Real Life Flip this House and financing

Update and new projects

2011-07-04T10:57:00.001-07:00

While it has been slow, our group just sold a house at less than we had in the house.
Due to holding time and paying too much on the front end this one was a loss.

There is a point here. It is said you make your money the day you buy. We thought we could go up to 75% on this one because the area was getting lots of activity (showings, solds...)

Go with your gut, stick to 65% of ARV as your investment maximum.

Some things we could have avoided and tips to make a faster close:

1. paying too much, there is always another deal. We should have passed.
2. Watch the average % discount off original asking price in an area.
3. What are your buyers alternatives (another similiar area, another house, ..)
4. Buyers today truly want steals and deals. Buyers want new houses for price of old ones, be prepared on how to show, position and market your renovations and upgrades.
5. Buyers are relying on thier realtor, make sure you communicate any repairs made, things that may be needed, be flexible.
6. Make sure house is clean , no need in turning off buyer upon first look.

While flipping is slow, we are looking for another deal and still are very active in financing other investors flips and investments.

www.texasrehabloan.com

New Projects in Dallas,Texas

2010-08-12T09:45:00.000-07:00

2 new projects. Example of being at right place at right time. Being in the lending business (www.texasrehabloan.com), we had worked with the owner on the loan. So we already liked the house. The owner had to sell the project, so naturally who do they call first-done deal.

Always get inspection or carefully review work that has been done. We had discovered some shortcomings in already completed work, so that did factor in our agreed upon price.

Another project, buyer had come to us for loan, it just made more sense for them to sell us the contract due to time constraints.

THese are faily easy rehabs, lots of upgrades and cosmetics, no real floorplan changes or structural.

The key point is that niether was listed anywhere near our contract price.
example of networking and being able to move quickly.

Flipping today in 2009

2009-01-04T09:43:00.000-08:00

Dont buy anything today unless you can afford to hold. That is exactly what we are doing.
Consider renting, owner financing or lease options.

ex: 42k home,4k repairs, 850-900.00 rent.
several exits here at this point.

The work begins

2008-04-01T14:54:00.000-07:00

Once our pictures and drawings are presented to the contractor the work begins.
While the demo occurs I acquire our fixtures,tile and appliances. money was saved by picking out tile on sale, fixtures that were returned (like new), and appliances used or repos.

3 weeks to completion. budget was 11-12k and we are still on target for our 60k home.

what makes your house special - flipping in Texas

2008-03-11T07:50:00.000-07:00

Consider your potential flip, a 3-2 brick on non-descript street. you payed the right price and with minimal repairs can probably rent or firesale and be ok. But to make your profit and sell quickly what makes your deal special compared to the existing inventory.

curb appeal
floorplan
landscape
bonus rooms (extra bath, bedroom, office) consider your client /target
price (if it wont sale, your too high)
quality of rehab / construction
offering flexible terms / owner financing

This is just a checklist when considering how you stack up against the competition.

www.texasrehabloan.com

looking at new property

2008-03-10T06:37:00.000-07:00

Just a quick tip. If looking to acquire 2 properties at once, why not start in the same neighborhood. Offer buys 2 choices. We found one of the larger properties in the area and can still sell below market value. (5 bedrooms and big lot). House would rent for 1000-1100 month, home cost no more than 60k (includes repairs).

Anyone interested in rental homes in Dallas call us, we are finding some very good rental and lease - purchase homes.

www.dallasinvestmentrealestate.com
www.texasrehabloan.com

Flipping from the lenders view

2008-03-06T06:56:00.001-08:00

I look at potential flips everyday. We loan 70% of ARV. I see lots of eager and competent investors but sometimes the enthusiasm clouds thier ability to judge a deal.

Dont push values, dont chase deals (banks are chasing investors now, let the deal come to you and your offer).

We dont want to own the the property we loan on nor do we want to put an investor in a position to fail.

ex: sell a house for 100k, what do you net.

6% commission
3% seller contribution or more if FHA
1% title policy

So a minimum of 10-12% closing costs on most deals. You net 89k, if we had loaned up 75%, after your holding costs (interest, utilities, insurance, budget overuns..)

you may well be near a net of 80k, so if everything goes pretty well you made 10k , then taxes, so you walk away with 5-7k. Not a good return and not a good risk by most standards.

Also, if you decide to refinance, that appraisal had better be tight. Its very difficult to finance beyond 75 - 80% for investor property. With no title seasoning you can expect an appraisal review.

The conclusion: dont push value, stay in the 70% rule or less and have realistic expectations about your holding time.

www.texasrehabloan.com

Delays in Closing due to probate

2008-03-04T17:27:00.001-08:00

Typical deal, going through probate will take about another week.

Watch for delays such as surveys, title work, bank approving loan, offer......it goes on.

