Step 1 – Don’t pay thousands of dollars taking a course in how to flip real estate for a profit. There is nothing they are going to tell you that will help, they will just try to sell you stuff. Look, listen and learn. Typically, in most cities there are real estate investment groups that meet on a monthly basis. These are great places to learn and it will not cost you a penny. Just follow steps 2 – 9 listed below:
Step 2 – Business system. Talk to your CPA or financial advisor. You might wish to set up an LLC for you flipping business. Also, you need a nice, attractive website to promote you flipping business. Also, a good social media presence.
Step 3 – Team members. You probably need to employ a general contractor, especially if you have a full-time job. You also need a title company, REALTOR©, inspector, foundation company, etc.
Step 4 – Funding. Unless you have unlimited cash you probably are going to need some type of funding. Chase, Wells Fargo, Bank of America are not interested in financing your flip activity. You are going to need private or hard money lenders. Who are private lenders? Your family and or friends. Make it worth their while pay them 10% to borrow money on a short-term basis. Hard money lenders typically they find the private lenders mark up the interest and then lend you the money. In our area a hard money lender usually wants 2% origination fee and 12% interest. Hard money lenders are more interested in the property and do not require an appraisal or a credit report on you. You should have a pre-approval letter to present with your offer.
Step 5 – Find the deal. Typically, the deals are not in mls. Look for vacant properties, properties with city code violations, properties with absentee owners. Find four types of properties and work them hard. Direct mail is your friend. Design a marketing piece that grabs their attention, ask a question, and make a promise.
Step 6 – Analyze the deal. Get access to mls so you can pull good comps. You may need to pay a REALTOR® for this service. When you visit the property 3 main areas to look at are roof, foundation, and HVAC system. On most all flips you will need to make repairs. For every $10,000 you spend allow one week to complete those repairs. In other words, if you estimate there are $80,000 in repairs to get top dollar you need to allow two months to complete the repairs. You need to be ready to make your offer when you are at the property for the first time.
Step 7 Control and Close. Have you contract and all disclosures with you so you can get the sellers signature. Pay the closing cost and be a flexible as possible. Take your signed contract and earnest money to title company immediately.
Step 8 Rehab. Time is money, you are paying 10 – 12 % interest the quicker you get the property on the market and sold the more money you save. You need to inspect the property on a weekly basis, and more often if you are the general contractor.
Step 9 Put it on the market. In this market you might consider listing with an agent to get the most money in the shortest amount of time. If you are going to sell yourself have a professional photographer take the pictures. Do email blast to people on your buyer list. If you are not available to show the property you might consider hosting several open houses each week.
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