How to Find Private Money for Real Estate Investments

private money lendersI have completed a lot of house flips and bought many rental properties. Over the years, I have established many private-money relationships. Some of the people who work with me are amazed at how much money people are willing to lend me! I was able to attract private-money lenders by being trustworthy, being transparent, and putting myself out in the public eye. I don’t have a fancy presentation or a secret list of lenders. I am myself and honest about everything I do. It is not easy to attract private money, especially when just starting out, but it can be a game changer if you are a real estate investor.

What is private money?

The first thing I want to talk about is what private money is. There is a lot of confusion about hard money and private money. The biggest problem is that hard-money lenders started calling themselves private-money lenders in order to get more business.

A hard-money lender is a company that lends money to real estate investors. They usually lend from 8 to 15%, and the terms are less than one year. The loans are meant for house flipping but can be used for rental properties that are refinanced quickly as well. Hard-money lenders usually require an appraisal, have loan fees, underwriting, and a loan approval process. Hard-money loans can be a pain. They have a lot of fees, and the lenders can change their minds at any time with no real repercussions.

Private money comes from a person who lends money to another person. When I borrow private money, it is not from a company that specializes in lending money—it is from someone I know. I have at least 6 people I borrow money from. Some are friends, some are family, some are investors I know, and some are strangers who found me online. Private-money lenders often have no fees, require no underwriting, and most likely do not need an appraisal or valuation.

When I get a private-money loan, I send a text or an email to my lender and ask them if they want to do this loan. With some of the lenders, I give the address and a few basic numbers like the purchase price, the repairs needed, and the ARV (after repaired value). With other lenders, I say, “Hey, you want to do a loan?”

I love private money because it is so easy to use and I know there will not be any issues once my lender says I can do the loan. I have had many problems with many different hard-money lenders.

Do not confuse hard money with private money!

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Avoid private-money scams!

You may want to get into the heart of how to find private-money lenders, but first a word of warning: do not fall for private-money scams! I personally can’t believe people fall for them, but it happens all the time.

How does the scam work?

Someone posts something on social media about having private-money loans from $50,000 to $5,000,000 at a 5% interest rate and no points, no credit needed, and no income verification. It sounds too good to be true, right? Well, that is because it is too good to be true!

The scammer will charge a small fee to get the application process started, and once they have that, you will never hear from them again. Private-money lenders are not looking to loan their money at rock bottom rates to strangers they find online. Don’t fall for it!

How did I find my private lenders?

When I was flipping houses in the beginning, I did not use private money. I worked with my father, and almost all the money we used was from the bank. This was also before the housing crash when it was much easier to get money from banks for flipping houses. We had a large credit line that we could use for whatever property we wanted.

After the housing crash happened, those lines of credit dried up, and we had to find new financing. We found banks who would lend to us, but we had to put 25% down and finance all of the repairs. We could handle that because we had been in the business for a long time and had a lot of working capital.

Over time, I took over the business and was flipping houses on my own. I was still using bank money, but a couple of people approached me about lending me private money. One was an investor who used to be one of our main competitors in the house flipping business. He had stopped flipping houses but was interested in lending me money when I flipped houses.

I was not sure what to make of the offer since the interest rate he wanted was much higher than the bank’s interest rate. He was also offering to finance 100% of the purchase price. That was intriguing to me because it meant I could flip many more houses. I wouldn’t have to come up with nearly as much cash for each deal. I did one deal with him and then another, and then he became my main source of financing.

I have also borrowed money from family members who saw what I was doing and knew that I could give them decent returns that were safer than other high-risk investments.

Another investor saw my YouTube videos and my blog and wanted to become an investor! I am at a point now where there is no way I can use all the money I have available to me. At the same time, the lenders are not dependent on me to make them money, so there is no pressure to use the private money all the time.

loans for house flips

How are my private-money deals set up?

I very rarely partner with anyone. I almost always set up my loans as a pure interest rate deal. The private-money lender gives me money, and I pay them interest and points. Points are like an origination fee and are based on a percentage of the loan. If I pay 2 points on a $100k loan, I pay $2,000. My lenders charge from 1 to 2 points on the loans. Hard-money lenders charge from 1 to 5 points on loans.

Some investors will share the equity with the lenders, or as I like to call it partners if it is an equity share. They will do all the work, find the deal, and sell the property, while the lender will put up all of the money. Often, the two partners will split the profit 50/50. I hate giving up equity, and I also hate paying people based on the profit I make. There can be a lot of doubt and suspicion about the actual profits, the actual costs, and how the money is being handled on those deals. When I borrow money based on the interest rate, there is no confusion, and it gives me a sense of urgency to get things done so it doesn’t cost me as much money!

When I borrow money for a house flip, I will create a Deed of Trust and a Note for the lender. I sign both documents that describe the interest rate, payments, late fees, etc. and record the Deed of Trust and return the note to the lender. If I can’t repay the loan for any reason, the lenders have the property as collateral. It is not an easy process, but they could foreclose on the property and take the house back if they wanted to after I stop making payments or violate any of the terms of the loan.

I also have some deals set up with family where I borrow money all year round, not on a per-deal basis. These loans also have Deeds of Trusts on rental properties I own. The lender has collateral and a way to get their money back if things go south. Their investment is secured by a real asset.

