Category: Fix-and-Flip

10 Most Import Items to Upgrade on Your Home

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If you have a home that you are considering fixing up so you can sell it for the best price but you don’t have a fortune to spend on upgrades, focus on the following 10 items to make the biggest impression on potential buyers:

  • New Front Door: It is always important to make a good first impression and the front door is the first thing people see when they come up to a house. Replace an old, plain slab door with a new raised panel with a window in it.  Paint it a color that complements the house but also adds a little character and stands out.
  • Tile Foyer Entry: The next item buyers see when they enter your home is the entry, so make it look like an entry by laying some tile or hardwood in the space allotted.  If you walk into a house that is carpeted right up to the front door, the entry disappears into the living room and doesn’t look as classy.
  • New or Improved Doors: Another inexpensive replacement that can make a big difference is replacing the interior doors.  If your doors are plain, flat slab doors, upgrade them to raised panel doors.  Purchase a whole new pre-hung door, jamb and casing to replace the old ones.  They will come pre-primed so they can be easily painted.  Be sure to pick a color that offsets the walls for a two-toned look.
  • New Door Handles: Along with your new doors, jamb and casing you should replace the hinges and door handles with a nickel satin finish to match today’s modern look.  You can buy inexpensive handles for about $12 each and make a big impression.
  • New Electrical Switch Plates: Other items that are overlooked include electric wall switch plates.  A lot of people will freshly paint their place but leave the old, worn-looking electric cover plates on or even paint over them, which is worse.  Spend 35 cents each and replace the cover plates throughout the house.
  • Paint/Replace Trim: Painting the house will make one of the biggest best impressions of all, but if your walls look pretty good already and you are on a budget, consider just painting the doors and trim.  You can pick a color that offsets the wall color, like white when the walls are grey or beige.  This will create a two-tone look which is much more appealing than everything painted the same color.
  • Paint Kitchen Cabinets: Replacing the kitchen cabinets is nice but also one of the most expensive rehabbing items you could do, so if you are limited on funds, consider simply painting the cabinets.  Since today’s popular look is white cabinets, you can paint over any cabinet finish with semi-gloss white and make your cabinets look new.
  • New Shower Curtains: Another easy, inexpensive upgrade is to replace your shower curtains with new, decorative curtains that match the colors of the home.
  • Add Window Shutters: You can also add window shutters to cover up old windows and avoid spending the money to replace them.
  • Add a Nice Mailbox:  Lastly, you can help your house stand out from the crowd by replacing the mailbox with a new one that has a little more character than every other mailbox on the street. You can also paint the old one to stand out and tie the color in with your new front door for some added street appeal.

Gypsy Real Estate Investing

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Gypsy Real Estate Investing

Gypsy real estate investing is a great way to build a strong rental portfolio. My wife and I started our real estate investing this way by accident. We had a house built and had lived in it for a few years when we decided to move. I had just finished real estate school and received my realtor’s license. While attending real estate school, I met a mortgage broker who introduced me to real estate investing. I decided to research lease options and liked what I found, so I decided to give it a try. We decided to move and do a lease option on our house instead of selling it. After we moved, we acquired a couple of other properties that we lease optioned also. During this time, we kept looking for another great deal on a house for us to live in. When we found one we wanted to buy, we moved and lease optioned the one we had been living in instead of selling it.

The strategy is to find a great deal on a house to live in that gives you a better interest rate and smaller down payment. Live in the house long enough to find another great deal on a new house that you can move into, and then rent out the house you move out of. You can buy ready-to-move-in properties, or you can buy properties that need a little work. You can then work on fixing the house up while you are looking for another great deal.

One thing with this strategy that helped us be successful is to not be in a hurry to find the next deal. We were able to acquire other properties using creative terms in between each move, which helped.

Of all the properties that we have owned and rented out, or lease optioned, the ones we lived in before renting them out have brought us by far the largest returns. Obviously, you have to be okay with moving that often. But if you have a long-term plan, you can create a very profitable passive income using the gypsy method.

