10 Items For Your Real Estate Tool Belt
To learn How To Buy And Flip Houses, you must first know the essential tools of the business.
House flipping, and real estate in general, can often be a complicated task. There are a great number of variables that can change after you purchase a house, and from property to property. Moreover, flipping can be an incredibly quick process, and one mistake can send all of your profit down the toilet.
If you want to know how to buy and flip houses, it is important that you have some vital resources in your back pocket that you can always fall back on. You’ll never know when you might need some extra help.
Knowing the right people and having the right instruments can often make the entire process run smoother and bail you out if you are in trouble.
The Tool Belt List
Below is a list of the most critical tools that you should always have available when flipping real estate.
1. A Good Real Estate Broker
Not every house flipper uses a real estate broker, but it’s a safe bet that they all know one. It’s always good to have a broker, who knows the area and is familiar with the market, in your phonebook just in case. Brokers can help you with things like determining an accurate ARV, or “after repair value”, of a property. They also can help you find and sell houses if you need some help.
2. A Calculator
Real estate is largely a game of numbers. An error calculating you MAO, or “maximum allowable offer”, could result in a heavy profit loss. You will need to get a potential property inspected and determine exactly what needs to be renovated and how much it will cost.
Other expenses that will need to be factored in are things like loans, and the cost of maintenance, taxes, insurance, and utilities. If you are a wholesaler, you will need to factor in your wholesaler’s fee to see, not only if it is a profitable purchase for you, but also if it will profit the investor you will end up selling to.
3. A Checkbook
While sometimes you will have no other option but to use loans, if possible, you should try to deal in cash. Whether it is your own money, or the money of a partner or private investor, cash is always the way to go.
If your purchase offer is in cash, you will appear as a more serious buyer than someone paying through finance. This is even more of a factor when buying from a bank in an REO sale or with the probate court when buying a property from a deceased person.
The “Multiple Listing Service”, or MLS, is a great way to find a house to flip. Some of the properties on this service are posted before being listed via normal real estate advertising in newspapers and online.
The properties on this database were originally meant for real estate brokers only, however, in recent times they have become more available to the public. The average person can view most listings, but to get all of the information, you’ll have to get a licensed broker to lend a hand.
5. Bandit Signs
If you want to get the word out that you are interested in buying properties or selling a particular house, you might want to consider using bandit signs.
You can hang these signs on lamp posts, telephone poles, street signs or even trees, as well as planting them in the yard of the property you are trying to sell.
Bandit signs often get a bad rap because some towns have laws against their usage. Just make sure you check the legality of what you are doing in the particular town you are hanging them before taking any action.
6. An Attorney
This might seem like a no-brainer, but many new house flippers do not get in touch with an attorney until they are already in trouble.
House flipping is a business full of strict protocol and legalities. To make sure you don’t accidently break any laws, make sure you have an attorney on payroll and as part of your team. They can help you with things like getting the right permits or subdividing a property.
7. A Few Friends In Real Estate
Some people approach real estate with a dog-eat-dog mentality, where the other agents and investors are the enemy. However, in reality, you won’t get very far trying to tackle house flipping on your own.
Try networking and making some friends who can help you out and give you advice. REIA meetings are great places to talk shop and exchange business cards with other people like you. These investors can help you find properties and give you insider information about the market in your area.
8. A Reliable Wholesaler
If you specialize in fix and flips, you’ll want to maximize the number of available properties that you can select from, so that you can find the right deal.
Luckily, the entire job of a wholesaler is to find properties for other people to renovate and profit off of. For a relatively small wholesaler’s fee, you can purchase a great property without having to do any of the work to find it.
9. An Ongoing Buyer’s List
Or, if you are a wholesaler, you’ll want an ongoing list of buyers that you can always refer to. These people are not looking to buy a home for themselves, but rather to invest in as a fix and flip.
By having a list before you put a property under contract, you’ll never have to worry about rushing around to find one before the deal closes.
Real estate is a fast paced, juggernaut of a business. Because of this, you need to make sure that you don’t get carried away and make a mistake.
Sometimes, house flippers will get anxious because they are not finding a good property fast enough and buy a property that they will not profit from. If you ever feel this way, just relax and keep searching. You’ll find the right property eventually.