All Forum Posts by: Rodney Marcantel

Inspectors are a good thing if you don't have experience inspecting yourself provided you're not under a time crunch (i.e. other bidders). However, they cost money and time. Learn to inspect and spot signs of key things like roof, foundation, termite or water damage from surface inspections. Bring a tape, a level, a flashlight, etc.

I find it interesting that you think you need an RE license to flip homes only to access the MLS. Unless you plan to use your license as a Real Estate Agent, you'll be wasting your money if your goal is to flip houses and not use your license as a Real Estate Agent (marketing homes for buyers and sellers).

Better to partner with an agent who is versed in distressed properties and/or has worked with flippers in the past with success. That agent would be more than happy to provide properties and MLS comps anytime you need them.

Leverage is the key to success. Leverage your time and money. Time is something you cannot get more of. You have to leverage your time so you can focus on finding and securing deals for your contractors and your selling agent.

Tarek and Christina from Flip or Flop were agents with an RE business before getting into flipping. They didn't get into flipping because they were RE agents. It was  out of a necessity due to a downturned market.

This is a Bank REO. Contact the bank. Don't know who the bank is? Do a title search.

It's a dynamic business, one that changes with the economy and sometimes against the economy. When times are tough for a family due to high interest rates and they struggle to pay their mortgage, you have a situation where foreclosures and pre-forclosures are rising and inventories go up as well because people are looking to get out of a high interest and high payment mortgage due to their living expenses exceeding income. That was the scenario a few years ago. Rehabs were easy to find and easier to turn a profit.

Today, interest rates are very low (historic lows some would say) and that's driving inventories to be at record lows because few want to sell because they like their low payments or the refinance costs are low enough that it make sense to refi and lower your payment whereby increasing your cash flow (income to debt). Low inventories means higher prices for properties as more and more investors come in to get the best deals as soon as they present themselves. Rehabs are still good but harder to find the deals that will have the best spread (purchase versus ARV). Other strategy in this market is to buy and hold due to the low interest rates whereby increasing CAP rate (rate of return on investment). A buy and hold is an appreciating asset so by holding and getting a decent return on your investment, you can cash in down the road for higher profit if your ARV when selling now isn't going to net a good return.

Deals will be out there no mater the market conditions. It's what you do with the market conditions that will ultimately determine your long term success as an investor. Education is critical and it goes beyond just real estate flipping and wholesaling courses. Anyone can do this type business but not everyone can or has the drive to train/learn and then execute. This is a business and you have to treat it as a business and know how to navigate the market fluctuations to profit. There  will always be a business of flipping homes and plenty of inventory because people need a roof over their head and are willing to pay for it. Hope this helps.

I'd either run away from this or buy it if you can get it extremely cheap (for what the land is worth) and you're in a desirable neighborhood (good appreciation or close to schools, businesses, public transportation, etc.). You'll likely have to tear it down and pour a foundation and reconstruct a new home. You'll get more money in the end for it depending on comps and market appreciation in your area. Where is the house located? Near you, Amarillo, Lubbock, or elsewhere.

• Start with knowing where to get private money lenders, build a list.
• Second, find a property you can get under contract and meets your criteria (i.e. 70% of ARV minus repair costs for instance).
• Third, create your Deal Analysis Report detailing the cost, repairs, ARV and your down payment.
• Fourth, submit your Deal Analysis Report to various lenders from your list in step one and negotiate a deal with them to close on the property.
• Fifth, after closing, contact some contractors to bid on repairs.
• Sixth, get your RE agent to market the property 2 weeks before work completion.
• Plan for contingencies and holding costs as well as alternate exit strategies.

Hope this helps.

Can't go wrong with an entire first floor of hardwood flooring. Anything you can do to add a wow factor to a home is worth the cost. Updated kitchens, bathrooms and flooring are key to increasing value as people who purchase homes don't want to mess with fixing or replacing those items which gives you an edge on getting a deal closed.

@Julian L. you wrote...

The contractor I liked the best gave me a quote of $10,500. I would have to purchase all appliances, sink, floors and extras. This is what I have budgeted:

$3000 for appliances
$350 sink
$100 garbage disposal
$450 hood vent
$300 facet
$100 backsplash
$350 hardwood floor
$1000 granite counter top
$1000 white wood cabinets with silver hardware

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My input for what it's worth.

Numbers look solid for a contractor bid. But you can save about 25% or more if you are contractor and sub the work. And you'll keep your costs under control.

$3,000 for appliances? Buy from a resale place or even Sears Outlet (if you have one). Will probably only cost you a max $2,500. I would use that extra $500 on the backsplash and upgrade to glass tiles or higher end backsplash.

$1,000 for granite (installed) is very reasonable. If that's only installation, then your contractor is robbing you as you can granite installed for $1,000 - $1,200 likely.

In a rehab, I would get stock cabinets and paint. For that size room, $1,000 seems about right with hardware. I think you meant to say brushed nickle or stainless hardware not silver. Also, you can increase the look and value added if your hardware is not just knobs but pull handles.

If you can get in the house to look, take a very long level and check level on the floors and top of door casings. Also, get a feel for the foundation by looking at trees close to property and water drainage as that can give you better indication of how well the soil is. Too wet or too dry over long periods can cause foundation problems. 

Is this a pier and beam or slab foundation?

We added a bathroom to a 4/2 house. Now 4/3. Moved a laundry room to a stackable laundry in a coat closet. Got permits and licensed contractors for the job. With new bathroom, widening one bathroom door, upgrading a toilet in master, granite on kitchen island (had ugly tile), hardwood flooring, upgrading lighting in dining and kitchen to can LED lights and paint, we spent about $19K in upgrades. Paid a premium for the house at $211K in a very nice neighborhood (bidding war). House is currently valued (after 1 year) at $240K. 

Going in, it wasn't a fix and flip property, but a home for my father-in-law with alzheimer's and a live in nurse. We decided to lease the property to a care home agency who has 3 residents in the home now covering the costs. So we paid cash for the house and the updates which earns $2,000 monthly in rent - $350 in expenses (taxes/insurance/home warranty) which net's us about 8.6% on our investment. Better than a CD or Fund. And we have an appreciating asset now.

So, was adding a 3rd bathroom a wise investment, not for a short term flip but for passive income yes as leasing the home to a care home organization commands higher rents than for single family (could only rent to single family for $1,600 monthly). 

Lesson learned: If purchasing a home to make money, know your options and ways out. In my case, I knew that home appreciation was at a good pace but also knew that I could rent to a care home organization if appreciation wasn't strong enough in the short term.