Why do my lenders trust me?

One thing that surprises many people that work with me (I have no idea why) is how many people want to lend me money! The other day, I mentioned on Instagram that I was starting an opportunity fund. I was starting this fund with my own money, and I was not looking for any investor money. I had multiple people ask how they could invest in my fund. I had no idea who these people were!

I have people ask to invest with me all the time, and the reason is they trust me. Why do they trust me? I think it is because I am very open about what I do, I show the numbers on my deals, I show videos of my properties, and they can verify everything I say. I have also done well for myself and have a few nice cars like my Lamborghini.

Over the years, I have created a blog (what you are reading now), a YouTube channel, an Instagram page, a Facebook page, etc. I have not been afraid to talk about what I do and share what I do. This transparency has been a huge reason why people trust me and want to invest with me.

Not only do I talk about my successes, but I talk about my failures as well. I do not make money on every single deal I do. I think being honest and admitting my mistakes also plays a big part in why people trust me. I think it also helps that I have a credit score over 800, and I have never missed a payment in my life.

How can you find private money?

I have talked about how I was able to find private money, but that might not relate well to people who are just starting out or do not have a public presence. How can the average real estate investor find those private lenders?

The first thing I tell everyone is you cannot be afraid to ask! Many people say they are afraid to ask their family for one because they do not want to lose it. Does that mean it is okay to lose a stranger’s money? Do you intend to lose this money? If you are not confident in your investing and 100% sure you will be able to pay back the money you are borrowing, you may not be ready to borrow it. Sure things happen, but if you are looking to borrow private money simply because you are not prepared enough to get bank money, you may need to do more prep work.

Your family is the first place to state, and it should be mutually beneficial. You are providing them with a superior return, and you are making money using their money in the real estate business. You should not be begging for a favor but providing them with an opportunity.

You can do the same thing with friends, co-workers, or any other contact you have. Remember, that it is an opportunity for them to make a high return with an asset-backed investment.

If you know no one with money, which is very rare (most people know people with money, they are just afraid to ask them), you can start searching for people with money.

  • Look up public records to see who is buying houses without loans. Those are investors with cash, and they may want to lend money as well as invest.
  • Immerse yourself in the real estate world and find the investors who have money but don’t have the desire to hustle as hard anymore.
  • Put yourself out in the public eye. Write a blog, post on social media, start a YouTube channel. No one will find you if you don’t make it easy for them!
  • Attend real estate investor clubs. These clubs often have a lot of newbies, but there can be some experiences investors there as well.

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Conclusion

Private money can be a wonderful tool to help your real estate investing business. However, you must be prepared and know what you are doing if you think private investors will give you money. You have to show how their investment is safe, and you must show that you are trustworthy. If you try to BS people into giving you money, it will be a long and hard battle that will not end well.

Source: investfourmore.com

Should You Have a Real Estate Investment Partner?

A lot of people look for partners when investing in real estate. They look for a partner because they need money, they need expertise, or they want someone to share in the pros and cons. Investing in real estate can be an amazing venture, but it is not easy and it often takes a lot of money. For these reasons, a partner can make sense but a partner can also cause problems. Not all partners are created equal and many times a partner is not needed or can complicate the deal. If you are looking for a partner you need to figure out exactly what the roles of the partners will be, if the partner is needed, and everything needs to be in writing!

Do you need a partner?

A lot of real estate investors or people who want to invest in real estate want a partner. They do not want a partner because they need something particular, they want a partner because they have heard it can be good to have a partner and it might be nice to have someone to share the responsibilities with.

I am not a fan of partnering just to partner. I think you should only take on a partner if you need someone very specific and can create specific roles for each person. It can be very tricky and very risky bringing in someone else, especially if they are not an expert in what you are trying to do I have seen many people partner with a friend because it seems fun but now there are a few people who don’t know what they are doing working a deal instead of one. This does not increase your chances of success!

If you are scared to do a deal or to start something new because you do not feel you have the experience to do it on your own, another person who also does not have the experience will not help, in fact, it could very well hurt! Not to mention, if friendships or family are involved it can lead to some very awkward and flat-out horrible situations.

The complete guide to flipping houses.

What can a partner bring to the table?

Not all partnerships are bad and there can be times when a partner is needed. Here are some things a partner can help with:

  • Money
  • Time
  • Experience
  • Network
  • Financing
  • Labor

The most common reason to use a partner is that one person has money and the other does not. I think the best way to set up this relationship is to have one person do the work and the other provides the money. A partner can also save time if they have extra time for tasks that the other partner does not have. Partners can have the experience that will help the other partner, and networking is obviously a huge benefit as well. In some cases, a partner will be able to help with financing a deal and in other cases, a partner can provide the grunt work.

The complete guide to investing in rentals

Are there alternatives to bringing on a partner?

I have done many real estate deals and very rarely use a partner. I prefer to be in total control and keep 100 percent of the equity. When you bring on a partner, they almost always want a share of the equity and the profits. This does not mean I do everything on my own. I have many people who help me and I have learned a lot from those who know much more than me. However, making someone a partner is not always the only option.

I borrow money from many people in the form of private money. I could bring people on as a partner and split the profits but I prefer to pay them an interest rate instead. If I do not do well on a deal that means I may lose more money than if I had a partner, but if I do well I make much more than if I had a partner. I also get to make all of the decisions which is even more important to me.

