The Book on Flipping Houses: How to Buy, Rehab, and Resell Residential Properties

352 Pages·2013·1.51 MB·english

by  J. Scott

Copyright © 2013 by Lish Marketing, LLC. All Rights Reserved.
Published by BiggerPockets Publishing LLC, Denver, CO
This publication is protected under the U.S. Copyright Act of 1976 and all other
applicable international, federal, state and local laws, and all rights are reserved,
including resale rights: you are not allowed to reproduce, transmit or sell this
book in part or in full without the written permission of the publisher.
Limit of Liability: Please note that much of this publication is based on
personal experience and anecdotal evidence. Although the author and publisher
have made every reasonable attempt to achieve complete accuracy of the content
in this book, they make no representations or warranties with respect to the
accuracy or completeness of the contents of this book and specifically disclaim
any implied warranties of merchantability or fitness for a particular purpose.
Your particular circumstances may not be suited to the examples illustrated in
this book; in fact, it’s likely that they won’t be. You should use the information
in this book at your own risk.
Any trademarks, service marks, product names or named features are assumed to
be the property of their respective owners, and are used only for reference. There
is no implied endorsement if we use one of these terms.
Finally, use your head. Nothing in this book is intended to replace common
sense, legal, accounting, or professional advice, and only is meant to inform.
ISBN: 978-0-9889737-0-1
First Edition
To my amazing wifey, without whom I never would have had the
inspiration to embark on this crazy and wonderful journey. There’s
nobody I’d rather be doing this with.
Thank you from the bottom of my heart.
J Scott
Table of Contents
FOREWORD
INTRODUCTION
WHY DID I WRITE THIS BOOK?
20 STEPS TO YOUR FIRST REHAB
CHAPTER 1: FIRST CONCEPTS
WHAT IS HOUSE FLIPPING?
DOES FLIPPING STILL WORK IN TODAY’S MARKET?
HOW MUCH CAN I EARN FLIPPING HOUSES?
WHAT ABOUT TAXES?
ARE YOU A CONTRACTOR OR AN INVESTOR?
CONTROLLING YOUR DEALS
PART-TIME HOUSE FLIPPING
CHAPTER 2: GET YOUR FINANCING IN ORDER
FIRST, THE BAD NEWS
TYPES OF REAL ESTATE FINANCING
SUMMARY OF FINANCING OPTIONS
YOUR FINANCIAL RESUME
NO CASH? NO CREDIT? KNOW THIS!
SOME OTHER TIPS TO SUCCESSFUL BORROWING
WHAT ABOUT CREATIVE FINANCING?
CHAPTER 3: FIND YOUR REAL ESTATE AGENT
WHAT KIND OF AGENT DO YOU NEED?
BECOMING YOUR OWN AGENT
YOUR LICENSE AS A SECONDARY INCOME STREAM
CHAPTER 4: WHERE SHOULD YOU BUY?
DETERMINING YOUR FARM AREA
ANALYSING POTENTIAL MARKETS
MY FARM AREA
CHAPTER 5: WHAT SHOULD YOU BUY?
DISTRESSED PROPERTIES
RETAIL PROPERTIES
THE FORECLOSURE PROCESS
PROPERTY CRITERIA
LEVEL OF RENOVATION
CHAPTER 6: WHO SHOULD YOU BUY FROM?
PURCHASING FROM OWNERS WITH EQUITY
PURCHASING FROM ABSENTEE OWNERS W/EQUITY
PURCHASING FROM OWNERS WITHOUT EQUITY
PURCHASING BANKS OWNED FORECLOSURES (REO)
PURCHASING FORECLOSURES AT AUCTION (TRUSTEE SALES)
WHICH TYPE OF SELLER IS RIGHT FOR YOU?
CHAPTER 7: HOW WILL YOU FIND DEALS?
THE ACQUISITION / MARKETING GRID
THE MLS
ONLINE / AUCTIONS
DIRECT MARKETING
ADVERTISING
INTERNET MARKETING
BANDIT SIGNS
WHOLESALERS
ON-SITE (TRUSTEE SALES)
OTHER MARKETING TECHNIQUES
CHAPTER 8: THE FLIP FORMULA
THE FLIP FORMULA
DETERMINING SALES PRICE
CALCULATING FIXED COSTS
YOUR PROFIT
ESTIMATING REHAB COSTS
CHAPTER 9: LOOKING AT PROPERTIES
THE 100 HOUSE RULE
START LOOKING FOR DEALS
DECIDING WHETHER TO MAKE AN OFFER?
USING PRICE PER SQUARE FOOT TO PRE-EVALUATE
CHAPTER 10: MAKING OFFERS
STATE CONTRACT VS. CUSTOM CONTRACT
THE 5 BIG CONTRACT COMPONENTS
NEGOTIATING TIPS
CHAPTER 11: YOUR DUE DILIGENCE
A CAUTIONARY TALE
DUE DILIGENCE TASKS
RUN THE NUMBERS AGAIN
WHAT IF THE NUMBERS DON’T WORK?
PURCHASE CHECKLISTS
CHAPTER 12: CREATE YOUR SOW
WHAT IS A STATEMENT OF WORK (SOW)?
HOW MUCH (OR LITTLE) RENOVATION SHOULD I DO?
OVER-REHABBING
UNDER-REHABBING
THE 25 RENOVATION COMPONENTS
SCOPE OF WORK: THE DEMO HOUSE
CHAPTER 13: CREATE YOUR BUDGET
BUILDING OUR BUDGET
BUDGET: THE DEMO HOUSE
CHAPTER 14: CREATE YOUR SCHEDULE
SCHEDULING COMPONENTS
SCHEDULING RULES OF THUMB
SCHEDULE: THE DEMO HOUSE
CHAPTER 15: HIRING CONTRACTORS
THE SPECTRUM OF CONTRACTORS
THE VALUE OF A GREAT HANDYMAN
CREATING YOUR REHAB TEAM
FINDING YOUR CONTRACTORS
YOUR CONTRACTOR PAPERWORK
EMPLOYEE OR INDEPENDENT CONTRACTOR?
CHAPTER 16: MANAGING YOUR REHAB
CHAPTER 17: AGENT OR FSBO?
THE VALUE OF A GOOD AGENT
WHEN TO CONSIDER “FOR SALE BY OWNER”
WHAT ABOUT FLAT FEE LISTINGS?
CHAPTER 18: STAGING
DECIDING WHETHER TO BUY OR RENT FURNITURE
TOP 16 STAGING TIPS
CHAPTER 19: BUYER DUE DILIGENCE
PREPARING FOR THE BUYER INSPECTION
DEALING WITH INSPECTION ISSUES
HANDLING APPRAISALS
BEWARE OF BUYER FINANCING TRAPS
CHAPTER 20: THE CLOSING
THE CLOSING PROCESS
10 TIPS TO IMPROVE YOUR CLOSING SUCCESS
ABOUT THE AUTHOR