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7 Simple Tips For Flipping Real Estate
Unless you've been living under a rock for the past few years,
you've probably either dabbled in real estate yourself, or at
the very least, know someone who has. So, how does someone
that's brand new to real estate start flipping homes? (And let's
clear the air right now... IT IS NOT TOO LATE to start investing
in real estate).
Follow these 7 tips to start investing in real estate today:
1. Look In Your Own Backyard The grass is always greener
in the other neighborhood, and it's easy to keep looking for the
"right" area. The bottom line is that any area is the "right"
area. In order to be effective in the steps 2 through 7, you've
got to get over the idea that real estate deals only exist in
other areas. It sounds cliché, but there are plenty of deals in
your own backyard. Not to mention, it's easier to manage and
you're likely to know the values in and around your area.
2. Find the "Right" Property Not every piece of real
estate is a good investment - even if you can "steal" it! Make
sure you look at things like: * Property Location - Will you be
able to sell the property once you've renovated it? * Condition
- How much work- and what kind of work - needs to be done and is
it a project that you can afford to take on financially and from
a management perspective? * Seller's motivation - Is the seller
truly motivated enough to negotiate on price?
3. Have A Thorough Inspection Unless you've been
flipping real estate for a while or have a background in
construction, then it's a good idea to have a full home
inspection. It may cost you a few hundred dollars, but will
catch things that maybe you didn't know to look for. When
flipping real estate, it's the "little" things that add up very
quickly and can eat up your profits!
*** Bonus Tip*** Use a home inspection to help
renegotiate the purchase price OR ask for a credit toward
repairs.
4. Don't Get Emotional Real Estate is emotional by
nature. Investing in real estate cannot involve your emotions.
It's got to be all business. If the numbers don't work, move on
to the next. So many times, people are so desperate to flip
their first deal that they make bad decisions just to do
something at all. Then, they've become so attached to the deal
that they try to sell it for higher than the market will bear
and end up holding the property longer, reducing their profit
and getting left with a bad taste in their mouth. 5. Know
Your Numbers - All of Them! Late night infomercials will
hype you up with pipe dreams of flipping real estate for
millions of dollars in profits and no work. You've seen the
testimonials that go something like: "Mary Smith purchased this
property for $100,000. It cost $10,000 in repairs. She flipped
the property for $140,000 and made $30,000". Somewhere on the
screen, you see in teeny tiny print: Results Not Typical. Your
Results May Vary!
Of course results are not typical because those results assume
that you buy the property for all cash and pay no closing fees
and have no monthly costs. Be VERY cautious of deals that you
see that sound like that!
In the real world, costs associated with flipping real estate
are: * Purchase costs: Upfront mortgage fees, attorneys
fees, regular closings fees, title, survey, etc. * Carrying
costs: It's more than just the repairs! When you're
flipping real estate, you're likely paying higher interest rates
than on, let's say, a primary residence or second home. In
addition to the repairs, you've got to consider monthly
payments, taxes, insurance, utilities, etc. * Selling costs:
Again, you've got closing costs and possibly real estate
commissions to consider.
Whether you're flipping a real estate deal here and there or
you're looking to make real estate your new career, it's
important that you know - and figure - your costs into your
calculations. Keeping this in mind will help you keep from
getting emotional (See Tip 4)
6. Keep Track Of Your Progress You can't improve what you
can't measure! Throughout the entire project, you'll want to
constantly track your progress. This way, you'll know, at any
given time, where you stand on the deal. This will help keep you
focused by keeping the bottom line in front of you all the time.
7. Expect the Unexpected In virtually every single
property you flip, you will run across SOMETHING that you simply
didn't expect. Whether it's an issue that pops up 2 hours before
closing that needs to be handled or a big surprise when you peek
behind the drywall that you had to replace! You'll almost always
run at least a little over budget or hold it a little longer
than you anticipated. But at the end of the day, you'll have the
satisfaction of taken an ugly house and turned it around and
depositing a healthy check in your bank account.
About the author:
Heather Seitz makes it easy to get to the bottom line. Learn how
to evaluate a real estate deal in less than 15 minutes. Get your
FREE video on flipping real estate and uncover the top 5 secrets
that you need to know to double your profits on every single
deal. Get your free video and 5-part mini course at www.fixingandflipping.com">www.fixingandflipping.com">www.fixingandflipping.com
Heather Seitz
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