The alternative to bringing a partner in is paying someone. You can pay someone to teach you, you can pay interest on a loan, and you can pay someone to work for you. I also think that handling deals this way leads to fewer conflicts and misunderstandings. It is usually clear what each party is getting and if one party does not hold up their end of the deal, the relationship usually ends.

The video below is a rental property I bought with a partner.

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What can go wrong in a partnership?

Many things can go wrong in a partnership! The biggest problems that arise in a partnership come from one party not doing what the other party expects them to do. Because the partnership involves equity, this can make the deal very tricky. To end the partnership, one party must buy out the other party or the asset must be sold. This can not always be easily done.

I think the biggest issue with partnerships is that the roles of each partner are not clearly defined. When you create a partnership each person needs to know exactly what is expected of them and what will happen if they do not hold up their end of the deal. If the roles are not clearly defined one partner or even both partners, or all the partners may not hold up their part of the deal. Not only can this be frustrating to those who are involved but it can destroy the deal if the work is not being done.

This is why a partnership that is there simply to make each person feel better about having someone with them is such a bad idea. The roles are almost never defined, the partners do not know what they are supposed to be doing, and in most cases, one partner does more work than the other and there are bad feelings. To throw salt onto the wound, the deal usually goes bad as well and people lose money.

How does a partnership work?

There are many different ways to set up a partnership and many types of real estate that a partnership can be used with. I have partnered with an investor when buying a large commercial property, and I used to partner with my father flipping houses.

Flipping houses

As I mentioned the best partnerships with house flipping tend to be when one party does all of the work and the other party provides all of the money. The usual split I see with this setup is 50/50. Both partners get 50 percent of the profits. There can be many ways to set up a partnership but always get everything in writing! What happens if things go bad? Or if one partner gets sick or dies? Or if one partner runs out of money?

Rental properties

Rental property partnerships can be a little trickier. There is no solid profit number at the end of the deal and there is no set time when the partnership ends. Partnerships can still work with a number of different scenarios but again everything should be in writing.  One person could provide all of the funding while the other does all of the work. Or there could be equal amounts of work. There is no exact way to set things up but make sure you need a partner as the exit can be tricky. What if one partner wants out but the other does not? What if one partner runs into financial problems and has to be bought out but the other partner does not have the money to buy them out? You could run into a situation where the property must be sold but no one really wants to sell it!

Conclusion

Partners can provide value to a deal but they are not always necessary. I think using private money lenders instead of partners can make things much simpler. If you really want a partner make sure as many scenarios as possible are covered and that it is clear what the responsibility of each partner will be!

Source: investfourmore.com

What the Flip? Portland Home Gets a Major Face-Lift and Gains $600K in Value

Flipping a house is a lot of work that can yield a big profit. But not every project is guaranteed to be lucrative. So what’s the key to successfully making over a fixer-upper and selling it for a gain? Our series “What the Flip?” presents before and after photos to identify the smart construction and design decisions that ultimately helped make the house desirable to buyers.

Known for friendly faces, eclectic locals, and beautiful scenery, Portland, OR, has been seen as a desirable place to put down roots for a while now. It was even rated the ninth best U.S. city to live in by U.S. News & World Report. All of those benefits, plus historically low real estate inventory, mean housing prices in Portland are high. But for flippers who can nab a fixer-upper with good bones, there’s plenty of potential for profit—as this example shows.

The flippers who took on this five-bedroom, five-bathroom house made a smart move by pouncing on the well-worn property for $875,000 when it was listed in June 2019. After a full-on renovation, they put the home up for sale, and in December 2020 it was sold for $1,475,000.

So how did they raise the home’s value by $600,000 in just a year and a half—and during a pandemic, no less? The booming market wasn’t the only thing that made this home sale such a success. The fresh renovations also had something to do with making this a must-have property.

Taking into account the home’s now-stylish interior design, we asked our team of experts to look at before and after photos and weigh in on the changes that made the biggest difference in this home. Here’s what they had to say.

Living room

Talk about major changes! Once full of dark, drab wallpaper and a dated, textured ceiling, the living room now has a brighter, cleaner look.

“The application of white paint on everything really works well in this room,” says designer, real estate agent, and house-flipping investor Laura Schlicht. “Two of this house’s biggest assets have been artfully played up: the architectural moldings and the fantastic view.”

“It was a great move to get rid of the extra door on the side of the fireplace,” adds real estate investor and agent Molly Gallagher, of Falk Ruvin Gallagher. “There are plenty of other ways in and out of the room, and it allowed them to widen the hearth and keep the green-tiled theme going.”

Kitchen

The old kitchen was spacious, but that’s about all it had going for it. Once the flippers worked their magic, they had a kitchen that would impress any prospective buyer.

“Removing a section of the wall between the dining room and kitchen brings much more light into the kitchen, bouncing off the bright white cabinets, rather than keeping the view for the dining room itself,” says Kate Ziegler, real estate investor and real estate agent.

She adds that her top question from buyers touring homes is whether or not they can remove a wall.

“Having done this update for the buyers broadens the audience for this home, and boosts sale price as a result,” says Ziegler.

Real estate investor and agent Tracie Setliff, also with Falk Ruvin Gallagher, was impressed with the island addition.

