Home Flipping Houses 3 New House Flipping Rules for 2013 and Beyond

3 New House Flipping Rules for 2013 and Beyond

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We cannot deny the false gratitude that brought out the brave, arrogant and opportunistic speculators. It was an era of tulip market crisis only about 400 years later.

Personally, I’m happy to see the “easy money maker” leave. It made the cream go up. But the considerable roar of time and rumors softens the harsh memories of the past. “Will Real Estate Return?” According to the National Association of Real Estate Agents, counties across the United States have responded to the 11.6 year-on-year price increase. The inventory level then returns to the pre-apocalyptic level.

So flipping is sexy again. The truth is, it was still all this time, the game was just different. According to RealtyTrac, the average profit on flips in 2012 was $ 37,375 (defined as a home bought and sold to make a profit within 6 months). Of course, this is from a national point of view, so normal market conditions may vary.

Nonetheless, most of the damage has been eliminated and the media is screaming that the bust is over. Nothing sells more important papers, journals or homes than behavioral economics. In my belief, markets don’t happen to people … people create markets. But when I got out of my economist’s soap box, the rules for flip games changed. Easy money, complete ignorance, and mods / rehab don’t cut it anymore.

# 1) Turn over meaningful areas

Of course, to get the chance to be prime, you need to have some fundamentals in place. The foreclosure process can make up the majority of the year, and if you live in a low-demand, high-cost area, you are less likely to succeed in your business model. If your area isn’t moving and shaking, it may make more sense to invest elsewhere in the country.

By investigating the pockets of emerging markets and countries with rising prices, stable sales and high demand, you can host the ideal place to buy, modify and sell quickly for big profits. If you’re not sure if the market is ripe, it’s a good idea to choose a small area to investigate and start with a small area. Talk to agents and other investors there and read online about the local economy. “Arizona is a good market to buy,” but “Glendale, Arizona has the details you need to successfully buy and sell your business model.” (By the way, that. Don’t make decisions based on statements. I’m mainly in the East Valley of Arizona and used only the city as an example).

In short, what makes fundamentals attractive can create more competition, which can lead to higher marketing costs and time between transactions.

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# 2) I actually have money

I jokingly say this, but I’m just annoyed by the fact that the “investor” was buying a completely skinless home in a deal. However, we cannot blame the buyer for being opportunistic when the product was created by seemingly wise decision makers.

Regardless, Real estate has no money This means that you are finding a deal and spending your efforts. You may need a money partner (or three) to fund a transaction and share profits, but the days of buying a home with just a signature and a smile are over.

Hard money lender In addition to at least 20% of the purchase price from you, you will potentially need a personal guarantee, if not any other collateral. In addition, you need to fund rehabilitation costs, loan interest payments, and other related costs.

If you plan to buy a home for immediate repair and sale with a traditional loan, it will make you much less competitive. I can’t say that it can’t be done, but if the seller’s house is seized and other buyers know the opportunity, cash becomes the king. If you don’t have one, find someone to do so until you have enough income to start a pitch-in. Until then, you are a professional bird dog or partner.

# 3) Polish your rehabilitation and budget

Due to lack of inventory and rising prices, it can be difficult to get a proper discount on a property unless the property is in very poor condition. This alone may be enough to scare people unfamiliar with the business.

Ceiling depressions, additional and sometimes unauthorized additions, and many other non-cosmetic issues are not for people with weak hearts or poorly educated construction. If you use the friendly BigName Fix Up Store to hire a contractor to solve all your problems, say hello to labor and expense markup. I don’t know what I don’t know, but hope is not the current strategy. Knowledge and budget.

The minimum things you need to do are:

  • Kitchen remodeling with new appliances similar to other homes in the area and similar upgrades
  • Fresh paint
  • LowE window and features
  • New luxury flooring
  • Make sure the electricity, plumbing, heating, air conditioning and roof are repaired and compliant with the code
  • Create a curb charm
  • Professional photography and staging

Measure twice and cut once. Investigate other retail homes in the area sold in the last few months and stick to improving as they did. Don’t fall in love with what you think is “very good here”. – This is not your home! Budget, budget, monitor, and budget. Soon you will learn to measure your neighborhood or area and find cost-effective products and workforce to lower your costs. However, if you want to participate in the game and stay, these factors are important to your staying ability.

For risk takers and hard-working workers, real estate always has an opportunity. One of my favorite things about this business is that there are 100 ways to slice it and it’s constantly changing. It makes it rewarding, but it’s also rewarding if it’s not financially.

The world is your oyster, even if you are participating in a buying and selling game. But the preconceptions and stories from 2007 need to forget how much profit they have made for it.

As long as you adapt to the new rules of the game, this year could be a game changer for you. As an ambitious and enthusiastic reader I know, you will be willing to accept now and control your own destiny. This is your success!

What other rules do you have to turn your house over?

Photo credit: Mariano Kamp

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