced that real estate investing is the answer for most
people,
there is much money that can be made in other fields. It would be
pointless to discuss
multiple streams of income without mentioning a few that were unrelated
to real
estate investing:
·
Retirement
plans are a smart choice
and you can now invest in a
retirement plan of your own even if you are
self-employed. It is definitely worth looking into as yet another
stream of
income. Planning for the future is always a smart choice.
·
Franchise
businesses are also
excellent money makers
for those who are looking for immediate results from
their investment.
·
Stocks and
bonds are also wise choices
when it comes to long term investment
strategies.
The truth
is that there are countless ways to create even more streams of income
to add
to your real
estate investments. From making money online
through affiliate
marketing, blogs, online stores, you can also tackle brick and mortar
businesses, though these tend to be just as time consuming
as real estate. The
point here is that the smart thing to do is to develop income sources
from
different avenues for safety. Real
estate investing is one of many different
routes to explore when deciding on your investment future and
establishing
those multiple streams
of income. Good luck!
Becoming a
Lease to Own Property Investor
If
you’ve
ever dreamt of becoming one of those investors who enjoy real
estate riches,
along with being in the position to help out those who cannot currently
obtain
a mortgage themselves, this may be just the type of investment
opportunity for
you.
This type
of real estate investment is an excellent way to enjoy a nice income
for yourself
and your family while helping others to reach their home ownership
dreams at
the same time. There are many other benefits to this type of
arrangement as
well. First of all, renters really have no stake in the property they
rent from
you. For this reason you will often find that renters do not take care
of a
property beyond how it affects their security deposit. Those who have
hopes of
someday owning the property they are living in, however, are much more
inclined
to take pride in the interior and exterior of the home they are leasing
to own
from you. For you, the mortgage holder, this means that chances are
excellent
that the value of the home will actually improve during their tenure,
whether
the current residents ultimately decide to purchase the property or not.
Flipping
Houses and Life Lessons
Aside from
the monetary benefits and sense of personal
success that go along with real
estate investing and house flipping,
there are a few more abstract benefits
that can be gained when you take on a house flipping venture.
Most things
in life have their own list of pros and cons, and house flipping is no
different. Whether flipping homes is your career or just a one-time
deal, you
will learn a lot along the way. Knowledge is rarely a bad thing and the
lessons
you learn while flipping
houses can be applied to many aspects of your personal
and business life.
1)
Budgeting: Few
endeavors will give
you the crash
course in budgeting that flipping a house does.
In order to
successfully flip the
house you are working on you will need to learn to budget
quickly or you will wind up literally bleeding money. House flipping
budgeting
has to be viewed like a game. Set the budget and then do everything in
your
power to stay under budget. The sense of accomplishment and self
discipline of
“under-spending” are exhilarating. Just think if
you end up using this skill in
your other real life applications.
2)
Muscle
Definition: Who knew that
flipping houses
would be such an outstanding workout? This is particularly true
for those whose careers don’t require much physical labor.
Speaking of keeping
under budget: doing much of the painting and other laborious work will
save
money and get you in shape! From heavy lifting, hammering and plenty of
other
physical jobs, you should discover that your labors are rewarded in
more ways
than simply watching your project come together.
3)
Attention to
Detail: Depending on
your learning
curve, this one will benefit you greatly. When
flipping houses it
is often the small details that pull the house together to give it a
polished
and finished look. Inexpensive items such as new electric faceplates,
proper lighting,
and a good eye for color throughout the property will do wonders for
the
overall look of your house. These things make potential buyers see a
home that
is loved and cared for. If you take this attention to detail into your
9-5
career after flipping properties you will find that attention to detail
goes a
long way with everything.
4)
Positive
Thinking: You’ve heard it
before; the power of positive thinking is a tool in your hand. This
especially
holds true when it comes to flipping houses. You definitely want to
stay in
reality mode, but without the ‘can do’ power of
positive thinking, you can
quickly lose momentum. Instead of focusing on problems or bad news,
concentrate
on the fact that you are still under budget! Just think of the benefits
to your
personal life when you refuse to focus on the negative!