“The island placement is perfect—it seems like it was always there and makes up for some of the storage lost by opening up the wall,” she adds.

“We love that they nod to the original lights and time period of the home with the updated light fixtures they chose,” adds Gallagher. “And they smartly chose to appeal to a wide buyer pool by not adding in some specific tile that will be dated in five years.”

Home office

Before 2020, a home office was just a bonus, but now it’s essential—whether it’s for work or school, or both. Even though this renovation was started before the coronavirus pandemic, the flippers chose to upgrade this home office in a major way, which really paid off by the time they listed the home.

“I love that they removed the old attached bookshelf,” says Setliff. “The room has an airier feel to it without the hulk of the built-in shelving. There are so many cute bookshelves that are much sleeker.”

Schlicht agreed, explaining that the built-in bookcase, while often a bonus, was actually the wrong size for the space and made the room feel crowded.

“Let’s take a moment to notice the windows,” says Ziegler. “New windows are a significant cost that most new buyers don’t want to take on in the near term—but the payback in efficiency can be remarkable. Replacing windows as part of a flip makes the whole space look more contemporary and polished, but also adds real value to the home that buyers can quantify.”

Dining room

At first glance, it may seem like the only real change in the dining room was a new coat of white paint, but Ziegler says that’s not the case. In fact, she was rather impressed with the flippers’ efforts in this room.

“The dining room demonstrates places where the investors behind this work took the time to restore and retain older details: keeping the built-in sideboard, and even the mirror detail below the smaller window shows a thoughtful approach and is indicative of more time-intensive work,” Ziegler says.

“Restoring details rather than replacing with cheaper, contemporary alternatives requires patience and care, and that attention to detail is something buyers notice even if they don’t have the vocabulary to describe it,” she adds. “The updated chandelier is trendy but also a nod to midcentury modern styling that is appropriate for a house of this age.”

Setliff is happy to see the “boring” light fixture go, in favor of the new “sophisticated, sculpturelike light.”

“Buyers do not want to have to change fixtures, as simple as it seems, and keeping it fun yet unfussy was the way to go,” she says. “It is interesting how you notice the views from the windows now that your eye isn’t drawn to the dark brown of the built-in cabinets and window trim.”

Den

This old den went from afterthought to amazing after this flip, and our experts are impressed with the results.

“Goodbye, ’60s; hello, now!” says Gallagher. “Knotty pine is best reserved for Wisconsin supper clubs these days, and today’s buyers are not interested in having a supper club theme for their den.”

“Removing drop ceilings and wood paneling is an easy, instant update, but the nicer detail here is the addition of recessed lighting,” says Ziegler. “Recessed lighting in a basement space creates the illusion of more headroom, making for a much more comfortable den. Updating the basement den adds valuable square footage that buyers might have otherwise written off as just basement space.”

And we can’t forget about the star of this room: the fireplace.

“Replacing the dated brick with a pop of green tile and the white surround and mantel transform this new den,” says Setliff.

Source: realtor.com

7 Insider Secrets About House Flipping To Put You on the Path to Profitability

Is 2021 the year you’re going to buy a real estate investment property? If you have your sights set on flipping a house for a big profit, you likely know how much work is involved. Sure, popular real estate reality shows like “Flip or Flop” and “Flipping Across America” make fix-and-flip investing look like a feasible endeavor, but you’re wise to the magic of TV, right?

The truth is that flipping a house is rife with challenges, from financial setbacks to breakdowns in communication with your construction crew. Plus, low interest rates mean properties are flying off the market, especially in up-and-coming neighborhoods.

So how can house-flipping newbies compete today? By learning from those with more experience. We spoke to successful home flippers about what they wish they had known when starting out. Hopefully their tips below will help you minimize pain and maximize profits.

1. Stick to your maximum allowable offer

Our experts all agree that buying a fix-and-flip investment should not be an emotional decision. There are certain formulas that every house flipper needs to calculate in order to make a profit.

“Real estate investing is a numbers business, and if the deal doesn’t make sense when you crunch the numbers, you should be able to walk away,” says Hayden Lyon of Cowtown Home Buyers, a real estate investment firm in Fort Worth, TX.

“Stick to your maximum allowable offer. Going above your MAO is just asking for trouble,” says Ryne Lambert, co-founder of Sell My House, a real estate investment firm in Green Bay, WI.

The general rule when determining your MAO is not to pay more than 70% of the property’s after-repair value, or ARV, minus repair estimates. For example, if the property’s ARV will be $150,000, you would subtract the costs to flip (including the cost of a loan, repairs, and other fees) and then multiply that number by 70%. That will give you the MAO you should make on the property.

However, Lambert recommends a more exact formula: “We calculate MAO as ARV minus rehab estimates, selling costs, and minimum gross profit,” he says. “Our detailed formula makes our offer more competitive for sellers while still providing us a nice profit.”

2. Build a buffer into your renovation budget

Anyone who’s undertaken repairs on their house or an investment property knows things rarely go as planned. Permit delays, bad weather, and unforeseen expenses can all throw a wrench in the works—and revise your bottom line.

That’s why Lambert advises new investors to build a buffer of up to 25% into their rehab estimate.

3. Don’t always go with the cheapest contractor

Finding the right contractor can help keep renovation costs in check—but right does not always mean the least expensive.

