Update and new projects

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

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

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

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

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

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

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