It seems that everyone wants to be in the flip business and reap great rewards! However, it is not as easy as one might think. I have done 100’s of flips and know that while flipping can be fun and produce great profits, if not done right it can lead to financial ruin.
Below are a few things that should be considered before launching into the flipping business. 1) Money. For example: In the Phoenix market an investor will need around $50K liquid in order to play. With the program Rooftop Investment is now offering, our private lender will look for 20-30% down and sometimes fix-up costs. So with the average price of homes selling between $150K-$200K, $50K should get you in.
2). Know the market. What types of homes are selling and where? The goal of flipping is to be able to sell in the end. If homes are not selling in a particular area, do not buy there. What the values are in that subdivision? For example, be sure to only use only “like” homes for comparables. Are the sold homes auction, REO’s, short sales, or retail sales? This is important to know to determine true value.
3). Construction cost. This can make or break an investor. This cost should be known before the inspection period is over. In the case of an auction property, an inspection period is not available. So the investor must know the costs before purchase. As a rule of thumb, this cost should be based on the “spread”. For example: if the investor has a $50K equity position, the construction costs should be somewhere between 15k-20K.
4). Closing cost. Closing costs are often over looked. The investor can get this cost from any Realtor. Realtors have a program that calculates the closing cost. All commissions and interest payments (if needed) should be included. Also, remember, investors are entitled to a discount. This will can save the investor $100’s.
--
Brett young
Valley Realty
Owner/ CEO Roof Top Investment
Real Estate Investment
http://www.rooftopprofitmax.com/
No comments:
Post a Comment