“When I was new, I thought in order to keep as much profit margin in the flip as I could, I needed to choose the lowest contractor bid,” says Jonathan Faccone of Halo Homebuyers, a real estate consultant in Bridgewater Township, NJ.

“You do have to manage costs prudently, but going with the lowest contractor bids usually end up costing you more in the long run,” says Faccone. “Be cautious about choosing the cheap price and, instead, go with the contractor who offers the best quality and most professional work for your money.”

4. Make sure the contractors have a clear scope of work

You may be able to head off issues with contractors—including plumbers, electricians, and general contractors—by ensuring they present a clear scope of work for the project, experts advise.

“The scope of work usually includes working with the city to obtain permits, ordering materials and equipment, and confirming the house plans. This section will save you a lot of time and money on the back end of the project,” says Shawn Breyer of Breyer Home Buyers, a real estate investing firm in Atlanta.

Most importantly, start building relationships with contractors in the areas where you invest, so you know whom you can trust for any project.

5. Provide a quality product

As fast as homes are selling today, the market is filled with many discerning buyers.

“Often, the ultimate buyer of a flip expects the home to compare with existing homes—or even new construction—in quality and value,” says Greg Kurzner, a Realtor ® for ERA Atlantic Reality in Alpharetta, GA.

Lyon agrees: “Focus on value-add renovations and amenities. Research shows buyers want a nice kitchen and bathrooms. Of course, everything should be functional and up to code, but you want to create an instant emotional connection for potential buyers.”

6. Get your own finances in order before you start

Several investors pointed out the importance of running your blossoming home-flipping company as a business—because it is. That means tracking all of your expenses so you can make better decisions for greater profits. Be extremely organized, and document every purchase order, utility bill, and closing fee that’s involved in the project.

It’s also important to have your own financial house in order before you start.

“If all goes well, you’re about to start making money in large chunks. If you lack proper discipline, you’ll wind up worse than when you started,” says Billy Ross, CEO at RFTA Properties, a residential real estate investment company in Winter Park, FL.

7. Expect to put time and money into marketing

James Fitzgibbons of Ledge Real Estate Solutions, in Windermere, FL, says he wishes he had spent more time in his early years learning how to market homes efficiently.

“We have a wrapped car that we drive around town,” he says. “We’ve driven for dollars, and we’ve used direct mail marketing. Today, we advertise online through Google and Facebook. All of these methods have potential if done right.”

Source: realtor.com

How This 1920s California Bohemian Sold Over Asking—and Helped Set a Record

It doesn’t matter how perfect your home is—if your listing photos don’t stand out, potential buyers won’t come by to take a look. In our series “Lessons From Listing Photos,” we dissect the smart updates sellers have made to their homes, and how their listing pictures highlight the home’s best assets.

In 2020, nothing is for certain—and in many places, that includes the real estate market. That’s not true for Berkeley, though. This Northern California city, located on the east side of the San Francisco Bay, is experiencing an upswing in an already booming real estate market. In fact, October 2020 racked up the most single-family home sales for the city in nearly two decades.

High demand is likely to have been part of the reason the former owners of this two-bedroom, one-bathroom bungalow in Berkeley were able to sell their home for $161,000 over the listing price of $1,189,000. They purchased their home in April 2014 for $1,020,000 and sold it in November, for $1.35 million. But, looking at the before and after photos, we also chalk this successful sale up to smart home staging.

If you’re getting ready to put your home on the market, there are plenty of lessons to learn from this particular sale. From clever design decisions to the little details that made all the difference, here are the moves that made this cozy home appealing to buyers.

Living room

This living room may feel completely different in the before and after photos, but if you look closely, you’ll notice there weren’t any major changes. Instead, the owners made a few smart cosmetic updates and did a great job of staging the room.

“The ‘before’ of this room felt small, dark, and choppy, due to the use of multiple paint colors breaking up the visual flow of the space,” explains designer Gabrielle Aker, of Aker Interiors. “The fresh coat of white paint instantly brightens the room.”

Danny Davis, owner and broker of San Diego Brokerage in Encinitas, CA, agrees that color was a key factor in the living room.

“In my decades of experience in real estate, no one has ever told me that they were looking for a dark and gloomy home. Everyone wants light and bright,” he says. “Incorporating stylish, minimalist furniture and light paint and stain colors often make a smaller space feel larger and more livable.”

Real estate agent Natasha Wood of Balaj Realty Group says making the floors more visible also made a big impact.

“Hardwood flooring can increase a home’s value by up to 5%, so showing that off is key,” she explains.

Kitchen

“Choosing the right professional photographer and staging company is very important when selling your home,” says Davis.

He explains that each listing must attract a buyer in the first few photos, or they’ll just keep scrolling. In the case of this kitchen, he says the listing photos showed exactly what buyers want to see.

“This kitchen, where families tend to spend most of their time, is so much more inviting in the ‘after’ photo,” he says.

“That warm wood island makes such a difference in this space,” adds Susan Covell Sands, owner of Susan Covell Designs. “The floor-to-ceiling white tile, new textured stone floor—all of it looks much cozier and workable than the ‘before’ photo, with its gray walls and old, orange-toned wood floors.

Nook

Before the overhaul, this nook just off of the kitchen was a strange bit of wasted space, a real shame in a small home.

