LEARN TO FLIP BLOG

TIP OF THE WEEK: Know Your Transaction Costs

 

When you are purchasing a property to flip and/or when you are about to sell a rehabbed property, make sure you request from escrow a Closing Statement Estimate before the close. This way, you can see all of the projected taxes, fees, debits and credits. This gives you one last chance to ask questions for escrow/title fees that may be too much or for any unforeseen tax liabilities you were unaware of. Never feel that any question is dumb or naive...its your money. 

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TIP OF THE WEEK: Get Secure

 

Fool me once, Shame on You, Fool me twice, Shame on ME! We had one of our flips broken into and our very expensive stove stolen...and guess what, our security cameras were not up on the house. Our agent asked us to take them down for the photos, and during that time, the house was broken into. Thus, we have done the below, and suggest you do this also right before your appliances arrive:

  1. Put up security signs

  2. Put security stickers on your windows

  3. Put up security cameras

  4. Do NOT take them down until the house has been sold & recorded

To learn more about our Learn To Flip program, click here

TIP OF THE WEEK: Effective Sales Plan

 

After the home's rehab is complete, in order for flippers to have an effective sales plan, we must not only have the right agent, but have a thought-out process that accounts for any type of market. Look to do the following:

  1. Agree on a commission before signing an agreement

  2. Ask for what the Marketing Plan will be from the agent

  3. Make sure the agent will perform a Broker's Open House and weekly Open Houses on the weekends (at least one day each weekend until going into escrow)

  4. If the house in not in escrow after 30 Days, do a '30 Day Review' in order to find out what the feedback has been from potential buyers, what issues there are, and what can be done to sale the property going forward

  5. Have a Contingency Plan if the home does not sell in 90 Days (such as renting out via traditional rental, refinance, etc)

  6. Make sure once the home does go into escrow, the agent continues to market the home for backup offers and showing upon request

To learn more about our Learn To Flip program, click here

TIP OF THE WEEK: Working with Contractors

 

Like any other business, there are good and bad things to deal with on an ongoing basis. Wroking with contractors is one of those things when it comes to flipping houses. 

To insure you have as seemless of a working relationship as possible, implement these strategies:

1. Agree to a Line-by-Line budget upfront (not a blank total budget)

2. Get it signed before starting any work

3. In the contract, make sure to have in BOLD FONT that any increases in the budget must be approved by you before it is done, and if not, the expense is not valid

4. Only pay as SPECIFIC work is being done. If the contractor is working on HVAC, they'll get paid for HVAC. If not, they do not. Every expense must be reconciled as the project goes along.

To learn more about our Learn To Flip program, click here

TIP OF THE WEEK: Three ways to confirm After Repair Value

To have an ARV that is trustworthy, you must take these three steps of analysis before you put up an Ernest Money Deposit:

 

1. In-house analysis of comps to get the ARV

2. An investor friendly and experienced agent who can confirm an ARV with comps

3. A Hard Money Lender on the deal will inspect the home and comps to determine an ARV before they lend

If #2 and #3 confirm an ARV that make the deal impossible, DO NOT DO THE DEAL. 

To learn more about our Learn To Flip program, click here

TIP OF THE WEEK: Minimizing Risk

In order to minimize your legal and financial risks, here are some suggestions to make your business as bullet proof as possible:

 

1. Get legal counsel

2. Get a good CPA on your side

3. Do not buy in your personal name, use LLC

4. Not necessary to have a new LLC for each flip, but limit the value of each LLC to $1mill in property(s) value 

5. Get appropriate Liability and home replacement insurance

6. Have a separate checking account for each property

To learn more about our Learn To Flip program, click here

TIP OF THE WEEK: Boundaries for finding comps

 

THE most important variable when deciding if a lead can be a good deal is an accurate After Repair Value. 

 

In order to get an accurate ARV, we must make sure to have at least three direct comps. In order for a house to be considered a direct comp, these must be true:

 

- Sold within the last 6 months

- Similar home and lot sqft

- Home has been repaired also

- Similar parking setups

- Within 1 mile of the subject property

- Similar type of street (busy/large vs residential)

 

And even when all of these are matches, we must also make sure that these geographical variables are matches also:

 

1. Does not cross a major freeway/large avenue/river/lakes/etc

2. Is considered the same 'neighborhood'

3. Similar noise from freeways, etc

To learn more about our Learn To Flip program, click here

TIP OF THE WEEK: Finding Deals

Finding deals can be easy...finding GOOD deals is the hard part. However, you cannot find a good deal until you start generating deal flow. 

You can do this by getting on email lists from wholesalers and agents in your area. Start to do this by doing a search on LinkedIn and BiggerPockets.com for 'wholesaler YOUR CITY' and connect with them. Let them know you are an investor flipping houses, and want to be put on their email list that sends out leads. 

To learn more about our Learn To Flip program, click here

TIP OF THE WEEK: Getting quotes from Contractors

 

As you get into contract, make sure to get at least 3 contractors to quote your rehab before choosing one. Walk the property with them, let them understand the scope of work, and to give you a detailed outline of the cost (materials and labor) in order to execute the rehab. 

Get to know the $/sqft they are charging and ask them for clarifications on permitting and the time it will take to complete the project also. 

To learn more about our Learn To Flip program, click here

TIP OF THE WEEK: Getting Permits

 

Working with your city or county can be a headache and it is easy to choose to avoid them when beginning to to prepare for your fix and flip project. However, when making this decision, it is best to make sure that you are playing the long game and not the short game. Not having the appropriate permits can come back to haunt you if you are caught (which happens a lot) or when a picky buyer(s) demands them. It can end up costing a lot more and taking more time if you would have gone ahead and got them in the first place. So, GET THE PERMITS!

To learn more about our Learn To Flip program, click here