House Flip For Profit – 7 Tips For House Flipping Success in Any Market

1. Get Prepared – Now that you have decide to start flipping houses for profit it’s time to get your goals and expectations set correctly in your mind. Figure out how much cash you have available for this investment. Make sure that you have enough money to cover a twenty percent down payment, the remodel of the home, and enough cash on hand to cover the monthly mortgage payment until the property is. I know it sounds overwhelming, but I will show you how to reduce the up-front cash and the funds for the remodel. It always make sense to write down your plan. It doesn’t have to be anything fancy, it just has to make sense to you. You can’t possibly know where you are going without a map to navigate by.

2. Identify a good property to flip – Now that you have some idea of your direction, it’s time to consider the type of property that would make a good flip. Figure out if you want to buy a single family home that needs work, or a multi-family home where your intention could be a condo conversion. For our purposes here, we’ll discuss the single family house flip. If you don’t have access to the Multiple Listing Service (MLS) in your area, find a reputable real estate agent who could provide you with access to the MLS. It is wise to have a buyers agent because it’s doesn’t cost you any money. The buyers agent is compensated by the listing broker’s agency. Once you have access to the MLS, you can start searching for properties. I like to search by zip codes in areas that I know to have desirable neighborhoods. In a down market, such as the one we are in now, there are plenty of rundown homes that happen to be in great neighborhoods. Those are the homes that will always sell first. You should focus on bank owned, short sale and foreclosed homes that are on the market. Keep in mind that it doesn’t matter how much the seller is asking for the home, what matters is if the project makes sense. I typically figure out the price I will pay for a home after I figure out the amount of work that needs to be done and how much I can sell it for. Remember, the market tells you what a home will sell for, not a price tag.

3. Inspection and Property Analysis – Before you can make an educated offer, you must know two things. First you must know how much it will cost to bring the house to it’s highest and best condition. You need to appeal to the type of buyer that is most likely to purchase the home. You should have a trusted contractor meet you at the house so they can give you an idea of the costs involved. Now add 20% just to be allow for unexpected costs. Once you know your cost you should consult with your real estate agent to determine what similar homes have sold for and look at the homes you will be competing with. Now that you have a good idea of the future selling price and the cost of the construction, you can now use basic math to add the cost to the purchase price and then subtract that answer from the estimated future sales price to determine if there is a enough profit margin for this house flip to make sense for you. Tip: Don’t forget to add sales commission to your cost if you plan on using a real estate agent.

4. If the Numbers Work, Get Financed ! – Once you know that there is enough profit after your acquisition cost, remodel estimate and sales cost. You now know the most that you should pay for the home. Before you make an offer, you must get your financing in place. This is my area of expertise since I have been a mortgage broker for several years. There have been many changes in the mortgage industry since mid 2006. Money is a little tougher to get, but it is still available with a down payment and decent credit history. Guidelines are always changing, but right now at the end of 2008, a minimum of 20% down payment is required to purchase investment property and the borrower must show income and assets to qualify. If after the 20% down, remodel money and cash to cover the monthly payments, you do not have much money left, you should consider a partner for the deal. You may not be a fan of long term partnerships, but when you are flipping property, you would be looking at a 4-6 month partnership, not a lifetime. If that works out you could always buy more property to flip in the future. It also helps split the risk and the tasks. Just make sure your expectations are set properly. If going the partner route I suggest opening a joint bank and funding it with 6 months of mortgage payments including tax and insurance. If you have more questions about financing, I would be happy to answer them. I will provide my office contact information at the end of this article.

5. Remodel / Rehabilitation Phase – It’s time to get this home fixed up and back on the market as fast as possible. You should now have your contractors come in to start the construction phase. Keep in mind that cheap labor will almost always be more expensive. Make sure that the contractors are pulling the proper permits. The last thing that you want is a forced work stoppage because the required permit was not pulled. Furthermore, if these workers do not know or build to code, it will usually cost you double to correct a code issue. By now you should have a detailed list of everything that needs to be done. Break it down by major systems such as heating, cooling, plumbing, electrical, and any other system that needs repair or service. Then go room by room and make a list of what needs to be done in each room. Joint compound and a fresh coat of paint goes a long way. Just make sure you use modern, neutral colors that would not be offensive to anyone. Make sure you inspect the exterior of the home for repairs and touch-ups. The yard should be clean and landscaped properly. Make sure you check in on the contractors daily to make sure things are on track, don’t assume all is on schedule. Finally, take advantage of using Lowes and Home Depot credit to avoid payments and interest for six to twelve months. You should be able to buy most of the materials with that credit. Just makes sure you pay the entire balance when the interest free period ends or you will get whacked with all of the accrued interest.