“What a difference it makes to give a space a specific function,” says Covell Sands. “Showing the shelves with a laptop, lamp, and stool gives the potential buyer the understanding that this space could be more than just extra storage shelves.”

Davis explained that thanks to COVID-19, most of us are now doing many things at home that we used to do elsewhere, from working, to exercising, to school.

“It’s more important than ever to showcase an area where people can have a private space to work and take Zoom calls away from the rest of the family, pets, and mess that a home must accommodate in today’s lifestyle,” he says.

“Creating a useful space that has a dedicated function, especially in a small home, will invite buyers to imagine themselves in that space, instead of wondering what to do with it.”

Dining room

Even in the before image, this unique dining room was a showstopper, but after a few tweaks, it’s a home buyer’s heaven.

According to Davis, staging was a huge factor in this room.

“As for staging, it’s imperative that you stay away from bulky furniture in small areas and finish off a room with accents like window shades,” he explains, which is exactly what happened in this space.

Kendall Severson, co-owner of Interior Design Partnership, LLC, agreed.

“I love this transformation!” she says. “The ‘before’ picture makes the space feel heavy and small. They toned down the color and focused on white and natural elements. … They really hit the nail on the head when it came to scale and proportion in this space.”

Wood noticed that the stairs are also visible from this room.

“The updated stairway follows the natural movement throughout the home and creates a cohesive feel,” she says.

Bedroom

Having an extra bedroom that doubles as both a guest room and an office may sound like a great way to utilize a space, but our experts say that often sends buyers running.

“Defining a space with a specific purpose definitely helps a buyer envision themselves and their belongings in a home. That’s why staging is so valuable to home sellers,” says Davis.

He explains that the previous owners, once again, pulled off a major win in this room.

“Oftentimes, multipurpose rooms—such as a guest room/office—only point out to the buyer that the home doesn’t have room for both purposes, and that can have a negative effect on buyer perception,” he says.

Staging this room as a cozy bedroom makes the whole house feel more inviting and livable, he argues.

Source: realtor.com

What the Flip? This Refurbished Asheville, NC, Home Made a 6-Figure Profit

Flipping a house is a lot of work, and can yield a big profit. But not every project is guaranteed to be lucrative. So what’s the key to successfully making over a fixer-upper and selling it for a gain? Our new series, “What the Flip?” presents before and after photos to identify the smart construction and design decisions that ultimately helped to make a house desirable to buyers.

For years, the city of Asheville, NC, has been a popular place to live. It’s earned a reputation both as a cultural hub and as an outdoor lover’s dream, with easy access to Great Smoky Mountains National Park and the Appalachian Trail.

Those facts—coupled with the notion that the COVID-19 pandemic has prompted people to re-evaluate where they really want to live—made Asheville and the surrounding area especially hot in 2020.

“The market in Asheville has significantly increased over the last year. We are experiencing record demand from buyers who are coming from major metro areas,” says the real estate agent Mike Figura, broker and owner of Mosaic Community Lifestyle Realty in Asheville.

“At the same time, fewer people are listing their homes, causing low supply, tight inventory, rising prices, and frequent bidding wars.”

Any seasoned house flipper can see the opportunity in a city like Asheville, especially if it’s a seller’s market. That’s why we were excited to find this fixer-upper turned polished property in the heart of the West Asheville neighborhood.

The six-bedroom, four-bathroom home was purchased for $276,000 in January 2020. After a top-to-bottom renovation, it was listed just six months later for $500,000. It sold in a little less than a month, for $525,000.

Of course, it wasn’t just the hot market that brought such an amazing profit, although the flip was pretty impressive, so we’re guessing that did help a lot, too.

We went straight to our experts to find out which changes are likely to have lured in buyers, and to discover how you can make that happen with your home, too.

Front porch

The old front porch lacked curb appeal. All the windows and doors made it difficult to determine where you were supposed to enter the house. That’s not the kind of impression you want to make on potential buyers.

“By removing the existing doors and creating a new front door, the entry feels like it has a sense of arrival now,” explains Adrienne Valenza, an interior designer at Adrienne Valenza Design. “Replacing the windows with new, Craftsman-style windows also added to the charm.”

The dirty and dingy feel of the old porch was also a big negative. Thankfully, the flippers didn’t stop at changing out doors and windows; they also went to work with scrub brushes and buckets of paint.

“By cleaning up, and painting light, beachy colors on this porch renovation, it helps create a welcoming feeling, while adding tremendous curb appeal,” says Mike Syms, of Full Scale Renovations.

Living room

Talk about fresh and clean! This living room got a major glow-up, and our experts are feeling it.

“By removing the carpet and refinishing the wood floors, it gives the room much more of a sophisticated look, which is further echoed in the color palette,” says Valenza.

It also doesn’t hurt that the furniture, fixtures, and fireplace are no longer reminiscent of something you’d find at grandma’s house. Modern buyers want a modern home, and the outdated look of this living room gave buyers the impression that they were looking at a major project.

In the end, the most subtle new feature of this living room is the ceiling.

“The addition of the ceiling bulkheads on this living room remodel adds a lot of interest and provides a feeling reminiscent of a modern hotel,” says Syms. “This detail will make potential buyers remember this house as something unique and different from all the others on the market.”

