fliprent

Happy 4Th of July to my readers and fellow investors.  If you’re not an investor yet, get out there and buy your first property.  You won’t get another buyers market like this one again.  Enjoy the fireworks!

Today while I was in Home Depot returning a pressure washer, another gentlemen thought that he recognized me.   He asked if I was a member of the local REIA.  I replied that I attend meetings but that I had not attended an event at that particular group.  He was sure that he knew me.  He said he forgets names all the time but he never forgets a face.  I thought to myself why do so many people say that.  Are there really that many people that never forget a face?  Do they honestly believe this or is it just something they say because it sounds cool?  I know that I forget faces, and names for that matter , especially from childhood. 

I’ve decided that one of my goals is to work on remembering faces and names.  I always feel a little guilty when someone recognizes or remembers my name and I don’t remember theirs.  Ehow.com has an article that gives pointers on how to remember names and faces.  The article mentions saying the name several times in your head and of course paying attention when someone tells you their name.  It also mentions writing the name down while picturing the face but who has time for that.  Anyway most of these pointers seem like pretty good advice so I think I’ll try them out.  This is something that I always try to do when introduced during a business meeting and believe it or not it impresses people.  

Like lead based paint, many older homes have asbestos.  Asbestos was used as an insulator and mostly found wrapped around duct-work, plumbing lines and other pipes, floor tile, attics, roofing, etc.  If exposed and inhaled over a long period of time, it can severely damage human lungs. Asbestos can also cause other problems such as warts, plaques, and asbestosis.  Although it has been banned in many other countries, the Unites States still allows its use in new construction.

Removal 

Asbestos should be handled and removed by professionals.  It can be encapsulated so that the tiny fibers will not escape into the air.  It should not be vacuumed as the fibers are too small for the vacuum.   The EPA website is a good resource on what to do when you think you have exposed this material.  There you can find a local asbestos mitigation service.

Lead based paint  is commonly found in houses that were built prior to 1978.  Most areas of the country now require a lead certificate or approval before the home can be rented or sold after being remodeled.  Lead based paint is considered toxic and should always be removed by a professional.  It is typically disposed of at toxic waste sites or in some cases landfills.  

Lead paint should not be vacuumed, burned or sanded.  Any of these methods either release lead particles or lead smoke into the air which causes more problems.  Chipped lead based paint is commonly found in areas such as windows sills, floors, base boards and moldings where it can be eaten by young children.  If you believe there is lead paint in your house flip or remodel be sure to call a local lead mitigation service.  You can find them on the Environmental Protection Agency website.   Be sure to check out more house flipping tips by clicking on the House Flipping Tips category. 

As a house flipper, you should be constantly looking for ways to raise money.  Friends, family and associates can be a great avenue to get started.  However, you will want to be careful on the amount and the terms used for the money you receive.  Lets say your grandfather wants to help you get started in your house flipping business.  He offers to give you money for this duplex that you just got under contract.  This doesn’t mean that he can just write you a check for any amount and of you go.  Uncle Sam may want his cut. 

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I’m sure this is only the beginning of a painful process but I finally received a letter from the city that they would like to acquire my interest in the Hopkins area project.  I have no idea why it took so long but at least I now know for sure that they intend to acquire it.  During my research, I read that I was supposed to receive a certified letter from the city prior to an appraiser contacting me.   I assume an appraisal will be the next item on the agenda.  Just to add to the confusion it appears that the post office either lost the letter, delivered it to the wrong address or something else happened.  The letter was dated back in May but the first delivery notice that I received was today.  The funny thing is that someone was here but the doorbell never rang.  I don’t think that the mailman even bothered getting out of his truck.  Can anyone just do their job? 

I am not sure what’s going to happen from here but I’m hoping that they will compensate me fairly for all the money and effort that I have put into this property not to mention how poorly this situation was handled from the beginning.  In one hand I have a bank that gave me a time limit to complete the rehab.  In another hand the city telling me that I must complete the rehab according to the vacant property violation.  A third hand the corporation representing the city trying to keep me from rehabbing the property.  Meanwhile Im paying monthly a monthly mortgage,  contractors to pay, insurance to pay, etc, etc etc.  What a mess!!  This all could have been avoided before I acquired it but that’s a story for another post.  Is there a such thing as ethics in politics and government?  Maybe in the end they will fix this mess and I can move on. 

The Housing Choice Voucher Program (once called section eight) was put in place by HUD for low income families to rent property.  Many landlords choose this program for one reason…guaranteed rent every month on time.  Unfortunately, it’s not always that simple.  In some areas the tenant uses 30 percent of their income towards housing when enrolled in the program.  For example, if the tenant makes $25,000 per year they are required to pay $625 of the monthly rent.  If your rent is $900/month then the program only subsidizes $225/month.  The $225 is the only portion that is guaranteed by the government.   The rest must be collected from the tenant and there are no guarantees.   This is a common misconception of the section 8 program.  However, there are no guarantees at all when renting to anyone else.   If you have been a landlord for a while, you have experienced this first hand.

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As we all should know by now real estate is local.  Even in the midst of this bubble/crash or whatever they are calling it these days, there are still hot markets around the country.   Thanks to the military, some area markets are drawing tens of thousands of new residents and in turn real estate investments.  Why thanks the military you ask?  Well if you haven’t heard about the defense base realignments and BRAC, I suggest that you look it up.

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Real estate tax sales are another avenue to acquire investment property.  They can require some research and comfort with having your hard earned dollars unavailable to you for a period of up to two years in some cases.  The good news is that the rules usually require the original owner to pay the lien holder interest if they are able to redeem the property.  In some areas the interest can be up to 24%!!  That’s what I call a great savings account.  In fact many investors use them for just that. 

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The best way to save a few bucks on your house flips is to do some of the work yourself.  Of course most of us are not qualified which is why we pay people in the first place.  One area that does not require special skills is demolition.  You might think to yourself “This is a no brainer”, but be careful.   There can be a few hidden problems with demolition.  Besides the obvious back breaking work of slinging a sledge hammer and rolling out the trash to the dumpster, there are also potential hazards.

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