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2008 April » fliprent
30th April 2008

House Flipping in 2008

With the current real estate market and the impending recession, why would anyone want to flip houses?   The answer may just be because of the current real estate market.  In these times houses can be found for huge discounts.  Some investors are buying properties at 50 cents on the dollar or less.   Unfortunately there are many distressed homeowners and properties in times like today.  Personally I am not one to target homeowners that are about to loose their homes to foreclosure.  In many cases homeowners can keep their homes and should speak with a foreclosure counselor before talking to an investor.  However, many property owners want to get rid of property that has been abandoned, distressed, inherited or houses that they cannot make the payments on.  These are great opportunities for house flippers.    

House flipping takes on two different meanings in the real estate investment world.  There are house flippers that buy distressed properties, fix them and sell them.  There house wholesalers that “flip” houses to other investors without ever really owning them.   I happen to be the former.  I like to find distressed or abandoned houses and rehab them.  This way I am actually contributing to the community and the economy at the same time.  The biggest question right now is what my exit strategy will be.

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posted in House Flipping | 1 Comment

28th April 2008

Real Estate Contracts Part2

In this series I am outlining clauses commonly used in real estate contracts.  Use this information as a reference but do not repeat any examples word for word in a contract.  Consult an attorney in your local area for more details.  You can read Real Estate Contract Clauses Part 1 for the first five clauses or click on the contracts category to follow along with this series.

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posted in Contracts, Property Acquisition, Real Estate Investing | 0 Comments

25th April 2008

Builders Risk Insurance is going to cost me more money

As you can probably tell the Hopkins Project house is still on hold.  I’m waiting to hear something from the city but my loan will not allow me to wait much longer.  Most rehab loans are for one year and mine is no exception.  Even if you are using hard money, there is normally a time frame of one year before you will need to refinance or pay in full.  This project has been a cluster from the beginning.  Each day costs me more money that I may not get back if the city does decide to take this property.  I have had some high ranking individuals paying close attention to my situation, so hopefully that will keep the city honest in their negotiations.  But that’s a story for another day…

Not only do I have to continue to make mortgage payments each month but my builders risk policy is set to expire soon and it does not come cheap.  Builders Risk insurance is required for rehabs and new construction.  Because it is not a habitable dwelling, insurance providers will not cover it with a typical home owner’s insurance policy.   Builders Risk insurance protects the homeowner against damage to the property.  Bank rehab loans also require that house flippers attain builders risk insurance.  You may be able to obtain typical home owners insurance on the property in cases where the home is livable or has an occupancy permit.  Just make sure it covers the type of damages that occur during a remodel.      

posted in Complete Rehabs, Insurance, Real Estate Investing | 0 Comments

23rd April 2008

Get down payment and closing cost help for your dream home.

In almost all states and major cities in the country there are housing assistance programs.  These programs exist for first time home buyers, teachers, low income families, etc.  These programs are normally public, non-profit or church based.  These organizations offer a variety of programs and assistance to first time home buyers.  One service in particular is the down payment and closing cost help program.  They offer funds in the form of grants and loans which buyers can use toward the down payment and closing costs for the purchase a home. 

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posted in Financing, Mortgages | 16 Comments

21st April 2008

Real Estate Contract Clauses - Part 1

Real Estate investors need to know as much about writing contracts as they know about real estate.   This series of posts is a continuation from the Negotiating Real Estate Contracts article.  In Part 1, we will discuss 5 clauses that are commonly used by investors in real estate purchase contracts.

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posted in Contracts, Financing, Property Acquisition, Real Estate Investing | 0 Comments

18th April 2008

Use a building Inspector when flipping houses.

House flipping without a building inspection is like shooting pool in the dark.  If you cannot see what you are aiming for then you are relying on luck to make the shot.  Unless, of course you are knowledgeable enough to detect problems with HVAC, termites, mold, foundation, rotted out framing, environmental conditions, electrical, plumbing, water damage, and the list goes on.  After a few years in the house flipping business, you may well be able to detect these problems yourself, but why risk it?

 cats in the house

Make sure that you use an inspector that is not also a contractor because of the potential conflict of interest.  If he/she is a contractor then be sure to explain up front that they will NOT be contracted to do any of the repair work.   Any inspection should include an inspection report.  This report should list all items that require repair or replacement and potential future problems.   Be sure to ask if the inspection report will include approximate costs and estimated time frame from start to finish.  This information is invaluable when estimating repair costs, negotiating the price (when done prior to contract ratification), and determining the total funding required for a bank rehab loan.  If you do not feel like the inspector was very knowledgeable about his work, you may want to get a second opinion from another inspector.