Kitchen

The previous kitchen in this house was outdated, with a layout that just didn’t work. Its foldable table just screamed that the room didn’t have enough workable space. But the renovated kitchen is now a place for cooking, entertaining, and feeling at home.

“Changing the layout of this kitchen and opening it up to the living room was a fantastic use of the space. It’s so much more functional and open now,” says Valenza. “Continuing the color palette from the new living room was also a smart decision; it makes everything feel more spacious.”

And at a time when people are taking up home cooking instead of dining out, spacious kitchens are definitely a selling point.

“This kitchen remodel will add a ton of resale value to this home,” says Syms, “by getting rid of the textured ceiling and outdated yellow paint and adding the large island with quartz countertops. The new finishes provide a clean and contemporary look that homeowners love.”

Other touches to the kitchen, like the “dramatic, scalloped backsplash tile and the free-floating range hood,” add a touch of class, Syms says. All that goes a long way toward helping the home to stand out in the minds of potential buyers.

Bathroom

The bathroom in this home is small, which is a tough sell, now that buyers are looking for bathrooms that look more like spas.

While the flippers didn’t have the space to make the bathroom larger, they did know how to make the most of what they were working with.

“They did a great job with the new layout. It’s a functional bathroom that feels much larger than it did before,” says Valenza.

The new vanity gives the bathroom “much-needed additional storage space,” Syms points out. No one wants a bathroom that can’t hold their essentials.

“The details are simple without being boring,” says Valenza. “Using the monochromatic patterned floor tile as a border in the shower is a great way to add visual interest without overwhelming the space.”

“It adds a high-end custom look that potential buyers would love,” says Syms of the patterned tile in the shower. And that’s the goal when flipping a house, right?

Source: realtor.com

What the Flip? A 1909 Family Home Is Fully Restored and Grabs Top Dollar

Flipping a house is a lot of work, and can yield a big profit. But not every project is guaranteed to be lucrative. So what’s the key to successfully making over a fixer-upper and selling it for a gain? Our new series “What the Flip?” presents before and after photos to identify the smart construction and design decisions that ultimately helped make a house desirable to buyers.

Oklahoma City is an alluring place for home buyers these days. Its cost of living is low, there are plenty of opportunities for work and play, and you get the pace of city life with the quiet of the country nearby.

With a median listing price of $225,000, Oklahoma City is certainly a place to score a sizable single-family home for a reasonable chunk of cash, but finding an age-old property with good bones is a challenge. So when our flippers stumbled upon this four-bedroom, three-bathroom home from the early 1900s—in one of the city’s most prestigious and historic neighborhoods—they jumped.

Sure, the home wasn’t exactly in great shape, but that’s where the flip comes in. This old home went from drab and dusty to absolutely fabulous. It was purchased in July 2018 for $325,000, and in September 2019 it was sold again, for $642,000. The sellers doubled their money in just over a year—a result that any flipper could hope for.

So what made this such a successful flip? We turned to our experts to uncover the winning design and home improvement moves.

Living room

The living room is often the first space buyers see when they enter the home, so bringing this room up to date was key. The original room felt dark, dirty, and cramped, so the sellers had a big project on their hands.

“Lighting is key to this room,” says Malissa Kelsch, real estate adviser with Red Rock Real Estate. “Removal of window coverings and additional can lights deliver a distinctive sensation of relaxation.”

“They resurfaced the walls, which was a great choice to make the walls feel like new construction,” adds architect and interior designer Alondra Alberti. “The light paint and blond floor stain showcase how large the space actually is.”

But one of the most impactful changes was simply the removal of the accordion doors leading to the kitchen.

“The living room seamlessly flows into the kitchen to make it a perfect home for entertaining,” adds real estate agent Sarah Bernard. “This is the open, bright look that buyers today are demanding in new construction, so to renovate with this in mind makes lots of sense.”

Office

Previously, the home office looks like a strange afterthought. The flip transformed it into a gorgeous, usable room.

“Home offices are one of the most sought-after spaces in our current climate of working and teaching kids remotely,” says Bernard. “The new floor, lighting, and open, sleek modern space with windows make this a strong selling point for busy buyers.”

“The hardwood floors throughout facilitate the visual flow between spaces, creating a more harmonious relationship between the office and the rest of the house,” says Alberti. “I also love the contrast of the black-matte stair raisers and wooden handrails. It provides a sophisticated rustic appeal that a lot of buyers look for in a home.”

Kitchen

“It looked like a sad little kitchen crying in the corner,” Alberti says of the pre-renovation space. But the flip made a huge difference in this all-important room.

“They have repositioned and expanded the kitchen, creating an open concept tied in by a beautiful, massive island that not only provides contrast but also bar seating,” Alberti explains. “They did a great job combining different materials and textures. … It’s a design risk that elevates the home.”

Kelsch says the new kitchen is definitely more appealing to potential buyers.

“Additional usable counter space, storage, and lighting make this a desirable kitchen and a ‘wow’ feature in the home,” she says.

Bathroom

The old bathroom in this home was like a walk back in time, but not in a good way.

“The wallpaper and the top-and-bottom built-in cabinets made the space feel enclosed and restricted,” says Alberti. “The old shower doors are always a must-go—they have had their run for far too long.”

The updated bathroom now feels warm and welcoming.