Being a lender we are used such delays, its good they are not waiting on us. I'm looking to make top 10 excuse list for reasons for not closing. However, we usually fund fast, see my lending website for some insight into how hard money for flips may work.

http://www.texasrehabloan.com/

New Property

2008-03-03T19:20:00.000-08:00

Now is a time to buy in Dallas I believe. How about a 60k home with comps supporting 100k. Home needs work, perfect. We should start work in a couple of weeks. I'll try and post some pics. As of yet I'm not certain if we keep as rental (rent for 950) or flip. Market is improving and there is not much inventory in this subdivision. (buy smelly , dirty, homes with problems) in a good area. THis one has one of the best lots and sq. footage in the area.

Sold

2007-02-26T17:33:00.000-08:00

The Townsend property finally sold. We were asking 2o9k and sold for 206k, not bad.
Slightly over budget but still an nice profit. One thing we learned on this one is that homes over 200k in a soft market can be tricky. buyers have more options and will use thier inspection reports for bargaining power at the end. This one cost us an extra 2k for misc repairs. Watch for minor roof repairs and electrical. It may be worth a the money to hire your own inspector near the end of your rehab to head off potential deal killers. Give the buyer as a clean of an inspection as possible to show your workmanship and also save you time and money on last minute repairs.

Try to highlight something about your house that others on the market may not have. I feel our strengths on this were large yard with electric gate, stainless countertop and appliances, 8 foot cedar fence and 3rd bathroom for guests.

stay tuned, we have one more to go and our group is currently shopping for new flips as we speak. Again, i'm looking for things that will cause slow sale or things I can highlight for a fast sale. The property with the biggest equity spread may not be the best if factors cause a longer than usual hold time.

fixtures and money saving tips

2006-09-24T22:12:00.000-07:00

The structure is complete, meaning all foundation and brick work is done.
The floors were redone and the house was painted.

To complete a nice finish you cant use old fixtures and hardware, at least not in a current dated condition.

For the kitchen, we saved by using existing cabinets and changing the hardware. Hinges and knobs were changed out for about 200.00. I purchasd hinges at Home depot and knobs online. You can save some money and trips to the store.

Most of the lights were changed with 4.00 fixtures from Ikea.
Doorknobs in a brushed nickel (about 8.00 per door ) were changed.

When choosing fixtures make sure and use items that give your investment house a clean updated look. If you have questions just go to some open houses. i like homes that sell for 250k and up as they usually have more updates and give some insight into what designers are promoting today.

If your ceiling fans are in good shape you can always paint them a nice silver or bronze. There are many new colors and kinds of paint for doing so.

We had a dishwasher in perfect condition but the almond color didnt give an updated look. You can buy a large sheet of stainless steel and use for several dishwashers and even a backsplash as we did on our latest project (Lathrop). cost 125.00

Progress is made after foundation work

2006-09-24T22:08:00.000-07:00

Foundation work was complete. But with foundation work comes other problems. Consider that many times bricks will have to be fixed and sometimes porches dont come out level.

The fix: Since bricks around the window were crumbling, we took this opportunity to put in a new and larger window. basically we were already paying for the labor with the brick work so it was just a bit more than the cost of the window.

For the porch, we wanted it to be level, so instead or repouring concrete we added a nice slate and floated the porch level.

Day 1

2006-07-14T13:45:00.000-07:00

Let me start by saying I'm no professional investor. My day job is a mortgage broker. I specialize in investment property loans, so its a good fit. I have flipped about 15 houses in the last 3 years.
I have never lost money, although we have had some very thin profit ones.

My purpose for writing this blog has various reasons. I hope to give would be investors some real life examples, possible network with investors and function as a loan officer and drive traffic to my professional websites...and its fun.

Project 1.
Residential property - Dallas, TX

goal: 25k profit after all expenses.
190k sell price
125 purchase
6500 in interest and finance costs
21k repairs (mostly cosmetics, but plumbing has increased our original estimate from 18k to 21k), now 1500.00 for busted pipe.

152.5 total costs
sell 190k - 15k closing costs
175 net

Today:
busted pipes.
repair pipes and sheetrock damage: 1500.00 (those things happen)

goal is to get out with 20k profit.

property is about be listed for sale.

Project 2 is underway.
92k purchase
15k repairs (included foundation repair)
House: 3-2 brick, North Dallas. Market value 140k.
2 weeks into project and mostly smooth, estimate 2 weeks for completion.
Will have pics for this up on website soon.

Tips:
use quality fixtures, search home depot and other retailers for discontinued items. I even buy on ebay and garage sales.

For repairs, anticipate extra electrical and plumbing work. There are usually hidden problems. These houses have been neglected for years in most cases. Remember you are buying property on the cheap from people who usually cant afford the upkeep or just left. Your added value is the ability to buy non-financable property, fix and put back on the market.

Monty
www.dallasincomeproperty.com