So it's 1pm on Monday and I have been making phone calls, checking the hotsheet, sending out emails and writing offers since 7am this morning whew!
I work mostly with investors who are "looking for a deal". This is my job - scouring the streets for the perfect distressed property that is priced low and with a little bit of work can make you a decent profit in a span of 3 months.
Here's the deal investors - The reality is that you are not the only genius who came up with this idea - we are dealing with tons of investors who are hungry for property. So let me tell you what it takes to make a deal go through to get the property you want and what you need to do to sell it as quickly as possible for the most amount of money.
- CASH!! Yes that's right if you want to compete with the rest of the pack you want to come in with cash every time. Removing the need for loan contingencies and the appraisal contingency. Let's face it cash has always been king. The last thing you need once you have purchased your desired property is to worry about the cost of borrowing money while you are flipping. This can add up if the rehab time takes longer than expected or the property does not sell as quickly once it has been flipped.
- Short inspection period or even better - no inspection!! Take it from me if you want your offer accepted by the bank then forget the idea that they are going to repair anything for you. View the property with your contractor the first time, look out for telltale signs that this property has major issues (i.e. foundation). Otherwise if you are familiar with these distressed properties you should know that there will be issues.
- Close in 14 days or less. With no loan contingency and no inspections this is an important item on the contract that will entice the bank to choose your offer. A quick all cash close = happy asset manager.
- Work with the right agent. Pick an agent who understands this market, who can comp out the area for you before you make the offer and will be able to help you know the resale value of this property once it has been flipped.
Ok, so you have purchased that P.O.S house that you know will be money once you have flipped it. So what is the next step? You have to find the perfect medium between spending the least amount of money to rehab this property and providing a home that buyers desire.
Here are the key items that will give your flip added value that will bring buyers to you.
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| How hard can it be to flip a house?? |
- Floors - Carpet is acceptable in the bedrooms - please, please choose good quality carpet - buyers notice this. When you choose cheap carpet you might as well put astro-turf down! Hardwood needs to be either re-finished or replaced. Beware of dark stain flooring - this is a major bitch to keep clean and buyers know this. If they didn't know before, they will when they come to the open house and see foot prints all over the place.
- Kitchen - New appliances are pretty standard these days. Make sure the cabinets are installed correctly. It's worth getting someone who knows how to do this - I have seen disastrous kitchens where some cabinets couldn't open because they overlapped with others and screws poking out. Ick!
- Bathrooms - New cabinetry, tile that shower and put a nice shower head on there! Resurface or replace the tub. Real tile on the floors give the illusion of luxury - people like nice bathrooms this is an important room.
- Paint - Be smart and go with a neutral colour scheme. Keep the inside fresh and light. Exterior should be earthy and fresh.
- Yard - Put some colour in the front yard and make this house look attractive. Anything you can do to clean it up and make it look presentable is key to your sale. Buyers will judge the outside. If it is in your budget put up a cute little picket fence - nothing says home like the white picket fence. This does add value!
- Windows & Doors- You can put in new windows & doors on a budget and it makes a big difference.
- I don't care what neighborhood you live in - I have been from Bel Air to South Central and everyone loves the good old indoor outdoor flow. Try to make this happen. It may be worth putting in a french door from your master bedroom or from the living room to the yard - this will add value. Trust me!
After all of this you definitely need the right agent to list your property, price it right, market it like crazy and bring you the right buyer. This is crucial to the deal. Forget hiring your cousin or your girlfriends mother just because they were the first ones in. Get a professional with a track record for selling these houses - and selling them fast.
I could add so much more to this but I have work to do. So please if you have more questions feel free to contact me - I am here to help.
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