When investing in other states or jurisdictions, be sure to use a local inspector who is well versed in the local codes, conditions, costs, and policies. 

 

Real Estate Money Saving Tip

“If you run a small business of any kind, you can pay your child up to $4,400 per year without the child owing any taxes, and without you having to withhold. Use $2,000 of this every year to invest in a Roth IRA for your child - no taxes will be due on the funds when withdrawn, either. Use the other $2,400 to cover school clothing or other items your child needs anyway. Meanwhile, you take a $4,400 deduction for salary to your child”  by “The Simple Man’s Guide to Real Estate”

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

16th April 2008

6 Rules for Negotiating Good Real Estate Contracts


One of the biggest obstacles I faced when starting out investing in real estate was writing contracts.  It would be nearly impossible for anyone to write a blog post (at least one that would be read) about everything one needs to know about contracts.  With that in mind, I’ve decided to provide some basic knowledge for a beginner in real estate investing.  Another thing to note is that rules and laws are mostly local.  Writing a book or post that covers the law for the entire nation would also be, well… pretty darn long.  Here are some rules that I still use today.

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posted in Contracts, Property Acquisition, Real Estate Investing | 0 Comments

14th April 2008

Fannie Mae no longer aqcuiring loans with low scores.

Gone are the days where lenders could get Fannie Mae to back mortgages that come with low credit scores.  Although its not official reports are that the minimum score will be 580 for most loans with some possible exceptions.  This is just another step in fixing this broken system and moving into the next phase.  According to the Wall Street Journal Fannie Mae said it will increase the period needed for borrowers to re-establish their credit history after a foreclosure to five years from four years.  They will also allow shorter recovery periods for those who have “legitimate circumstances” for being foreclosed.  

posted in Financing, Foreclosure | 2 Comments

11th April 2008

I’m going Stir Crazy over this flipping house.

This thing with the house in the Hopkins area is driving me crazy.  I’ve had this project on hold for two weeks now and I’m loosing my mind.  Actually this property has been on and off for the entire time that I’ve owned it due to the organization/city attempts to derail it.  I’m not sure if I should proceed to finish it or if I should wait until I hear from the city.  The letter that was recently sent from “the organization” stated that I should receive something from the city within 2 months from the date of the letter.  There is a lot going on with this area and I am hearing rumors from different people about what they want to do with this block.  The latest rumor is that they want to rezone it to commercial, and sell the properties to doctors so that they can run their practices from them.  The property is directly across the street from the main hospital campus, so it is in a prime location.  A couple years from now, this block will be worth a mint. 

House flipping is a business but I would actually consider moving into this house if I can keep it.  The problem is that the city wants it.  They don’t care that I am rehabbing it or that I would make it my primary residence.   What they are doing seems unconstitutional, since I am not sitting on it like a lot of investors.  The ordinance clearly states that homeowners on ”preservation blocks” will remain and only properties that are not up to code or in vacant status will be acquired. This property was vacant when I bought it and needed a full rehab.  This is what I do, buy vacant properties and rehab them.  They can clearly see that I am raising the property and they are using every tactic to get me to stop.  Does this sound like a government that is interested in improving the quality of life in the city or one that is interested in making money?

 You can follow along with this project by clicking on the Hopkins Project category or clicking here.

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

10th April 2008

Real Estate Gurus… Buyer Beware.


So called real estate investment “gurus” offer lots of incredible knowledge at a cost of only $5000…  no wait $4000..just a second… $3000, but for tonight only $2000.  But wait there’s more, they’ll throw in two months of coaching (when there is time), a free CD packed full of “valuable information”, a free website, discounted street signs, and a group of other new investors to bounce all of your questions off of.   This is all valued at $10,000 but for tonight only they’re going to give it all to you for $1000.  But wait there’s more…

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posted in Real Estate Investing | 3 Comments

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