What To Look For In A Fixer-Upper
Buying fixer-uppers has been a common investment technique for many years. These days, with millions of foreclosed homes available at bargain basement prices, fixer-uppers can be an excellent choice for buyers who are shopping for a home to live in, as well as for real estate investors.
Fixer-uppers are properties in need of repairs. They may be liveable in their present condition, or they may need quite a bit of work before they can be occupied, but in either case, there are some very important considerations when choosing the right property to help insure that you can achieve your personal objectives.
1. The Location
It used to be pretty rare to find a fixer-upper in a nice neighborhood, but the housing crisis has changed that. Today, fixer-upper properties are readily available in many of the nicer neighborhoods, especially in those states that have been hit hardest by high rates of foreclosure.
Don’t be impatient. Look around your chosen area carefully before making a final choice. It’s very important to be familiar with the local market. Choosing the right location will result in better property appreciation, and more demand when you are ready to sell, or better tenants and higher rental rates.
Avoid locations that have too many vacant properties, locations that have too many other investors in the area, or are places that you would not want to live yourself. Investor over-crowding tends to increase your competition and will therefore reduce your profits.
2. Know The True Market Value.
A property is not always a good deal just because it is a fixer-upper. Don’t let anyone sway your judgement about a property simply because it’s a fixer-upper. Just because a home has been foreclosed on does not automatically mean it is a good deal. Good deals are made through knowing what the true market value is, then negotiating a price that is as far below the true market value as possible.
3. Find A Fixer-Upper Project That You Can Handle.
Whether you are planning to live in the property, fix it up to sell or fix it up to use as a rental property, the most common mistake is that of taking on a project that is beyond your ability to handle.
I’ve done dozens of fixer-upper projects, including managing them for other investors. The biggest problem I’ve seen consistently is investors who take on projects that are bigger than they can handle. This leads to cost over-runs, projects that take too much time, and even running out of money and another foreclosure. I’ve seen numerous projects that were never finished after the buyer got over budget and ran out of money.
It’s easy to rationalize a project before you start, and inexperienced investors often believe that they can renovate an entire house in 4 weeks, working only on weekends in their spare time. That is a common mistake.
One biggie I suggest is to avoid any fixer-upper that needs walls moved in order to be functional. Moving walls and things like staircases can create unexpected problems unless you are planning to use a contractor who has adequate experience and a crew that can get the work done correctly. I’ve seen projects that began well and got totally out of hand and over budget after the investor decided to make extensive changes to the original floor plan.
If you choose a fixer-upper property in a desirable location, keep your rehab budget and necessary work within your ability to control, and you have a good renovation plan that you can stick with, you should find yourself owning a great property at a below market price. That means you’ll have some positive equity or a positive cash flow right from the start. And after all, that’s the main reason why you should consider buying a fixer-upper.
Common Methods to Deal With Wholesaling Real Estate
Wholesaling Real Estate is regarded as a no risk strategy that may get huge benefits for first-time investors and also old-timers who had long been in the field of property investing. It takes little or no financial risk and that’s the reason why it is popular with most investors. There are a few ways about how you can get started with wholesaling: look for handles lots of equity, locking up the deals and lastly finding the investors who’d be interested to buy the deal.
Here are a few of the common methods to deal with the challenges in finding deals with high equity.
Search for sellers in classified ads or Craigslist. If you’ve a tight budget and wants to try wholesaling real estate this is one of the best means for newbies investors. You can get leads there for free. There may not be a lot of good leads but you will soon discover some that are worthwhile like those who advertise that they’re in pre-foreclosure.
One other approach to market where you’ll not need to spend anything is to put a road sign like “We Buy Houses” and add your contact number in some high traffic intersections in your area. By doing this you will be able to target certain areas for some small investment. The only setback with wholesaling real estate method is that other municipalities restrict road signs so you need to ask around or do your research first before you place your road signs.
But here is one most targeted practice of marketing when flipping houses and that is through mail or flyer campaigns. Flyers are considered an ideal option since you can do these with a limited budget. Just print out some flyers announcing that you are a cash home buyer with your contact details. Then look for the prospective area that you’d like to distribute your flyers to.
But if you’ve enough budget, you may try mailings to targeted homes in area you wish to acquire. There are also companies out there that may help do this for you at an affordable price. At the same time assist you in finding motivated sellers like those in foreclosure.
