Posts Tagged ‘real estate investment’

Flipping Houses is like Being Gay

Monday, January 4th, 2010

In the 21st century, everyone knows the word “gay” refers to people that are homosexual, but back in the 1950s, the meaning was contested. The alternate definition was “full of joy and mirth.”

Can you imagine the confusion? Tell one group of people that you’re “gay” and they’ll assume you’re happy. Tell another group and they’ll reach for a cross and a can of gasoline.

Right now, “flipping houses” creates the same effect. It has two definitions:

1) The process of *legally* selling a property for a fast profit, sometimes using little or none of your own money

2) The process of *illegally* selling property for an artificially inflated value, often involving a group of criminal appraisers, loan officers, and investors

Do you see the similarity with “gay?” One definition is upbeat and accepted, while the other is (currently) unacceptable and downright scary. The majority of the world understands “flipping” as an illegal activity, where a small minority are trying to redefine it as a legitimate real estate investment strategy.

The reason: good old Uncle Sam. When the government talks about flipping, they use the second definition. According to the Department of Housing and Urban Development, flipping occurs when:

A recently acquired property is resold for a considerable profit with an artificially inflated value

Being closely related to the government, attorneys, accountants, and the press are hanging on to that definition. So, the next time you visit them, don’t be surprised if they “flip out” (pun intended) at your strategy.

The exact opposite is true with real estate investors. You can buy a house and then “flip” it to another investor for a small but fast profit, allowing you to reinvest your money and repeat the process. You can also assign contracts for a fee (another form of flipping), allowing another buyer to close on the property in your place.

Which definition will win? If “flipping houses” follows the etymology of “gay,” the more acceptable definition will come out ahead. Who knows? Maybe they’ll make a movie about it.

Jon Morrow is the owner of Real Estate… Answered, a web site that answers dozens of questions about flipping houses for free. He also manages over $20 million of real estate investments, focusing on luxury homes and multimillion dollar transactions.

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The Most Important Aspect of Flipping Houses – Curb Appeal

Wednesday, September 9th, 2009

Of course, you’ve already considered location, so the first step you need to contemplate in purchasing a house for flipping is curb appeal. What does it look like from the street? If people aren’t anxious to buy after driving buy, what chance do you have of making a sale? Curb appeal is everything.

Actually, it’s curb appeal times two. You need to consider what it looks like to you for buying and you need to envision what it’s going to look like to a prospective home-buyer when you sell.

If the outside of the home doesn’t captivate you, then no matter what you do to the inside, you face an uphill battle. I’ve had great houses with great prices . . . and potential buyers barely slowed down as they drove by. You need to believe that with a little work and a little money, you can transform a home from a liability to alluring.

Curb appeal consideration for you:

  • Roof lines even? – You don’t want to see a sagging roof, even if it’s structurally sound. That look could cost you thousands in resale value.

  • Additions un-cobbled? – Many times people add on dormers or little additions. If there are additions: do they fit the basic “look” of the house? Does the roofing material match? You don’t want to be changing those. You want the home to look picture perfect.

  • Garage converted to a family room or bedroom? – Many times ramblers have original built-in garages converted to extra bedrooms and/or family rooms. The driveway comes up to the house and you can easily see where new siding was added to “hide” the conversion. This rarely works. The best I’ve seen used French Doors into a family or garden room.

  • House settling? – If you can see from the street that the house has settled, there is little you can do outside of major foundation work.

  • Concrete work settled? Cracked? – Front steps off kilter? Actually, you can build new steps around them. Often you construct a small deck that both hides the old concrete and enhances the new look. This hides unsightly cracks as well (make sure they are repaired first, however (don’t just cover them up).

  • Crappy neighbors with crappy homes, crappy landscape and crappy attitudes? – If you can buy their homes for a good price, consider it. If not, pass it by otherwise you’ll be trying to show your home while the police stop by next door for an on-location shooting of “Cops.”

    If you purchase the house, you will start working on the curb appeal as well as general remodeling. You need to capture the hearts of your potential buyers.

    Curb appeal for your new buyers:

  • Put up large street address numbers so people can easily locate your home for sale.

