Flip That House

In as much as I didn’t get the house on Polk for the original price I was hoping, I have had to go back and revisit my estimate for the rehab.  Originally, I had come up with a rehab cost of $104,000.  This thing needs a lot of work to successfully Flip That House and make a profit.   But, one thing I have learned about myself is that I sometimes tend to over estimate costs on these rehabs.  But by the same token, I hate to under figure the costs also.  Having to come up with additional monies out of pocket to get a project completed sucks.  It tends to cut into the bottom line drastically.

I went back through and identified a few items that may have had a little padding in them, and I’m making some cuts in the scope of work also.   One thing I am cutting is insulation.  I made an assumption that since the house was built in the ’50s it probably didn’t have much insulation in the walls and ceiling.  I was planning on taking off wall finishes and putting fiberglass batt insulation in all of the exterior walls, and pulling down the ceiling to expose the ceiling joists, so I could put in new ceiling insulation. 

I am now thinking that if I leave the ceiling up there, I can blow in some cellulose insulation  up in the attic area.  Plus, radiant barrier material is relative inexpensive and I can install that under the rafters.  Radiant barrier is a very effective way to cut down on the asorbtion of the sun’s radiant heat into the house, and it definitely will help to keep the house cooler, cutting down on the energy needed to cool it in the summer.  Similarily, it will help in the winter to keep the warmth from radiating out. 

I am also trying to see how much I can save on the pool since I had figured on completely replastering the thing.  I had a pool plastering contractor look at it and he is going to save me  some  money there too. 

So after sharpening my pencil, getting some actual bids on work, and revising the scope of work, I have a new budget of $79,300.  With any luck this should leave me with about a $7,000 cushion for those inevitable unplanned costs. 

We’re planning on closing on the house later this week, so I am looking forward to getting started.

And for more great ideas that you can use if you are contemplating a Flip, check out www.FlipThatHouseWebsite.com.

In my last post I mentioned how the bank had requested a report from my Realtor. Since then, I heard that someone from the bank went out to visit the property for themself. This is an encouraging development. They may now willing to talk turkey about how best to get this off their books.

The way I see it, if the bank can actually see and understand just what a liability that they have sitting there, they may be willing to make a sensible decision and unload the property.

Keeping you posted.

Visit www.FlipThatHouseWebsite.com to get more information.

Going out and actually making a purchase of Real Estate can be a scary thing to contemplate especially if you think that you want to try to Flip That House. Your first time out can be pretty intimidating. You worry about where to get the money, you worry about whether you will get the property, you worry about losing the money. What if you spread out some of that worry by bringing some partners.

There are different kinds of partners too. There are money partners, partners that provide expertise, partners that provide part of the rehab, etc. One excellent way to use partners can by forming a Real Estate Investment Club. With an investment club you can conceivably bring together all forms of partners. What’s more, you can form this club yourself.

With an investment club you can spread out some of the leg work, and bring together some additional minds to help put together some successful investments. With those minds can come valuable experience. If you bring in a seasoned investor that has done it before, he/she can help point out some of the pitfalls and guide your investment strategy.

You can bring in partners who may have money they want to invest for a higher return than they would get at the bank, but not want to put much more into it than that. Some money partners want to be involved in every step and some don’t. But having money partner can help to bridge the gaps if you don’t have any of the money yourself.

Bringing in a muscle partner can help when it is time to do the rehab work. This may be a family member, or friend that is willing to put in his/her time and effort to complete the remodeling portion of the project for a cut at the end. It could also be a contractor or other professional who brings construction knowledge to the table. Many people don’t have the first clue about how to do a remodel, and bringing in a construction professional would help in this area. You could also bring in a licensed Real Estate professional who can not only help find the properties, but sell them too.

I know what you’re thinking - if I bring in all of these partners I will have a smaller profit at the end. But one of the great things about bringing these talented people together is that you can do more than one project at a time. While you are working on the remodel on one property, you can be out looking for the next deal or two. Conceivably, you could have as many projects underway as you have members in your club, with each member focusing on his or her area of expertise. So if you are closing on one property a month and splitting the profits, that would still be a great income.

When you are starting a new Real Estate Investment Club, you must make sure that all partners in the club are aware that there is always the potential to lose money. Nothing is guaranteed when investing Real Estate, but by bringing together several great minds, you should be able to avoid many of the pitfalls that an individual investor might fall into. Make sure you put together an actual partnership agreement so all members know just what is expected of each partner and how responsiblity for profits (or losses) will be handled. Schedule weekly or bi-weekly meetings to bring everyone up to date on progress, to discuss strategies, and review new investments.

Much of this is discussed in more depth on our website www.InvestmentClubs.TheIncomeAdder.com where you can get information on how to form your club, some of the things to avoid, documentation, and other great ideas.

So you don’t have to do this all by yourself. Put together a Real Estate Investment Club and take advantage of the help you can get from others who have like minds and want to invest in Real Estate. Visit www.InvestmentClubs.TheIncomeAdder.com.