Flip_That_House_Style_Real_Estate_Investing

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					Title:
Flip That House Style Real Estate Investing

Word Count:
597

Summary:
I love those TV rehabbing shows like Flip That House. On the show people
buy a house needing to be seriously updated and repaired. Usually the
kitchen is heavily upgraded with new cabinets, cutting edge appliances,
new countertops and more.


Keywords:
real estate investor, rehab, manage contractors


Article Body:
I love those TV rehabbing shows like Flip That House. On the show people
buy a house needing to be seriously updated and repaired. Usually the
kitchen is heavily upgraded with new cabinets, cutting edge appliances,
new countertops and more. The bathrooms are completely redone with new
tile, tubs, showers, sinks and more. The living rooms and other areas
usually have walls taken out to open up the floor plan and usually carpet
is replaced with some type of hardwood flooring. It’s realistic to do
what they show in a high dollar housing market like California to make
the huge profits they usually get on that show. In a lower priced market
like Memphis, TN rehabbers are looking to make $20-30,000 per house
minimum. In California and on that show they are looking for $50,000-
150,000 per house. That’s because homes are so much more expensive in
California where the show is produced.

In a market like Memphis many of the same upgrades are done but maybe
skipping the granite countertops and some other high end upgrades. In any
market you are going to repaint and redo the floors. The areas to spend
the most money to upgrade are the kitchen and the bathrooms. A great
value add that sometimes adds tremendously to the value of the home is if
you can add a 2nd bathroom to a home with only one bathroom. While this
will probably cost in the $10,000 range to do, it could increase the
value of the home by $20,000-40,000 and significantly add to your profit
potential.

To do deals like this you need to go through several steps. First of all
you have to get set up with a hard money lender as you cannot get a
normal mortgage on a house in disrepair. You need to see what homes are
listed for in your area and figure that when you fix it up you want it to
be nicer and cheaper than all other equivalent homes on the market for
that neighborhood. Working backwards from the price you could sell at to
undercut the market, take out the repair costs and pad it by at least 50%
for unforeseen costs(always there) and then subtract your expected profit
and holding costs(interest), realtor fees(if you use), advertising and
more. If you can still make at least $20k it should be worth doing.
Managing your contractors is a very important part of this whole process.
Ask other investors who they know and trust to come in and do your work.
Require the work to be done on time and put penalties in the contract for
late completion. Don’t pay for the work up front, but agree to pay them a
part like 25% as each 25% of the work is completed.

One thing important to understand about these types of   deals is that they
aren’t super quick money. Typically the work will take   a couple of months
and then it will usually take a month or two to find a   buyer. Hard money
lenders typically loan money for 6 months as this time   frame usually is
sufficient to sell the fixed up home.

Homes like these may be homes the sellers can’t afford to fix up or
simply don’t want to fix. In real estate listings these may say things
like handyman special. Foreclosure homes and bank real estate owned(REO)
listings are generally good candidates. Mailing to out of state landlords
can produce some homes that are good as rental homes typically need
updating as they aren’t set up to sell retail.

				
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posted:3/24/2012
language:English
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