I was recently at a social occasion listening to someone I don’t know well bemoan the difficulties of selling their unique house so they could make a necessary relocation. This couple had spent their dozen years in this house customizing it for a particular pastime they both enjoy.  “I know we probably won’t get back the $6,000 we spent building out the special room we use most for our hobby,” said the wife, trying hard to be realistic. Note she said “probably” – she actually is hoping someone will add that $6,000 to what they will pay for this house. Read more…

The best thing about positive equity is that homeowners who have it are free to go shopping for a better home! Recent significant upticks in positive equity resulting from rising home values are helping millions of American homeowners. How is that affecting the market of homebuyers for our fix & flip properties? As you know, millions of homeowners found themselves trapped with mortgage loans higher than the value of their homes during the real estate price tumble of 2007-2009. Loans that were still at 20% or less equity quickly went negative when the local market lost 30% and more of Read more…

I’ll explain why I think the most important thing about the economy and real estate market trends for real estate investors are the effect they have on homebuyers. Are homebuyers eager to get in now? Are they skittish about some dicey market news?   No question about it, the dynamics of the real estate market have fundamentally changed over the last two to five years in most major markets. But that still doesn’t change the real estate investor’s approach to any market. It’s smart to be wise to the trends, know the market factors and where the market seems to Read more…

Selling costs are a popular item for procrastination as you work up your budget in the early project stages. But selling costs can end up taking a fair chunk out of the profit if the flipper or wholesaler hasn’t made sufficient allowance for them. What do you need to know about selling costs even before you negotiate the purchase price?   Don’t budget assuming you’ll give away most closing costs to the buyer, even if you can. The buyer will take all of their share of closing costs – including their agent’s commission – into their calculation of what they Read more…

“Time is Money” – never is that more true than in a real estate investor’s flip project. Each project property is running a dollar meter every day until it sells to a homebuyer. Beware of these pitfalls that can cause project delays and drain your cash on your carrying costs, including utilities, insurance, interest on borrowed funds, etc. Do-It-Yourself work, followed by professional do-over’sNew investors are told this until their ears bleed – and still some will overestimate their ability to save a few bucks with a DIY. If you can’t do it to the same standard as an expert Read more…

The whole point of real estate investing by flipping properties is to do projects and make money – so not doing a great deal because you are out of ready cash defeats the purpose! But where is this money-tree that can expand your business and your profits?   Unless you just sold a project, as a flipper you are likely to consider yourself constantly “broke”. Flipping is a cash-eating beast, even if the end of the project has handsome rewards for having the fortitude to complete it. Especially if you are doing more than one project at a time, active Read more…

Making below-market offers is a kind of reverse sales process, and an intriguing part of the wholesaling and flipping areas of real estate investing. You want to convince the homeowner/seller to let you give them money, rather than persuade them to give you theirs. But – and this is a very big “but” – you are offering less than they probably think they should have. Why should they agree? Will they accept your offer because, objectively, this is the smartest decision they can make? Interestingly, people rarely make big decisions based on objective criteria. Most decisions are emotional, even major Read more…

Where can you find a rehab property with good potential for wholesaling or flipping?   Your first criteria for buying to wholesale, or to fix & flip, is to purchase at a steep discount from the local market value. So, you are looking for problems you can fix that will lower the price, substantially. That means properties with problems, and sellers with problems – both types of problems being the kind the homeowner can best solve by selling this property fast, for cash.   This is where the footwork comes in, and where you, as a wholesaler, add value for Read more…

What makes a property a good wholesale prospect? My first and shortest answer is that it has to show that it can make enough money to get a real estate investor’s attention – and even more to make it worthwhile for you, as the middleman.   Remember that the greatest risk belongs to whoever does the rehab and then either sells to the home buyer, or rents the property out. The rehabbing investor gets the greater share of the profits, often twice what the wholesaler will make.   Criteria #1 is to satisfy your target investor who will buy (or Read more…

I began wholesaling over 13 years ago, because I had too many properties at one time, and not enough crews to work them all. Some properties would have to wait several weeks before a crew could start – costing me money all the time.   In property investing,waiting drains the wallet with monthly carrying costs such as utilities, insurance,interest on loans, upkeep if a yard must be maintained, and even security measures. Money is going out by the double-handful, and nothing is coming in.   An equally important cost of waiting: I had put capital into each of them that Read more…