on your 1st flip how much cash did you have and how did u manage your time

[Stephen Moore]

just curious to hnow on your 1st flip how much cash of your owns did u need ,how often did you go to the property ,also were u working a job or what?

[J Scott]

Originally posted by NewInvestorNJ:

J Scott,

You seem to be successful and know alot about flipping. What do you look for in a potential house in this market, cosmetic, complete gut jobs, ect.., and where do you concentrate your money? I've read that in this type of market you need to be very careful in regard to what improvements you make.

I have a bit different take than a lot of investors who say, "Only do the work that's absolutely necessary, and if something doesn't HAVE to be done, don't do it"...

Our goal is to sell houses quickly, and the best way to do that is to ensure that if there is a buyer looking in one of our neighborhoods, there is almost 100% chance he'll buy our house over any of competitors. To do that, there are other things as (and more) important than what we decide to renovate and what we don't decide to renovate.

For example:

- Make sure the house is priced less than any other rehabbed or even partially remodeled house in the neighborhood. This will go a long way towards buyers never purchasing a competitor's house.

- Focus on the segment of the market that's buying. Currently, all the buyers in this area are in the $100-140K range, are FHA, and are looking for move-in-ready houses. So, we tailor our product to those consumers. We don't buy houses that we will need to sell for more than $140K, we make sure they are fully FHA ready, and we make sure they're fully move-in ready.

- Always stage! The biggest advantage I have over my competitors is our staging. First, vacant houses suck. Buyers walk in and think, "I wonder if the plumbing works? I wonder if the electrical works? I wonder if the HVAC works?" But, when you stage, people instinctively think, "Oh, someone lives here, and therefore, everything must work pretty well." Even if they consciously realize the house is not occupied, sub-consciously they'll be more comfortable with a staged house. And, even competing against houses that are lived in, staging provides a great advantage.

- Make your first impression last, and don't leave anything to chance. When we have a showing at one of our houses, we make sure to go over there first to turn on all the lights, open the blinds, put on some music, and make sure there are new air fresheners making the house smell great. When buyers walk into the house, their first impression is, "Wow. I could be walking into my own house right now."

- Control your deals from end-to-end. Our motto is, "If a deal doesn't close, it's OUR fault." I don't care if the mortgage broker screws up, the lender doesn't come through, the buyer's agent is an idiot, the closing attorney loses paperwork, or whatever...if a deal doesn't close, it's 100% our fault. We have the power to make sure everything gets done correctly and on-schedule (even if it means demanding that the buyer uses our lenders, brokers, attorneys, etc), so if things go awry, we take the blame, not anyone else.

- As I said above, we make sure our houses are "fully move-in ready." To us, this means, all new appliances, including washer/dryer, window treatments, and shower curtains that come with the house. You have no idea how many people comment how excited they are that they won't have to keep spending more money AFTER they buy the house.

That said, when it comes to deciding what to renovate and what not to renovate, we *generally* (though not always) take the following stance:

- Do a full remodel. Too often, I hear people say, "I can salvage those cabinets, so why buy new ones?" The problem is, when the potential buyer sees that you skimped on something (refurbishing cabinets instead of installing new, for example), they will wonder what else you skimped on. When buyers have this nagging wonder in the back of their head, it doesn't go away, and the deal becomes more difficult.

Using these principles, our average DOM for remodeled houses is about 18 days, with our average contract price being 97% of the original list price.

Sure, we give away some of our profits to achieve this (staging costs money, full remodels cost money, ensuring that you're the cheapest in the neighborhood costs money), but it's well worth it in our opinion. Sure, we could probably make an extra $5-10K on each project if we skimped and saved, but this way, we sleep well at night knowing our houses won't sit long on the market and our buyers will be happy.

Btw, doing this has also allowed us to build a following with agents in our area. They are constantly calling us first when they have buyers to see what we have coming up to sell...

So, while I know this isn't the advice you'll get from a lot of flippers, it's certainly what is working for us in this market. Of course, your mileage may vary...

Hope that helps...