Flipping homes for profits has become a celebrity sports with the popularity of HGTV programs that make it irresistible to see a house
transformed in a 30 minutes show! Shows like FLIP IT TO WIN It and others like Than Merril of Fortune Builder have created a cottage industry of folks who believe they can become rich over night by buying a DVD course of flipping without risking a dime of their own money.
But the reality of home renovations are extremely stressful even for those who are doing it full time cause there are a lot of items that are NOT in your control. Believe me we have seen offers from some of these students of Than Merril and they are clueless when it comes to Real Estate transactions.
1) Find 3 Reliable Contractor. Reliable contractors that will show up on your job do NOT exist. Unless you can create a mutually benefitical relationship with these contractor to have a skin in the game, they will accept other jobs and leave you stranded. It’s in their DNA to do this and it’s impossible to fight it. So, find at least 2 or 3 reliable contractors with good crews.
3) Compute your Max Offer Price: Determine an Max Offer Price before you make an offer. Most savvy investors use the following formula: MOP = (After Repair Value x 75% ) – Repair Costs
Depending on your market activity and the available inventory you can adjust the MOP price you are willing to pay, but you should stick to your success formula and don’t take emotional decisions. It goes without saying that you will need to be aware of the repair costs so you can determine quick estimate for common items such as : Roof Repair, Kitchen Counter Tops, Appliances, Bathroom Fixtures, Flooring, Paint. Most great flippers can quickly come up with a reliable repair estimate on the spot since they know how much per-sq-ft their contractor will charge to remodel a home.
4) Recruit a Great Real Estate Team: You need to find agents who are willing to write multiple offers for you every week specially in a tight market where the inventory does not last long on the market. Also, find a great title rep who can generate Estimated Closing Costs and research Titles for you. Some of the large Title companies now offer iPhone apps for estimating Closing Costs on the fly.
Finally, for our investor club who purchase 3 homes with us every calender year, we offer 1% listing commission if they list their remodeled home with us for sale. So, feel free to contact us if you have a flip in mind.