5)
Just Do It:
Nike has a point there, and
if flipping houses
doesn’t teach you anything else it should teach you this
lesson. Procrastination costs money; big money. Every day that you
carry the
house you carry the weight of all of the expenses (electric, mortgage,
interest, etc.). Have a militant attitude. Get in, get it done, and get
out. Putting
off the tasks you don’t like won’t make them go
away, so dig in and get them
done. Same thing in your 9-5 job or your personal life. Stay on top of
things
and continue to raise the bar. Push yourself to be the best and most
productive
version of yourself.
Flipping
houses isn’t rocket science but it does take a
unique combination of luck,
skills, business sense, and tenacity to turn a profit in this
particular
business. Learning the lessons above will help you succeed when it
comes to
flipping
houses and in all other aspects of your life as
well!
Becoming a Real Estate Investor: Have you ever wonderedhow real estate investors can move so many homesin such a short period of time? Would you like to learn the insidersecrets of becoming a real estate investor?
As in anything to do with real estate,you need to research, talk to mortgage companies, real estate agents,other investors anddon’t be afraid to spend a little money on a good real estate course. Eventhough you may spend a couple of grand or more on a good real estate course,you will get your return on that investment ten fold. You could birddoga house for two thousand in just a couple of days easily (birddog means- finding and referring a property deal to another investor). Yourbest investment is in yourself.
There are a lot of things to consider before becominga real estate investor.One of the most important is finding the right kind of property toflip. Research the houses before making any offers. One thingyou’llneed to know are the comps (comparable home values) of theneighborhood. Find out what the other houses in the neighborhood havesold for. You’ll then want to compare features of the comphomes, suchas, land (lot size), square footage, number of bedrooms and bathrooms,and the condition of the house you are considering.
Making an Offer:
What if you make an offer on a home that’s accepted, how willyou payfor it? This needs to be determined prior to making your offer. Youhear a lot about no money down deals and creative financingbut thosemethods will not work in all cases, so you need to be prepared withalternatives.
One of the methods of financing is getting amortgage loan for the property. This can be long and drawn out and youwill need to have good credit and show your ability to handle the noteuntil you can sell the house. You will also have to have enough moneyto make any necessary repairs.
HELOC - Financing:
Another way to finance a real estate deal is to get a HELOCon the house you are living in. A HELOCis a home equity line of credit.You don't have to use the money right away, but it is there if you needit.
For example, let’s say you get a homeequity line of creditfor $100,000.00 (which is the loan percentage of your home value). Thismoney will just sit there available until you want to use it.
When becoming a real estate investor,if you find an investmentproperty for $70,000 and need another tenthousand for repairs, then you can withdraw just $80k from your HELOC.Using this method you can have a quick closing because you’llbe ableto offer cash for the property. The benefit is you can offer the sellercash and possibly a better buying price. Some home equity lines ofcredit require interest only payments when paying back the loan youused.
If you intend to flip the house in a short length of time, you couldjust pay the interest only (be sure your HELOCis set up this way) and when the investment propertysells, you would then pay off your home loan. A H.E.L.O.Ccan be very useful but remember that it is a second mortgage againstyour home so use it wisely. Talk to your Mortgage Company or banker tofind out about H.E.L.O.Cs, and decide if it isright for you.
Hard Money Loans - Becominga Real Estate Investor
You can also get a hard money loan.These are privately financed loans that have a higher interest ratethan a mortgage loan, usually 12% to 18%, and they are short term, sixmonths to a year. One advantage of these loans is that you can have aquick closing, sometimes two weeks.
If you findthe right property for the right price, you can sometimes finance thecost of the home and the repairs. In some cases you will have no out ofpocket expenses. You’ll really need to find for the rightdeal for hardmoney loans to be beneficial for you. Research yourlocal hard money lendersand their loan costs; they can come in very handy in a pinch. Yourlocal real estate investment club and online searches may be a goodplace to ask about hard money lenders.
Education in Real Estate Investing - Boise Idaho Real Estate
Knowing your own real estate market, will greatly improve your chances of getting the best deal for your money. Here's a little insider information into the Boise Idaho real estate market!
If you are looking to buy or sell a home in the Boise Idaho real estate market, there are some stats and numbers that you need to know before making the move. The following is a snapshot of the most recent activity in the Boise market which includes Ada county. This includes Meridian, Eagle, Kuna, Boise, and Star.
