Flip That House Style Real Estate Investing

Flip That House Style Real Estate Investing



Flip That House Style Real Estate Investing
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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