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.
enjoy helping generally good people who have fallen on hard times then
want to consider a type of real estate investing in which you purchase
hold the mortgage and then work out a lease to own agreement with
who, for one reason or another, cannot get the financing to purchase a
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.
This also benefits you because these types of “owner option” properties are usually in demand and will fill up more quickly then a rental property should the sale of the house fall through. Some reasons that sales do not work out are work related transfers, divorces, family emergencies, or an inability to obtain financing from a financial institution, even with the money escrowed to go towards a down payment.
The benefits to the leasers are attractive as well. First of all, you will be putting a predetermined and agreed upon percentage of the monthly payments towards their down payment at the end of the agreed upon amount of time. This allows their down payment money to build up without the tenants worrying about it each month. This agreement also allows them a little more leeway for making improvements, painting to taste, and enjoying a feeling that the home is really theirs.Another huge advantage to those leasing to own is that it usually gives them about two years to get their affairs in order so that their mortgage application will be approved when the time comes. They can work on improving questionable credit, saving more money, and taking other positive other necessary steps towards their goal of home ownership. They also get the opportunity to use as a trial period to figure out if this is really the home, neighborhood, and area they want to settle down in. Many homeowners would love to have the benefit of a two-year trial on their homes before making the final commitment. They have an opportunity to learn about the area in general and also will be very familiar with any quirks or problems with the home itself. These things are a bonus for those leasing, to see and enjoy first hand before making the final commitment to purchase the home. It also happens to keep a steady flow of money coming to you month after month, with excess paid to go to the down payment reverting to you if the tenants decide not to go through with the deal.
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.
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.
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.
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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Brought to You by: L J Sutherland
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