Rehabbing vs. Wholesaling

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Rehabbing vs. Wholesaling

Many first time real estate investors want to start rehabbing houses but are a little timid about risking their money before they know all the ins and outs of the fix and flip business. Some decide to wholesale first in order to get their feet wet without a large outlay of personal funds or the need to borrow money. This article is written to show new investors why wholesaling can be a viable alternative to rehabbing, as well as be just as profitable.

Yes, there is a lot of profit to be earned on a single fix and flip project compared to one wholesale deal, but one must remember that a typical fix and flip takes 4-6 months to complete, whereas a wholesale deal only takes 30 days. If you look at the difference financially, a five month rehab project on a $200,000 home may make a profit of $25,000, but if a wholesaler assigns one property a month and makes $5,000 per assignment, he or she will also make $25,000 in the same five months. The difference being that the fix and flip project will take an investment of $200,000 tied up for five months, and the wholesaling business only requires a $500 earnest money deposit that is returned at the end of each month.

Another difference is that with a fix and flip, an investor spends the same amount of time making offers on properties with motivated sellers. However, once he has a property under contract, he has to close on it with cash, organize and spearhead the entire rehab process, and then market and sell the property to a retail buyer. Depending on how well he or she designs the rehab, stays in budget and is able to sell the home while the demand is still relatively high will determine whether or not he makes a profit on the project. Whereas, the wholesaler will make a guaranteed profit on each assignment and even if he or she analyzes the rehab poorly or pulls unrealistic comps, the worst scenario is the investor terminates the contract and starts over with no loss of money.

In conclusion, when you are just starting out as a real estate investor, whether you have money to invest or not, wholesaling can be a lucrative way to begin and continue making money in the real estate business.

Doing a Fix-and-Flip Remotely

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Doing a Fix-and-Flip Remotely

All over the United States investors are working in markets that are very hot and favor the seller. Like all cycles, this one will eventually swing back in favor of the buyer. However, some markets currently have more properties that will give you the opportunity to make money now.

 

Let’s name a few places that properties are more abundant than where we may live. In no particular order there is Atlanta, Indianapolis, Detroit and Columbus, Ohio. All these cities offer reasonable prices and a nice inventory of homes. But, if we do not live in these cities, how do we pursue opportunities to make money doing a fix and flip in these remote cities?

 

The key is to start with finding a good agent. You need to communicate to your agent exactly what you are looking for in a property. Ask them the following questions:

 

– What price could you expect to sell the property for when the rehab is finished?

– Do you know contractors who can do this type of work?

– Have you ever invested and done this type of rehab project?

– Would you be willing to give updates on the work?

– What suggestions can you give me?

 

The project is going to be done long distance. It can be done successfully, but you must manage your contractors so that you finish on time and within budget. “Carrots” can be given to your agent to help you get your rehab project done. Not only will your agent make a commission on helping you buy the house, they will also make a commission on selling the house when the work is done. In exchange for going by and seeing the progress of the work, your agent will have the listing posted when the house is ready for resale.

 

When looking for a contractor, remember that you make money by staying on budget and on time. Put the scope of work in writing. Hold tight to budgets and deadlines. If it can fit in your budget, give the contractor, in writing, a bonus if things are on time and on or under budget. In your contract have a penalty for being over time or over budget. If you are going to do well, you need to have this phase of the work tightly under control.

 

If it is within budget, fly to the city your property is in. If it is not within budget, have the agent and the contractor send you photos. Keeping yourself involved is the best way to be on top of your projects. It demonstrates that you are on top of things and that you hold others to their commitments.

 

Your agent’s input can be valuable. Ask your agent if he or she has ever done a rehab project. Try to have your agent give some input into contractors. Being local, your agent has more than likely dealt with contractors. Your agent’s input can be very important, especially as they inform you on the progress of the property with photos and verbal reports. Get your agent on board with the idea that there is money to be made in this project for them as well as you. It may be helpful to have a bonus for the agent if things come in on time and under budget, keeping in mind the goal is to make a profit.

 

Success will come if the investor does his or her homework. Though it is remote investing, he or she will do all the same due diligence remotely that they would do in their own backyard. Buy at the correct price, stick to the rehab budget and schedule and sell at a profit.

 

You can do this. Best of luck to you!