Many people these days have dreams of becoming a real estate mogul, or millionaire. However a lot more of them fail than are successful. Why? Most just go out and try to start buying rough old houses with very little if any planning as to what they will do with them, and how they will get all the needed repairs done.
Therefore most of them are doomed right from the start and thus fail miserably within the first six months to a year. When possibly they could have made a go had they done proper planning.
I will give you a few very important house flipping methods that have helped me immensely when properly applied. We all hear a lot about what not to do when entering this business.
What I am going to try to do is enlighten you on just a few basic methods that should be followed in order to have your deals turn out a success rather than a big flop.
Do not be fooled these big flops in real estate are most definitely not cheap, some can be very expensive and costly lessons that you will never be able to forget. Even if you are able to forget it, your wife will probably remind you for years.
There are quite a few things that you must not pass up nor forget in order to avoid disaster. One of the first is be sure you prepare your list of what you plan on doing.
You must have your financing already in place before you start making offers. Before you make an offer on a house, you need to give serious consideration as to the repairs that need to be done. Write them down one by one. As you do this you will need to factor in the cost on each item. You should make a high and a low estimate for each item.
Now the next thing we must do while figuring costs, we need to make a good and complete budget of the number of dollars we are going to spend on the repairs.
If you are new to the business then it is recommended that you call one of the "home Inspection" places and have them do a thorough inspection of the house.
You must put every item and repair down on paper with an estimated cost for Materials and labor. Make certain you cover everything, or you could end up with a sad look from doing all that work and no money left for the pocket.
Leave no stones unturned when you make your list of stuff you are going to do. If you are going to establish a proper budget for your project then these are must do things.
You should already have funds available and waiting at the time you make the purchase. Most of your private lenders will escrow the repair funds and release the money to you as phases of the work are completed.
You will need to try and get as much as possible so you will be able to complete the project as quick as possible. OPM (other people money) is the best policy in most cases.
Most of these deals will take a lot of time to complete, and a lot of money. If you are an accomplished repairman in just about all phases of the rehab work then you should be able to save a lot of money on the repairs.
However you must be very careful and not get called in for lack of Permits. The law in most locales says that we can do most repairs on our own. You will still need to get contractor prices on all the repairs. You will quickly learn the ins and outs of the house repair business.
You also need to understand the profit on a house is not made after the purchase. You make the profit when you buy the house. If you cannot get enough profit into the deal in the beginning then get away from the deal and look elsewhere.
You need to determine the going prices of the houses in your neighborhood, and I do not mean the asking prices.
You should determine the selling prices of the houses sold within the past twelve months, and make special notes about prices of any identical model to the one you are considering purchasing. So you now have enough solid information to get involved with a couple projects.
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