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2008 February » fliprent
  • fliprent

  • How to buy HUD Foreclosures and flip them for profit.

28th February 2008

How to buy HUD Foreclosures and flip them for profit.

HUD foreclosed properties are available in most areas of the country. The Department of Housing and Urban Development (HUD) is a parent organization to the Federal Housing Administration or (FHA). The sales process is quite a bit different from county/city foreclosures or even purchasing a house from a home owner. This organization provides federal mortgage insurance to lenders, mostly for low to middle income borrowers. Lenders that foreclose on a home previously insured by the FHA, can file a claim for the remaining balance. Once the FHA refunds the lender the ownership will be transferred to HUD. HUD in turn auctions the home on the open market. Contrary to what many believe, investors are given the opportunity to bid on properties that are not purchased by potential owner occupants. Typically after the initial ten day period, investor’s bids are accepted. This is a good thing for house flippers, given that many home owners are not looking for a property that will require major repairs. You can even find multi-unit properties for sale on occasion. Other programs exist for non-profits, teachers, police officers, hurricane Katrina evacuees, firefighters, emergency medical technicians and other public service entities.

Read the rest of this entry »

posted in Financing, House Flipping, Mortgages, Property Acquisition | 0 Comments

27th February 2008

House Flipper - Be your own private investigator.

Good subcontractors are happy to give you the names of other contractors.  It’s a great way for them to get referrals.  If you find one that you can trust, he usually knows of others that he likes to work with.  Just today, my plumber gave me another framer and concrete guy that he often does work for.  Contractors run in the same circles and prefer working with someone they have experience with.  Flipping or rehabbing houses requires that plumbers, heating contractors and electricians communicate. Things like trunk lines, ductwork, and pathways need to be planned especially without a architectural diagram.  It can make your job a lot easier just finding one good contractor that will give you the names of others.If you’ve established a relationship with a subcontractor, you can often get the inside scoop about the others as well.  Things like who’s having financial difficulties, dissolving partnerships, going through a divorce, kids in college, a bad drinking habit, and the list goes on.  All of these little things will make a difference on the job that he/she will do for you.  In most cases, I only need to ask a simple question  “What’s his deal?”.  Before you know it, you’ve got the guys life history.  This information is valuable when it comes to negotiating a contract as well.  If you know the guy is trustworthy but needs work, you are in a good position to get a decent price.  Be careful not to go too low.  Even the most honorable person will resort to drastic measures to pay the bills.  If the situation is really bad stay far away no matter how good he is.

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posted in Complete Rehabs, House Flipping, Real Estate Investing, contractors | 1 Comment

26th February 2008

Will you compromise with your tenants?

I have a tenant that pays his rent late every single month.  In fact he doesn’t even bother mailing it anymore.  I usually meet him somewhere depending upon my location.  He pays with cash because we no longer accept checks from him.  This is one compromise that landlords cannot afford to make.  Too many bounced checks are never a good thing to your bank.   He doesn’t want to get a money order because it costs too much.  For tax reasons, cash is not the best way to conduct business.  However, I would prefer to be paid then not.  Did I mention he pays a late fee every month as well?  This would be a serious problem if all tenants paid this way, so make sure word doesn’t spread to your other renters.

 Compromise is what I’m getting at in this article.  I make a little more every month but have to wait (sometimes weeks) to get it.  Renting can be a hassle at times but there is no better way to own a house after 10-20-30 years and have someone else pay for it.   That is a sacrifice I am willing to make.   There are some scenarios however that compromise is not an option.  My parents still own the first house they ever purchased.  The current tenant has family members that are destroying the property.  In fact they and are not supposed to be living in the house at all.  This property is no longer generating positive cash flow not to mention the tenant’s breach of contract.  It’s going to cost more to repair the property than what it grossed in two years.   An eviction is not always necessary but if the tenant does not cooperate, it may be the only option.

Work with your tenants to come to an agreement that you both can live with.   If you have a renter that takes care of your property and treats it like a home, you should be willing to work with them.  We all go through financial difficulties and your tenants are no different.    

posted in Landlord, Renting | 3 Comments

25th February 2008

Flipping houses and general contractors.

It’s looking more and more like I will need to bring in a general contractor on this Hopkins Project.  I normally act as the general contractor for my flips but this one is taking too much time from other projects.  Also, it is a larger job than I originally thought which is not unusual when doing complete rehabs.  The rear wall of the house is being held up by a single header approximately 6×12 inches and 10 feet long.  I have several options, none of which will be cheap.  I can take the whole rear wall down and rebuild it or I can try and replace that header with steel.  Both are risky and will require someone with previous experience.  Also the rear addition on the house needs to be rebuilt. I can either re-brick it or tear it down and build it back up with wood.  Flipping houses is somewhat easier when you are not rehabbing them.  The margins are usually larger with rehabs but you need to have the stomach for this kind of work. 