  • Nicely painted – Fresh paint adds value and says the home is well-cared for.

  • Landscaping – Big bushes and trees add instant value. Tie the landscaping together with edging and you have a complete look. If you don’t know what time of year you will be selling, choose mostly evergreens and then add flowering plants just before you put up your sign.

  • Charming – Nothing sells like charm. Don’t settle for bland. Add color that highlights the home. Got room for an arbor? Is there a small private area that can still be seen from the street? Room for a bench? Does the house have shutters. They don’t even have to work. They can even have to work. Shutters or “faux” shutters can be used to accent the windows and make them appear larger.

  • Dramatic lighting – Make sure your address is well lighted. Use dramatic spot lights to show off the landscaping and the private areas. If your house is vacant, choose a nice table by a beautiful window to add an attractive lamp. You want a shade that sends light up and down. You’re want people to have the feeling that they’ve come home after being away, and someone left the light on for them.

    People view houses when it is convenient to them, this often means after work, at night. Be sure to check out your curb appeal for different times of day and night.

    Imagine the house you’re selling as the perfect home. How would it look, if it were painted as a romantic scene by Thomas Kincade? You would see drama. You would see color. The lighting would pull you into the painting. Create that picture for your curb appeal.

    What you want is an image that stays in the mind of potential buyers. They drive by. They call. They look it over. They make their offer. They can’t wait to move in. They pursue financing. You get your asking price . . . or better. Their dream never waivers. This is their home. All of this is done with curb appeal.

    Don Doman is a published author, video producer, and corporate trainer. He owns the business training site Ideas and Training (http://www.ideasandtraining.com), which he says is the home of the no-hassle “free preview” for business training videos. Don and his wife Peg at one time owned 33 single family homes, which they purchased, remodeled, and used as income properties before selling them for profit. You can gain from their experiences at Simple Home Repair (http://www.simplehomerepair.com).

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    Flipping Houses Common Mistakes That Flippers Make

    Saturday, November 1st, 2008

    In my profession as a home inspector, I get to witness some amazing flipping deals. Some are profitable, some aren’t. Here are the common mistakes I see flipper continuing to make.

    #1. Falling In Love With The Home: Hey, it’s just a house built out of sticks and clay. There are thousands more. If you can’t keep from falling in love with every home you see, then flipping homes isn’t for you. Never forget it’s a business, treat it that way.

    #2. Keep Your Mouth Shut! There’s an old saying in the Navy. “Loose lips sink ships”. More than once I’ve inspected a home for an Investor and have the Investor call up a week later saying they lost the deal to someone else. Some people just can’t keep their mouth’s shut. Wait until you walk away from the closing table to tell everyone what a deal you made!

    #3. First Impressions Are The Most Important: Spend the dough on the landscaping and exterior of the front of the home. I’ve seen more homes sold and more homes fallen in love with (see rule #1) from a great first impression than any other single item. Clean and shiny door knobs, door knockers, coach lamps and address numbers will add to the impression. If it doesn’t add cosmetically to the home, get rid of it.

    #4. Don’t go overbored The simple fact is that most homes can be flipped for a decent profit by cleaning and replacing the carpet and paint. Too many times flippers think they need to sink thousands of dollars on a home to make it sell.

    Many times what happens is they will remodel the home and it ends up being priced higher than anything in the neighborhood and sits on the market untill the Investor drops the price. Take a page from the flipping pro’s book. Keep it to the basics. You’re trying to make a profit, not make the front cover of a glamour magazine.

    #5. When In Doubt, Reread Rule #1 Some people need Rule #1 stapled to their forheads!

    #6. Don’t Get Greedy! If you’ve priced your home well, then take the first offer that comes along. It’s not worth your home setting on the market for months because you’re too tight to come off the price a thousand or two. Reread rule #1!

    Donald Lawson is a Professional Real Estate Inspector licensed in Texas (#5824) and Oklahoma (#454). He currently owns and operates V.I.P. Home Inspections, a Houston Home Inspection company. If you’re interested in investment opportunity’s in Houston Tx, see his Houston Real Estate page.

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