After you have good leads coming into your wholesaling real estate pipeline, the next thing you need to do is get them under contract to buy. Try and see if you can get yourself a season investor or an attorney in your area to have a contract that would work well for you. It’s crucial that you ensure that you have the right to assign the contract before closing. In some other states, you’ll have the right unless the agreement states that you cannot assign the agreement and the term where buyer has the right to assign agreement can be added. So that you can then start marketing it to buyer’s list when you get the deal under contract.
Home Selling – FSBO – The #1 Secret to Thousands of Dollars of Free Advertising to Sell Your Home
Thousands of home sellers are already taking advantage of free internet advertising to find buyers for their properties. You should do this also to maximize the number of people who view your home’s online listing.
There are too many ways to get free advertising on the internet to discuss them all in one article. Also, there are just as many ways to get advertising that are not free but are very inexpensive.
The thing to keep in mind is that even free ads have a cost: the cost of the time it takes to post advertisements. This will be either your time or the time of someone you hire for the job.
The #1 way to receive the most traffic viewing your home’s website is to list your home in Craigslist.
Free Classifieds
There are hundreds of free classified ad sites online. You can get a lot of traffic to your home-for-sale website by posting ads on just the top ones, however.
The number one free classified site in the world is Craigslist, which has local pages in every major and mid-size city. If you choose just one free classified site to advertise your home for sale, this is the one.
By doing a FSBO sale you have an advantage on Craigslist since they do not like their free service to be used too much by commercial organizations like realty companies. Put in your ad that is is “for sale by owner” and it will be very well received.
How to Create a Home Listing on Craigslist
There is something of an art to this, so you want to seek out help or advice. You must first create your Craigslist account and give what they want. Then you simply write a compelling description just like you would for any other real estate listing. Stress the positive but don’t use extreme language. Just the facts, please.
You can upload four free photographs to your Craigslist home listing, so be sure to do that and pick four great ones.
You will need to post a new ad every two days to keep it fresh. This will get you the most traffic.
My experience tells me that free Craigslist ads, when combined with other internet marketing techniques, can yield a large number of interested buyers for your home-for-sale website. Be sure to make it part of our Total Web Marketing Strategy.
If you want to sell real estate fast then you should learn the power of video in making home sales.
Pricing Your Wholesale Deals
As you know Real Estate Wholesaling is one of the easiest, fastest profitable niches in Real Estate investing. But you must know how to price your properties in order to sell them quickly. You will see a lot of experienced wholesalers will post checks of making 10, 20k, even as much as 30k a wholesale deal. But for most volume based wholesalers there checks might be as little as 2-3k but they will get 8-10 of those checks a month.
Now with the foreclosure market selling properties as low as 30-60% market value. This allows room for markup when flipping properties. If your selling your properties to a retail buyer your profits will be larger. Now when pricing your deals you should always price a little higher. There’s always room for negotiation so buyers will low ball you. But if you have your properties priced a little higher, you will probably get the price your were expecting to get. Now after shopping it around for a few weeks, if you find yourself not getting the price your expecting, reduce the price and start to re-shop the deal.
I’ve seen other investors mark there deals up only 2k, to than have end buyers say they would only pay the price under what the investor has it under contract for. It’s best to come up with a system of what’s the lowest you would take on each deal. For instance you can say you won’t take lower than 3k on a deal, or either a certain percentage
Top 10 Tips for Flipping a House
Buying, renovating and selling a house for profit, known as house flipping, is the latest buzzword in real estate. There is no magical formula to ensure success at flipping houses. However, there are essential tips to help investors earn more money.
1. Do not get emotional about house flipping. It is after all a business. If the numbers do not work, proceed to the next property. Some investors commit the mistake of being too attached to the flip that they sell at a high price and end up holding the flip longer thus reducing profit.
2. First impressions count. Pay attention not just to the inside of the house but the outside as well. You cannot show off all the upgrades done inside the house if potential buyers are turned off by the outside appearance of the house and its surroundings.
3. Personal tastes are a no-no in a flipped property. Your flip needs to be attractive to buyers, not you. You should define who your target buyer is and what is his/her preferences. Color is a vital part of flipping houses. Stick to neutral colors especially when it comes to painting and laying the carpet.
4. Spruce up the kitchens and the bathrooms. They will noticeably increase the price of a house. But be sure that fixtures and appliances match the target price range. If the kitchen and bathrooms look clean, sleek and updated, the house will sell faster and for a higher profit.