6. Sell your House Fast – Now that your home is complete and ready to go on the market. You should already have an idea of how much you will list this property for, but you must once again verify the value. The best way to do this is to have an appraiser or a real estate agent do a comparable market analysis. If you don’t know an appraiser, call your mortgage broker and ask him or her to use their appraiser to help figure out a range for you. I do it for my mortgage clients as free value added service, it’s just good business practice. You may want to sell your home yourself and that is fine, but you must have the time to show it and also be able to list the property on your local multiple listing service. If you are trying to avoid paying a full real estate commission, a local real estate agent will usually do an “entry only” listing for a nominal fee. If you do not have the time or do not want to deal with the hassle of listing the home yourself, hire a real estate agent to list your home. You should have already added in the sales commission fee into your figures before hand. When figuring value make sure that you also look not only at similar homes that have sold, you should also look at your competition. Your home needs to be a great deal when the average buyer looks at it against others in the same price range. Finally, if you are not getting sufficient showings after a week or so the home may be priced to high, don’t be afraid to lower the price. Sometimes a little profit is better than no profit. That is why you must purchase the property that you want to flip as low as possible and estimate the remodel as accurately as possible.

7. Make Plans for your Profit – If you priced your newly remodeled house correctly, it will go under agreement and you will soon close. If you have planned correctly, you should have some profit coming to you. It would be wise to have a solid plan with regards to your profit. Here are some options; You could simply take the profit as well as your initial investment and place it in your bank. In that case, you just created a taxable event or in other words, a long or short term capital gain depending on how long you held the property. That option is better if the profit gain was minimal. If you made a significant profit and were planning on flipping another property, you can defer your taxes through a 1031 exchange. Basically a 1031 exchange is a tax code that allows you to defer capital gain tax to a later date buy reinvesting your profit into another investment property within a certain time frame. There are rules that must be followed in order to make the exchange valid but considering the benefit, it could be well worth it. The advantages of doing a 1031 exchange includes having more money available now and more buying power. It means not being taxed while your are building your real estate investment business. You can flip your profit, just like you flip a house. Here is an idea, why not flip homes until you have enough down payment funds to exchange into a 30 unit apartment building. Then you can turn your money into a cash flow. You could defer paying any taxes until after you sell the last property and actually take the money. It is always wise to speak with an accountant when making tax decisions, so always consult a professional CPA when dealing with tax laws, that is money well spent.

I will leave you with one last thought; Use professionals from start to finish. Licensed professionals may appear to cost more, but they will save you money by getting the job done on time and correctly.

Homes For Sale – 7 Tips for Selling in a Slow Market

In the past decade home sales have gradually become a buyer's market. Although this is good news for the buyer, it is becoming somewhat of a nightmare for those who are trying to sell their home. Because of this, sellers often have to dramatically drop the price of their homes in order to make the sale, resulting in huge losses. However, there are ways of increasing the chances of making the sale without the seller having to take a big loss. The following will be a list of seven tips for successfully selling a home in a slow market.

1) Appearance is key- When looking to buy a home a buyer will naturally gravitate to houses that have a nice appearance. Fixer-uppers are not as popular as they once were. The first thing that a seller should do is to fix anything that may catch the eye of a potential buyer. For instance, the yard should look immaculate at all times. If the gutters on the house are drooping, that will be the first thing people will notice. If there is chipped paint on the house, paint it. It is worth the money to stage your property for curb appeal.

2) Be flexible- Be prepared to make yourself scarce on weekends if needed for the realtor to show the house. Keep things tidy at all times for any last minute appointments made by perspective buyers. Try not to limit the times that you are willing to provide access to the home.

3) Keep the home at market price- If you are stuck in the mind-frame of making big dollars from the sale of your home, chances are your house will be on the market for years. The best way to drive away potential buyers is to put the house up for sale above market value. Keeping the house for sale at a reasonable market price means that there will be more interest in coming to an open house, therefore bettering your chances of making the sale. It is a well-known fact by realtors that if the price is right, there is a buyer out there for every house.

