One of my favorite self-improvement masters is Steven Covey.
As you may know, Covey 7 Habits of Very Effective People – And he’s no longer with us, but his teachings have taught millions of people how to use seven simple principles to achieve ultimate success in business and life.
His idea of thinking Win / Win, prioritizing above all, and actively sharpening the saw resonates with me every time I pick up an old wear copy of the 7 Habits.
However, while all seven habits apply very well to real estate investment, there is one habit that is particularly relevant when it comes to turning homes inside out.
It’s a second habit: Start from the end of the heart
When you start House flip What you want to achieve, you may not understand it, but you are using Covey’s second habit. And the end is determined by simple math and some thorough research on your side and research from the team that flips your home.
“Start from the end of the heart” flipping house method
Flipping good profits is not as easy as some claim, but when it comes to house flipping math, all you need is simple multiplication, subtraction, and addition. And when you finally know what you want to achieve, the whole project will have a laser-like focus and will ultimately be the most profitable.
When everything is said and done, it’s the number that flips or destroys your home. The math itself can be very simple, but knowing the correct numbers to use requires a lot of research and the help of one or two people from the team turning the house.
And when you learn how to turn a house over with the end in mind, you’re on your way to a successful turn.
The most important number in house flipping
Most people think of the most important numbers when learning how to turn a house over What you pay for the house.. Many real estate investment professionals say “buy and make money”, but I disagree. It’s not the most important.
Others consider rehabilitation costs to be the most important number. This is important, but not the most important.
The most important numbers in house flipping drive all the other numbers, including the two above. This is the repaired value, or ARV for short. It’s by far the most important number to get it right.
That ARV is the “end” you have in mind and upsets everything you do in the house.
This is mainly because the amount you pay for real estate and the amount you can pay for real estate rehab depends entirely on what you can sell the real estate after everything has been modified.
All other predictions are based on ARV. Correcting the ARV is absolutely important. Otherwise, all other predictions will be off and the profit margin will be reduced as a result.
If you’re using the wrong ARV, you’ll be pushing water uphill in the rest of the house.
This is your way to get the ARV right, and as Stephen Covey says, “Start with the end in mind.”
Find the best realtor on the market
To get a truly accurate ARV, a real estate agent or real estate broker will perform a comparative market analysis or CMA, as is commonly referred to. You need to make sure this person knows what they are doing because you rely on someone else to determine this number (although it’s a very important number!) there is. Working with the right realtor or broker is very important.
Keep in mind that just because this is their profession does not guarantee that they will nail the ARV. What if they are new to the area, inexperienced, or simply don’t mind doing a good job? Always keep in mind that this is the inside out of your home, your deal, and you are responsible for everything that happens.
Good realtors and brokers will see properties sold in the inside out area of your home. You should not pay attention to the property for sale as these properties have not been sold yet. A good realtor pays attention only to recently sold properties. This will help you determine how much a particular property will sell.
Do whatever you can to work with an expert and knowledgeable realtor / broker. I once worked with an agent who grew up in the town where she worked and knew everything she needed to know about the market. Thanks to her extraordinary predictions, we sold the inside out of that particular home in just one day.
Effectively communicate your plans to your agents / brokers
Communication is very important in this business (and any business in that regard). In last week’s blog post, I emphasized the importance of communicating effectively with contractors. I strongly believe in Covey’s idea of ”synergies” and communicate well with lenders and investors to ensure that everyone is heading in the same direction.
The same theory applies to realtors and brokers. Good communication is essential to making money with a certain degree of consistency.
Once in contact with a professional agent, communicate the property plan to the agent completely and explicitly. Make sure they are 100% on the same page you are trying to do. Communicate the importance of identifying ARVs and show exactly how the wrong ARV affects your bottom line.
I think it’s always important that the team turning your house is on the same page. Don’t lose details due to lack of communication.
Some phones and emails don’t cut it. Get out there and meet new members of the team turning home. If you are relying on new agents to determine the ARV of your property, you want to meet them and get to know you.
Meet them face-to-face, like Covey, and establish a “win-win” relationship.
Best of all, if you know, like, and understand your clients, people will naturally do a better job. If your team members know you and understand who you are, they will naturally make extra effort and do the best possible job.
Do your own due diligence
The best scenario is to work with a professional agent to effectively communicate your plans and receive what appears to be an accurate ARV. Remember that you are the captain of a ship that flips through your home and is responsible for sailing towards the horizon or sinking into the harbor. Your job is really just getting started when you receive a comparative market analysis from an agent.
Other Covey-like tips on ARV
To ensure that the ARV provided by the agent is accurate, consider the following:
Get a second or third opinion
Find another agent or broker and ask what they think. Then find another agent and listen to their thoughts. If this is the first flip, consider finding another flip. No sufficient precautions can be taken here when deciding on an ARV.
Get a paid appraisal
Consider hiring a professional appraiser to evaluate the property. Yes, this is another cost you pay from your earnings. However, the cost of the assessment is much less than measuring all predictions from an inaccurate ARV.
Do your own research
The Internet can be a great resource for reassessing values after repairs. It is never recommended to measure the final ARV from the information obtained through the internet. However, this is a good tool for double checking.
More importantly, you should pull out a map of the area, create a list of questions, and see one-on-one with the agent. Find properties for sale that were not included in the comparative market analysis. Ask them why they didn’t include them. Look for something that might reduce the value of your ARV and ask your agent about it.
Stephen Coby House Flipping Conclusion
If you don’t have the proper ARV, or if you think the broker is inflating the ARV just to get the business, consider using another broker. Many home flippers sell their homes. It may seem like a good thing when you first start flipping the house. I don’t. I would rather hire an expert to help me with my flip so that I can move on to the next flip.
It’s important to note that a thorough analysis and investigation of ARV with a purpose in mind can prepare you for success and withstand many of the ultimate problems and cost overruns that may arise. is. You can survive the storm by nailing the ARV.
And if you start with the end in mind and use the tips above, you will be on your way to a career that turns a very successful home with good profits.
What do you think? Is ARV really the most important number in house flipping? Was Steven Covey a great house flipper? Please leave a comment below and let us know what you think.
Photo: Mr. T of DC