The 70% Rule...it seems like everyone gets confused by this one when flipping houses...
Whether its people I meet at local meetups, Boot Camp attendees or people at local REIA meetings, they get confused all the time.
This "slightly older" video of yours truly, explains it:
For the past 1.5 years I have been sharing videos of my house flips as part of our Education packages. Today I would like to show you some of these videos, and in particular, provide you with an inside look at a house I successfully flipped in Hanover, Massachusetts.
This Massachusetts flip was unique because we found the deal through social media. The floor plan we chose was also quite creative and the way we managed contractors was new but worked. I'll explain the details below.
At one time or another, every real estate investor has broken at least one house flipping rule. Unfortunately, breaking any rules for house flipping has never made a deal go as smoothly as expected.
There are tons of rules that can real estate investors break including using eraser math, not adhering to the 70% rule or being dishonest.
We advise that you do not break any rules but the 70% rule can be broken under special circumstances.
Ever wonder what to actually say to a would be investor when you're raising money for your flips?
At our most recent HFS Bootcamp, Mike gives you the exact words and approach to use when talking to new investors about how to raise money for your next flip.
Please note: never ever ever ask for money. Use this approach instead talking about returns but no promises of return.
Most real estate investors know that working with wholesalers can be a great source of potential deals. Wholesalers have been known to be a great source of very lucrative deals.
Unfortunately, working with wholesales is not a walk in the park. You have to work it if you want to find killer deals. As you work with wholesalers, you will soon realize that how you deal with one wholesaler isn’t necessarily the way you deal with another.
These are seasoned real estate wholesalers who have been wholesaling for a long time and are seasoned real estate investors. Their primary business is wholesaling real estate and sometimes they dabble in other deals.
It’s important that you build a solid relationship with career wholesalers because they could be an excellent source of deals for you. These types of wholesalers are well financed and usually take the best deals for themselves. The bad news is that these types of wholesales are a little challenging to work with.
This type of wholesales are either looking to get their Continue reading
If you have done any kind of real estate investing, you must have at one point considered using a contractor and as such, you probably know that trying to manage a contractor is not an easy task.
Unfortunately, contractors do not have a very good reputation. Most real estate investors consider them difficult to work with, irritable, pugnacious, irrational and volatile. The good thing is that they are very good at what they do and this is what makes them worth the trouble.
There are a few things that can help you manage your contractor and make a profit.
To avoid dragging your house flipping projects, ensure that you Continue reading
When we go shopping, we always want to know how much something costs. So I’m not surprised when the biggest question that I receive is “what would be my house flipping financing costs?”
It’s impossible to put an exact figure on the cost of flipping a house. House flipping comes with so many variables so it’s hard to tell how much it would cost. It can cost you anything from hundreds of dollars to thousands of dollars depending on your market, rehab costs and plenty more factors.
First, you need to know how much the property will be worth when you are done rehabbing. Once you know the value, all other costs that come with the rehab will start to make sense. This is what is known as the ARV or the After Repair Value.
The best way to get an estimate of the ARV is to compare prices of similar properties in the same area of your target market in the past three months. Get a local realtor to help you determine the ARV faster or alternatively, you can do the research yourself by visiting websites such as Realtor.com.
Keep in mind the following things when determining ARV:
The amount of money you will spend on rehab will depend on Continue reading
There has been a lot of speculation about house flipping-- foreclosure flipping, to be specific. Is foreclosure flipping dead?
Well, many people have their reasons as to why the number of foreclosures are on the decline, but the truth is; foreclosure is fading for a number of reasons many people haven't thought of.
Of course, the promising economic data and the raw figures of new foreclosures may have drove foreclosure flipping to its end, but there’s a new player in town that’s killing it even more—the hedge fund. How?
Hedge funds are experimenting with Continue reading
Becoming a reliable house flipper is all about being honest and distinguishing yourself from unscrupulous people in the business.
Many people have a negative attitude towards fix and flip specialists. The negativity comes from different sources including clients, banks and even government. I had some reservations when I was starting my house flipping website. I handle other aspects of real estate as well but I did not want to present myself as a fix and flip professional. This is because of the bad rapport that is normally associated with this business.
To be completely honest, there are a number of reasons why house flipping has received so much criticism. One of those reasons is the large group of unscrupulous people in this business. These are people who look to make great profits through dishonest methods and by scamming investors. They buy property in bad state and do nothing in terms of repairs. Therefore, they do not improve the value of the property. They then flip it to an unsuspecting buyer.
On the other hand, some house flippers buy Continue reading
What exactly do you need to do while starting a house flipping business? How do you even flip houses like an expert?
Well, if you’re just starting to flip houses, then you have a lot to learn. And part of what you need to learn is how to manage a real estate team. For one, a real estate team will actually condense your learning curve; secondly, it will help you to go through tough times smoothly; and lastly, a team will protect you from all the major pitfalls that a great majority of house flipping investors experience.
Many investors who get into house flipping business are generally misled by a common notion: house flipping is a solitary process. But the truth is; profitable house flipping is totally dependent on the house flipping team you have.
In fact, establishing a good house flipping team comes as the second most important step of starting a successful house flipping business—first is the real estate mind set. That said, here are the most important recruits of a formidable house flipping team:
The first recruit on your team should be an experienced real estate lawyer that you implicitly trust. That’s not to say that you need one to help you get out of a jury summon. But somewhat, you need one to keep you on the right side of real estate laws.
Many house flippers make a grievous mistake by Continue reading