4) Find an agent with an extensive sales track record in your town- A good realtor will know exactly how to determine fair market price for your home. He should also have a record of being able to sell a home within three or four months. A realtor that is experienced in selling property in your particular neighborhood will be able to take you through the process efficiently and in a timely manner. If you have a realtor who doesn't have many years of experience, this will waste valuable time and money while he is still working on perfecting his craft.

5) Give the home have a warm and welcoming feel- If the walls in your home are painted in vibrant colors tone them down with neutral shades of tan and beige. This will allow perspective buyers to picture their own furniture in the home without distraction. Set the mood with lightly scented candles in the bedrooms and bathrooms. Soft calming music in the background will give the buyer a relaxed comfortable feeling. Buy new linens for the beds and throw pillows for the sofas. Give your home that "homey" feeling that everyone is looking for.

6) Do your research- Go to open houses and check out the other houses that are on the market in your area. See what they have to offer a potential buyer. If they have a cozy seating area in the master bedroom, create your own cozy seating area to entice those potential buyers. You would be surprised at the things you can do with just a few over-sized throw pillows and a window with a view. Gather ideas from other houses and use your imagination for the rest.

7) Offer incentives to potential buyers- When a buyer is interested in purchasing your home but wants you to come down on the price, try using other incentives instead. For instance, you may want to offer to pay the buyer closing costs. This is always tempting to buyers since it will save them money, allowing them to have more money for a down payment. Some sellers choose to throw in appliances such as the refrigerator, dishwasher or washer / dryer.

In a buyer's market, the seller has the task of being inventive in finding a way of moving his property. Making the sale is not always a piece of cake, but with a bit of effort, it can still be done quite successfully.

Modular Homes: Built Better to Meet Today's Demanding Housing Market

There are many reasons to consider buying a modular home these days. Today people are looking for value for every dollar spent, and modular homes offer just that. With the improvement in quality of modular homes, they can be a better choice then conventional construction in most areas. And don't think that modular homes can't live up to that dream house of fantasy. Today modular homes are built to more varied specifications and architectural designs then ever before including multi level, split level, post modernistic and many traditional styles. If it can be envisioned, more then likely there is a company that can modularize its construction. Here are some of the reasons that modular homes are such a great value.

They can be completed Faster

Modular homes from start to finish can be built faster because the greatest portion of construction, including HVAC electrical and plumbing are completed under what are usually controlled climate conditions in a factory. Most everything is completed at the factory including the installation of cabinets and doors. Most fixtures, plumbing and electrical are in place before the modular home leaves the factory. When the modular home arrives on site ready to set on its foundation, there is less for contractors and subcontractors to complete. This saves a lot of time due to weather and scheduling issues that always seem to arise with traditional construction. That means savings of time and as everyone knows, time is money, especially in home construction

Saving on construction time saves big interest

With a typical construction loan, the first payments are basically interest. A common construction loan for a conventionally constructed home can be anywhere from 6 to 12 months long. With that in mind, consider how much will be saved in interest on the loan before it is converted to a conventional mortgage, if the construction time is cut from 6 months to 2 months. On bigger projects, the savings will be even greater. If you are required to carry the construction insurance modular homes can save even more. Because the structure is not exposed to acts of nature during critical stages of framing and construction, insurance rates are much more reasonable as well.

Less Wasted Material

Because modular homes are constructed under climate controlled factory conditions, material loss is kept to a minimum. On conventional construction sites, losses can add up to big dollars, due to poor weather, theft, and over all poor construction conditions, making modular home construction again more cost effective.

More durable construction

Because modular homes must be transported sometimes many hundreds of miles from the factory to where they will be placed on a foundation, they are held to a much higher standard in most areas of construction, to be able to withstand being moved. Better flooring which can be varied may include engineered floors on top of thicker nailed AND glued sub floors. Double and heftier constructed rim joists and thicker wallboard on ceilings and walls. Many of the added supports and bracing that are required for transportation can be left in place upon arrival which makes for a stronger more durable structure that holds up to the forces of nature better then do most conventionally constructed homes.

So if it's time to consider a new home, its time to consider a modular home. The advantages are many the savings are great and the risks are few to none. Lending institutions are aware of modular home advantages and many times are more willing to process loans accordingly. Modular homes have come a long way since first conceived of. Modular housing is no long to be considered second class housing as it once might have been. Today it is top quality and rivals any home construction method available.