I’ve met with about five general contractors and I haven’t been overly impressed with any of them.  You can however, get some good ideas about how they would tackle the particular problem.  It’s always a good idea to get as many contractors as possible to see the job.  It slows progress but it’s worth the time and effort.  On a side note my plumber was supposed to start today but the business manager never sent me the contract.  The plumber is now calling me to start work.  Imagine that I’m going to give him a check to begin work without a contract!  Even if you have worked with someone before, do not get so comfortable that you leave yourself vulnerable.  This market is very bad for contractors right now.  A lot of them are hungry, so to speak.  House flippers need to make sure that you use common sense at all times.  Anyhow, I have a meeting with an architect and another contractor this morning. My wife has a “honey do” list just to top it off so on with the day I go.        

posted in Complete Rehabs, Hopkins Project, House Flipping | 0 Comments

22nd February 2008

How to protect yourself from predatory lenders.

The other day someone asked me what I thought was the biggest contributor to today’s mortgage mess.  I thought about low interest rates, inflated home prices, Mortgage Company lenience, and subprime lending.  It’s difficult to say that there was one root more responsible than another since they all played together in one big mortgage mess.  However, if I must choose, subprime lenders get the most blame in my opinion.  The main reason they get the blame is because of the ugly gremlins that spawned out of subprime lenders. These offenders are commonly referred to as predatory lenders.  The situation has gotten so bad that there is legislation being discussed by congress. The intention is to curtail the many practices commonly described as predatory lending. Read the rest of this entry »

posted in Financing, Foreclosure, Mortgages | 2 Comments

19th February 2008

Financing your house flips with no money down.

Real estate investing books often imply there is no need to worry about funding your deals.  Just get out there. Start making your calls, start setting appointments, start writing contracts, and the money part will be easy.  I agree that finding the good deals are the hardest part but finding financing for your deal can be equally as challenging.  For beginners, there are so many options that it becomes overwhelming.  There are money partners, private investors, hard money loans, bank loans, home equity lines of credit, credit lines, credit cards, downsizing, subject to, owner carry backs and wholesale flipping all to choose from.  Every author you read has a preferred method for financing deals.  Luckily, when it comes to flipping houses, things are a little simpler.  Read the rest of this entry »

posted in Financing, House Flipping, Mortgages, Real Estate Investing | 0 Comments

16th February 2008

Flipping Houses - Finding sub contractors.

I like to get at least three proposals for all my trades.  Plumbing, electrical, and HVAC are usually referred to as the trades.  Although I have specific subcontractors that I like to use, they are not all built the same.  Some are good for small jobs that don’t require permits.  Some are good for my large scale rehabs, which require new installation of pipes, duct-work, and electrical wiring.  Some subcontractors show up when they say they will, take pride in their work, and finish quickly.  Others will drag your job out, ask for more money, and drag it out some more.  When it comes to price and reliability, all contractors generally fit into three categories.  Fast and expensive, slow and cheap, or what I like to call buyer beware.  There is a gray area in each of the categories, but that’s generally what you get.  Read the rest of this entry »

posted in Complete Rehabs, House Flipping, Real Estate Investing | 0 Comments

11th February 2008

What happens when the real estate market finally bounces back?

The Question 

This is a question that every real estate investor should be asking someone right now or even two years ago for that matter. Everyone wants to know “when”, but will you be in the best position when it does?  You can turn to your local PBS radio station and hear forecasts about when.  You can read real estate market experts like Steve Bottfeld of Las Vegas. He says sales will increase in 2008 by 25% for new homes and 45% for resale homes.  Steve explains that new home prices will increase by 8% and resale home prices by 10%.  The fact is that no one knows when the market will begin to flatten.  Notice I said flatten which is still better than the recent trend of falling prices.  Read the rest of this entry »

posted in Real Estate Investing, Real Estate Market | 0 Comments

7th February 2008

The house flipper’s formula for profit in a down market.

Are you able to sell the houses once they are completed?  I get this question quite a bit lately and a good question it is.  The answer quite honestly is yes, but it can take a while.  Many real estate economists predicted the current real estate market years ago.  Investors should have formulated a plan B from the start, but especially within the last 2 years.  Read the rest of this entry »

posted in House Flipping, Real Estate Investing, Real Estate Market | 0 Comments

5th February 2008

Digging basements - repairing plumbing and replacing drain lines.

One of the things that attracted me to this house was that it has a full basement with approximately 90 inches of clearance to the floor joists of the first floor.  Why you ask?  Many Baltimore City row homes were built in the early 1900’s and they did not use the basement for living space back then.  In fact many of them are not tall enough for a normal adult to walk through without ducking down. Read the rest of this entry »

posted in Complete Rehabs, Hopkins Project, House Flipping | 2 Comments

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