How Easy Things Really Are
I like this blog of Jon's from this past week, it should be required reading for all the folks who watch some flipping show or another and think that they will make millions. In my estimation, most of these folks pay far too much and drastically underestimate the cost of rehab, and holding on to a property.
Ask a surgeon how easy it is to do a surgery. He can say that he takes a scalpel, makes a cut, fixes the problem, and then stitches the cut.
The way it sounds, stitching would be the most difficult part.
Intelligent people smile. They do not believe it. They know that things are never easy and surgeon's knowledge, training and experience matter a lot when you are on the table.
But same intelligent people think of foreclosure and Tax Deed auctions as a lot of adrenaline and fun. You go there, place your bid, take the possession and then resell for huge profit. And the toughest part is to be strong enough to carry all that money...
Yes, it is really simple.
All you need to do is:
· Prepare, and make a list of properties going for the chopping block...
· Figure out the value of these properties...
· Check the history of these properties, and make sure there are no liens, which can survive the foreclosure...
· Stop at City or County and check for zoning and code violations...
· Find out how much is owed in Taxes ...
· Figure out how much is owed in delinquent Association Dues...
· Peek through dirty windows (and it is not always possible) to see how substantial might be the damage...
· Figure how much it might cost you to fix the place...
· Figure how much it would cost you to sell the place...
· Figure who's who at the auction, so that you do not act stupid...
· Have sufficient cash to pay in full in less than 24 hours...
Well, if you can do all that, then yes, you can embark on the Auction journey. Adrenaline is guaranteed.
Money?
Good question.
How much can the excitement cost?
I just read that RealtyTrac researched flipping, and in Michigan, where on average flippers lose over $5K on a deal. Considering the cost of fixing, the number is over $8K on average. Considering that not everyone is losing, and that there are investors who know what they are doing, and they are making $10K-$15K on a flip or more, so average flipper loses more than $8K. On one single deal...
- Hey, what you listed would take a whole freaking day off the beach?
No, it will take way longer than the whole day. It takes me more than a week to prepare for the auction. It is a full-time job with more than 40-hours a week, unless, of course, your are trying to emulate an average Michigan flipper.
Any takers?
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