5. In house flipping, time is money. After making a detailed list of renovations to be done, come up with a timeline. A timeline is an important way to let contractors know when the next group of workers needs to be in a specific part of the house. One rule of thumb is to work from top to bottom and tackle the big work projects first.
6. Hire a good contractor. You cannot be at the job site all the time. This is where the contractor comes in handy. He can keep a close watch on your time line and also the part of the budget that is his responsibility. He can keep track of problems and readily find solutions. The easiest way to find a good contractor is through referrals.
7. Be ready for paperwork. There are loads of paperwork that accompany house flipping. The most important paperwork you will have to attend to are permits. It takes time to obtain permits so you need to apply for them before work begins. Not having the necessary permits can cause work stoppage and this cost money. Contracts and receipts are doubly important. Be sure to keep them. You also need to obtain insurance coverage not only on the property but the workers as well.
8. Keep track of your progress. Throughout the entire house flipping process, you have to constantly monitor your progress. That way, you will know at any given time where you stand on the project. This will help you keep focused. Time is of the essence in house flipping.
9. Start small or simply, and then work your way up. Your first house flipping project should only entail cosmetic work. You may not get a huge return on your investment but you will surely learn valuable lessons and develop experience.
10. As with any business venture, expect the unexpected. You will certainly encounter something that you simply did not expect. It may be a problem that appears hours before the transfer of ownership. You will almost always run at least a little over budget or hold the flip a little longer than expected.
Where to Find Motivated and Distressed Sellers
by: Alex Pardo
Many different types of motivated sellers are looking to sell their properties outside the conventional real estate advertising cycle. These distressed sellers are absentee landlords, probate estates, divorce filers, those looking for new jobs or school districts and REO\’s or real estate owned properties, which is a property taken back by a lender, usually a bank during foreclosure. You can get instant REO leads with FreedomSoft.
Looking outside the conventional real estate advertising cycle such as signs, websites and classified ads, here are some ways you can find motivated sellers to include in your marketing.
Start searching the Internet. Many banks maintain online lists of foreclosed properties suck as Bank of America and Chase Mortgage. Some great websites that allow you to search by foreclosures are Realtor.com, Zillow.com and BuyBankHomes.com. BackPage.com and CraigsList.com are also great places to look for motivated sellers who are in pre-foreclosure, divorce, bankruptcy and probate.
Some lenders hire an asset management company to handle foreclosures on the lender\’s behalf. Wells Fargo uses Premiere Asset Services, subprime mortgage companies use HomeEq Servicing and Keystone Asset Management is a national agency that deals with defaults.
Search for government agencies such as Housing Urban Development, or HUD, and Fannie Mae for foreclosure homes and the Department of the Treasury for homes seized by the Internal Revenue Service.
While some experts agree that auction companies often get higher prices due to the auction frenzy created among its bidders, you can get lucky and find a real gem at one. Real Estate Disposition Corporation, J. P. King, United Country Auction Services, Williams & Williams and Bid 4 Assets are some auction houses to check out.
Foreclosure.com and Realty Trac are web-based foreclosure companies who charge a fee for providing you with a list of foreclosure properties. They reason that it takes time, trouble and expertise to locate and assemble accurate national foreclosure lists. You may find it is worth the fee to let these companies search for you.
One of the most effective ways to find wholesale deals is hiring a bird dog. Bird dogs can range from casual contacts, such as delivery drivers, mail carriers and service people, to professionals trained to scout for properties. Look for high school or college students who want to earn extra money or new investors trying to break into the business. Have your bird dog take photos of the front and back of the property and fill out a detailed form about the property, then pay them a referral fee or a per-lead fee.
Be aware that not all foreclosures are great bargains and you can run into unexpected and costly problems. If you are inexperienced at buying foreclosures, you may want to hire a real estate agent for guidance and assistance.
In addition to these creative ways to find distressed and motivated sellers, continue to use conventional real estate advertising such as direct mailings, bandit signs and newspaper ads. Attract them to contact you and build a rapport with them. Word of mouth is a great but underestimated marketing tool.
A consistent flow of motivated seller leads is probably the most important aspect of your real estate investing business success. FreedomSoft will automatically provide many instant sellers leads for you as well as capture and maintain leads you obtain on your own.
A consistent flow of motivated seller leads is an important aspect of your real estate investing business success.
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