There are currently over 4,300 that are available on the Boise real estate market which does not include any homes that are listed by non-MLS brokers or for sale by owners. Of the available homes, over 2,300 are currently listed as vacant which is over 50%. When a home is vacant you do have a better chance of getting a better price on the home. The average asking price is $311,000 and the median asking price is $237,884
Pending Sales With Accepted Offer in the Boise real estate market: 488 Average Asking Price: $248,711 Median Asking Price: $202,711
Closed Sales Last Year At This Time # Closed: 422 Average Sales Price: $259,688 Median Sales Price: $212,422
Closed Sales - Last Month # Closed: 299 % Change: -33.7%
Average Sales Price: $232,411 % Change: -7.2%
Median Sales Price: $190,000 % Change: -12.9%
As you can see by the numbers, you are in a much better position to buy this year than last as there is more inventory and the sales price has dropped. With unbelievable interest rates, the Boise real estate market is going to be too tempting to pass up for many buyers.
If you are in the unfortunate position of trying to sell your Boise home, you might be in for more of a loss that you thought or you may have a long wait ahead. The good news that if you are looking to move within the Boise real estate market, or most anywhere else in the US you can strike a good buy on the other side of things to help make up for any losses that you might have when you sell. This can be especially good when you are moving up to a more expensive house. The more expensive areas and homes have taken a bigger hit in values in most areas in percentage of drop and dollar value.
If you are looking to make a move, don't wait until the market stabilizes or starts to drop. You want to get the best deals available? Then buy when it is not popular and sell when it is not popular. It is the old supply vs. demand principle.
Ben Janke has written a book on the secrets of the Boise Idaho real estate market that you can download for free. Go to Boise Idaho Real Estate to get your copy today while supplies last. One buyer saved $27k from one tip in the book that you need to know.
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How do you become a real estate investor: You may have toyed with the idea time and time again, but the very fact that you are reading this shows your desire to experience financial freedom and enter into the world of real estate investing.
Time has a way of taking our dreams and plans for success away from us. Instead of letting that happen, now is the time to take those first all-important steps to real estate investing.
A successful future in real estate will require time, patience, and effort on your part; but with the proper tools in your hand, financial success is much closer than you might think.
Step One:
The first step to real estate investing is a thorough understanding of what you “don’t need.” That may sound silly, but sometimes our greatest barriers can derive from a false sense that our goal may be unreachable.
Becoming a real estate investor does not take any special licenses, educational degrees, or a specified amount of equity or cash. What it does take is a willingness to learn the regulations, laws, marketing trends, and to stick with your business goals long enough to become successful.
Many people fail long before they even get started, just because they feel overwhelmed and unsure where to begin. As with most business endeavors, the beginning stage is all about learning. The more you know about a business or industry, the more it all starts making sense to you.
Just consider the industry you are currently in. Whether you work in a medical building or a print shop, you probably felt like a fish out of water before you had some knowledge under your belt. For every different career there is “industry jargon,” standards, and things that are considered “common knowledge” that weren’t common to you at all when you first began. Now it’s all just a part of your normal, day-to-day job that you don’t really think about.
It is the same with real estate. Becoming a real estate investor is not impossible to figure out, nor is it too difficult for you. Just look at it for what it is, a new undertaking that will take a bit of time to fully understand. Before long you will understand all that is common to the industry and you’ll wonder what held you back in the first place.
Step Two:
Look at your current financial situation and especially your credit. You don’t have to be a millionaire, but you do need to have enough credit-worthiness to obtain financing for your first investment.
Sit down with your spouse and your accountant to realistically determine a budget and how much you can invest. This is not the end of the road either. Even if your budget can‘t take a huge hit, understanding your currently financial standing is your next logical step becoming a real estate investor. You may have to start out smaller than some, but that doesn’t mean that you can’t begin at all. Now is the time to set investment goals and work out a financial plan that will take you where you need to be.
Step Three:
Once you have determined the amount you are able to comfortably invest, you can begin to investigate your real estate investment options. Real estate offers more security than the stock market and depending on when you buy and sell, it can provide the greatest possible return in the shortest amount of time.
The third step is where all of your acquired knowledge and determination pay off. There is nothing like the satisfaction and sense of accomplishment that comes from setting reachable goals, seeing them through, gaining the knowledge needed for the job, and then seeing it all the way through to that first sound real estate deal.
Congratulations on taking the first step to financial success. The time is now to overcome whatever is holding you back from taking the second. Procrastination may be the only reason that many dreams go unfulfilled: don‘t let it be yours.
Becoming A Real Estate Investor
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