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.

If you have a desire to Flip That House, you know that your really should know what you are doing the first time out. You should probably get some education. We, at FlipThatHouseWebsite.com are dedicated to providing you with up to the minute information and news on how to succeed in Real Estate Flipping. I also know that you don’t have to look hard to find some guru out there that is willing to show you how to become a wealthy real estate investor doing it their way. As for myself, my first introduction into Real Estate investing came in the mid ’80s from Robert Allen, author of “Nothing Down”. Surprisingly, Robert Allen is still out there promoting his seminars - I know because I still get emails from him periodically. Then there was Dr. Albert Lowry, Dave Del Dotto, and Carleton Sheets, all of whom would be glad to sign you up and show you their system (except for Dave who is not around anymore). And all of them had a system that will make you money if you actually apply the strategies properly.

The one thing none of them seemed to go into in much depth about was Real Estate Flipping, or how to “Flip That House”. Most of them would touch on the idea and devote a small chapter to the subject, but nobody seemed to go into any detail on how to do it. That was until Armando Montelongo.

Assuming you have not been living in a cave, you have probably seen Armando on TV as one of the stars of the A&E television show, “Flip This House”. When I first met Armando I had no idea who he was and had never seen the show. Now, I think there is still one other person who hasn’t seen him.

Armando has taken house flipping to a new level. He has made it his primary business and he proves it every week on TV. He has actually flipped as many 30 houses in one month. Now days, he is doing around 15-20 but still very actively showing the world how you can make money flipping real estate. And he showed me.

Armando made a promise to his wife that if he could somehow bring himself and his family out of poverty and actually make some big money in the business, that he would give back the knowledge he gained and show others how to do it too. Well he did make it a success, using no money of his own, and he is willing to show others. Armando Montelongo has put together a system that he wants to show to everyone and help them get started making money in Real Estate Flipping.

His system is the most comprehensive education on Real Estate Flipping that I have seen. He goes into so much detail that he calls it his Real Estate Flipping Machine. He shows you step by step how to Find Property, How to Fund the Deal using none of your own money, How to Fix the property, and ultimately, How to Flip the Property, putting a lot of cash in your pocket so you can go out and do it again. He shows you how it doesn’t matter what kind Real Estate market we are in because it will work. He especially loves this market we are in currently as says that “Real Estate is On Sale”.

If you truly want to learn how to Flip Real estate, it behooves you to first start by educating yourself on how to do it so as not to fall into some of the traps that first timers do, and thereby lose money. This is a business where you can make serious money. You don’t want to go out your first time, make some bad decisions, and become discouraged. You need to learn how you can make this a second income that can build wealth for you and your family.

Armando has an inexpensive E-book that you can download to get you started. But to get into the real meat and potatoes of the business he has a Master Home Study course that gets into every aspect of house flipping. In this course he will show you:

- How To Find The Deals
- How To Fund The Deals with No Money out of your pocket
- How To Make The Repairs in a no nonsense fashion that will make you the most money.
- How To Sell your house including how to sell a house in a weekend.

If you really want to get into house flipping and want to learn how to Flip That House the right way, I strongly urge you to get Armando Montelongo’s course. He will take you through from the Foundation of your business and “your Why”, to selling your properties for a profit every time.

To check out Armando Montelongo’s course you can go to Armando Montelongo.com and get started on your way to a better life today.

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.

Well, I put in an offer today for the house on Polk Street (by the way, my Realtor said she loves the new website at www.FlipThatHouseWebsite.com). Polk Street is the other Riverside house I mentioned yesterday. But that’s putting the punch line first. Let me go back…

I mentioned yesterday about another house in Riverside that I saw and think it might be a good candidate for me to Flip That House, but it definitely needs work. I put together an estimate of what I think the costs would be on the property to get it back in first class condition. Given the fact that I figure it needs to be taken down to the studs, completely insulated, a lot of new wiring, new drywall, doors, hardware, baseboard, new cabinets throughout, new plaster in the swimming pool and new pool equipment, complete landscaping, everything; I came up with a rehab cost of $104,000.

Now, I have also computed the After Repair Value (ARV) to be about $325,000 based on comps in the area. Using the 70% rule, that means I can get a loan of around $225,000. Subtract from that the rehab costs it leaves $121,000. Subtract from that a 10% fudge factor on the rehab and it leaves about $111,000. That represents my purchase price.

I made an offer of $105,000 all cash closing in 15 days. I went to $105K to allow me room to come back with a higher counter offer when they counter me (assuming me the will). In fact they are probably going to laugh considering they have it listed for $275K. I’m probably going to have to educate them on just what a liability they have sitting there.

I remember a mentor of mine told me one time that “if you’re not embarresed by the offer, you are offering too much.” Actually, it is a little embarrasing especially knowing that they (the bank) are not going to just jump at the offer, but this thing has been sitting there for over a year and it really is in bad shape. They just may not know it. I will make that they do know before this is over.

I’ll let you know you know what happens.