5 tricks to make it big with real estate investing:
Real estate investing is one of the most attractive ways of making good money (that is if you do it correct). Moreover, real estate investing is also a lot of fun. A lot of people practice real estate investing as their core profession and, in fact, make a lot of money that way.
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I made this quick video to try to answer the question can you still flip a house in today’s mortgage market, and I believe you can, but in order to sell a house you need to have the best looking house at the most competitive price.
When flipping a house you have 2 options. One is to do all the work yourself and save several thousands dollars in labor, or contract out the repairs and manage the flip.
I believe in order to make serious money house flipping real estate you need to build a team. We have a team that we put together with one of the partners having a history in construction, and knows how to do the repairs and can keep and eye on the contractors to make sure they are not ripping us off.
The other is what I like to call the “paper work guy.” This is someone who works in the mortgage industry, and is use to doing foreclosure contracts and hud’s.
Real estate agent - Find a real estate agent that does high volume sales and kicks butt.
Then finally the beloved investor who gives his money, but does not invest time into the project.
In this video we show you key ways at find good real estate properties for flipping. How to search for foreclosures, pre-foreclosures, FSBO, bank owned foreclosures.
I believe one of the most important aspects to finding a great deal in real estate is to find quality foreclosures and pre-foreclosure lists. There are several websites that we used to find houses to flip.
Ebby.com - is a great free website, but mostly MLS listings
Foreclosure.com - This has a great list of foreclosures and pre-foreclosures.
Realty Trac - Another company that has up to date foreclosures and pre-forclosures
Once you find a list of foreclosure properties, then you have to physically go and visit each one as fast as possible, then walk through and inspect the property to see if it is a flip or a flop. This video walks you through the steps we took when looking for our first foreclosure, and what websites we used in order to find the best foreclosure list
Foreclosures | Foreclosure List | Finding Foreclosures | Pre-ForeClosures, Bank Foreclosures | List of Foreclosers | Real Estate
Here is the bottom line if you are not good at negotiations then you will lose at the flipping game. If you can’t negotiate then you need to hire someone that can unless you enjoy pissing your money away. Check out the below video and see our negotiation skills. This is about our the 1st house we flipped and tells about what we did right when negations and what we did wrong. the series of videos is called “What Not To Do When Flipping a House”.
Flipping Real Estate is a business, and in order to make sure that your business is profitable you need to cut cost as much as possible. When we flipped our first property we made a budget, but we let it get away from us. If you want to be successful in real estate then you need to realize that every penny counts. Here are a few cut cutting flip tips.
- Get multiple quotes from contractors and then negotiate the price :: Most contractors are going to start with a high quote just to see if you will take the bait. We use about 4 different contractors per flip, and get bids from about 10 total, then negotiate with the contractors we like the most. By having the other quotes you get some leverage to use against them to force them to drop the price.
- Don’t use your house flip as a home depot shopping spree :: You don’t need the new drill set, nor the table saw that is on clearance to finish your flip. Watch your spending because it will add up and deplete your profits faster than you think. When you are flipping a house buy only the item’s needed to finish the house flip. The drill you can purchase after you sell the house with your profit’s.
- Turn off the lights and A/C :: When you leave or a contractor leaves make sure everything is getting turned off. I know this sound a little obsessive, but if you have house on the market for six months, and you are running lights, A/C, etc. Then you are going to get some high energy bills. Just by having stuff turned off at the end of the day you can save hundreds on your flip.
- You buy the materials not the contractors :: Contractors love to mark up materials 100% and more, so instead of letting them buy the supplies, you go out and purchase everything for the house flip and have it delivered to the house. Do not put your money in the hands of contractors.
- Don’t purchase everything from Home Depot :: Home Depot is great, but you can find carpet, tile, granite, hard wood, and other materials much cheaper from discount places around town. For hardwood, you can buy pallets of hard wood that was removed out of a house or building for pennies on the dollar. After you have it installed and refinished it looks great! Their are so many small businesses that will cut you a better deal of many of your materials. It is cost effective to think that Home Depot is the only place for materials.
Be sure to add any cost saving tips you might have in a comment!
I love these house flipping idiot’s. They remind me of our first flip. If you want to invest 5 minutes of your life in a good laugh, then this is the video for you. When we flipped our first house we only made $2,000 in 3 months. It was so bad we started make videos on how not to flip a house. This video is from flipper nation and is my absolute favorite house flipping video on youtube
I found this video on youtube, and it reminded me of my first flip. Off of a $50,000 dollar investment we only took home $2,000. This video is super funny!
Many first time flippers are so caught up in the rush of flipping a house that they do not research the tax laws to see how much this flip is going to cost them in capital gains taxes. When you flip a house you will owe capital gains tax on the total profit off of the house.
Example:
- Purchase House $100,000
- Fixing House $25,000
- Sell Price $200,000
- You Owe Capital Gains Tax on $75,000
In case you did not know capital gains tax varies from 15% - 35% depending on different variables. So, if you blow your $75k, or reinvest all of it back into real estate then you could be in some serious trouble at tax time. If your capital gains was 25% than you would owe the IRS $18,750. I love to flip, but I also think people need to be informed so that they don’t find themselves in trouble with the IRS, because that is trouble that you just don’t want.
If you want to avoid capital gains tax all together you can rent the property for 2 years, and then flip it, and not have to pay capital gains tax.
By You usually don’t hear people talking about “hidden” costs when flipping houses, rather, you hear about how much money they made.
“And we really didn’t have to do much either!”, you’ll hear them say.
While there are flipping jewels that do indeed fall into people’s laps, the reality is that those flips are few and far between. If you’re considering flipping, you certainly want to go into it with a lot of enthusiasm, but with a healthy dose of caution as well. Learning to “read” houses when inspecting them before buying will help you see more clearly what possible repairs might be needed to make the house ready for the market. Not paying attention to certain warning signs of structural problems could mean the difference of making, or losing money altogether.
If you’re relatively inexperienced at flipping, or considering your first flip, pay attention to what the house is “telling you”. You could go into it thinking you will make some great money, only to spend any profits on major repairs. Remember, in many flips, you are buying foreclosure property, property with tax liens against them, etc. So, understand that you are buying the property as is, warts and all.
Some major repair signs to be on the lookout for, are the following:
Having this particular increased-awareness mindset makes good business sense when evaluating any piece of property. Consult with a professional such as a general contractor or realtor and have them help you assess any possible repairs and related costs. When you have all of the facts and figures in front of you, can you then make an informed decision. When you do, in fact, submit a bid, you’re price will reflect any necessary repair expense.
If you’re relatively new or considering entering the house flipping business for the first time, please visit http://www.House-Flipping-Helper.com for more information regarding all things house flipping and remodeling.
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