“The shower wall niche was a particularly nice touch because it provides practicality to the user,” adds Alberti. “Those kinds of details are never overlooked by buyers.”

Bernard agrees: “The new, beautiful bath lets in natural light for the tranquility that homeowners want in their bathrooms,” she says. “The updated shower and more functional and modern vanity feel clean and fresh compared to the original.”

Bedroom

From the gray wall-to-wall carpet to the heavy drapes, can we all just agree that the old bedroom was the stuff of nightmares?

“The new bedroom sheds pounds of darkness that were exhibited in the old carpeting and bulky cabinets,” says Bernard. “The white walls and wonderful new windows are inviting in a room that anyone can envision themselves waking up in. This is a luxury look that buyers in all price ranges desire.”

“This bedroom has had a complete turnaround. The new vaulted ceiling helps make the room feel more spacious, and removing the cabinetry opens up the room,” says Kelsch. “Bringing in as much natural light as possible by taking down dated old drapes and updating furnishings and fixtures will bring top dollar to this house.”

Source: realtor.com

How to Efficiently Rehab

Welcome back to the show! Excited to be here today with Glenn Williams. Glenn rehabs a lot of houses, I’ve rehab hundred of houses, and you start to learn a few things along the way. Most of the lessons you learn are what NOT to do and those are some of the best lessons on how to move forward. Today, we are going to talk about more efficient rehabbing.

[00:00:00] Mike: [00:00:00] Professional real estate investors are different. We’re not afraid to go all in and take educated risks to build stronger businesses and help our families live better lives.

This is the FlipNerd professional real estate investor show. And I’m your host Mike Hambright each week. I host a new episode live and bring you America’s top real estate investors as guests.

Let’s start today’s show.

Hey, everybody. Welcome back to the show. Uh, excited to be here the day with Glen laser, we talked about more efficient rehabbing. He’s rehabbed, a lot of houses. I read it. We have hundreds of houses. You start to learn a few things along the way. Mostly what you learn is what not to do.

Those are some of the best lessons of how to kind of move forward. But that’s what we’re talking about today is more efficient. Rehabbing, Glen, glad to have you on the show.

Glenn: [00:00:46] Thanks for having me. I’m excited to be here.

Mike: [00:00:48] Yeah. Yeah. We made a little joke here. You’re joining us from Venice. So

Glenn: [00:00:52] I kind of wish I can’t do that now, but beautiful city.

Mike: [00:00:57] Yeah. Yeah. So you’re you operate in the Minneapolis [00:01:00] area and, uh, of course. Um, you know, a little different than Venice up there.

Glenn: [00:01:07] Yeah. Yeah. It’s uh, it’ll, it’ll be snowy soon. I actually had to wear a windbreaker a couple of days ago, a little premature, little premature for that, but that’s how it’s gone this year.

A little funny. Yup. Yup.

Mike: [00:01:18] It’s a strange year all around. So it is, um, but excited to share this with everybody today, we’re actually live right now. The, uh, in the FlipNerd a professional real estate investor group. And so we actually, if you’re joining us right now, live glad you’re here. You could, uh, Check some questions down below.

If you’re joining us afterwards, you should join the professional real estate investor group. You just go to, if you go to flipnerd.com/professional, it’ll redirect you to the group and you can request to join. If you’re not already a member, so, and efficient rehabbing, maybe maybe get into cars. I didn’t start off as an efficient rehabber and they’ve been investing for a long time.

So tell us kinda how you got started in real estate investing.

Glenn: [00:01:54] Um, got actually got started. Uh I’m I’m an old timer. I got started 25 years ago, uh, [00:02:00] doing, uh, rental properties. I had a day job and bought a duplex slipped in one side, rented out the other, uh, bought, uh, bought several properties over. Over a, I don’t know, seven, eight year period, something like that.

And then decided to leave my day job and go into real estate full time. I was in real estate agent. I’m a broker now and start doing, start doing some wholesaling type stuff and an agent work. And then. Didn’t like what was happening towards the end of the two thousands. So I actually went back and got a date.

Gotcha. I kept my real estate license in 2012. I decided, okay, I’m ready to kind of jump back in. I took my lumps in the crash years and had some challenges with that. Like anyone who was actually active at that time. Yup. Um, I felt like I was in a good position to get started again in 2012. Got started again, and then full time again, rehabbing [00:03:00] houses ever since.

Mike: [00:03:01] Yeah. That’s awesome. So, so as a rehabber, um, you know, you’ve learned some things along the way, so talk a little bit more about, uh, some, I guess we’re going to kind of get into detail. I don’t want to steal our thunder from it, but just, um, you know, once you start to look back on some of your deals and you realize.

When you read this part, one of the problems that we have as real estate investors is, you know, usually our margins are pretty high and so it covers up a lot of sins. Right. But you start to look and you’re like, Oh, I still made 20 grand, 30 grand 40, or whatever it might be, but you look back and you’re like, yeah, but I could have made another 10 on that if I had just done this.

Right. And you’re like, and I did this many deals this year, and next thing you know, you’re talking about six and seven figures over time. Right. And so it just forces you to like, okay, Let’s get serious about this. Right. So kind of talk about like how you got to that point. Cause I’m sure it was through some, some war wounds.

Uh, they kind of brought that to your attention,

Glenn: [00:03:52] right? Yeah. I mean, I, I got started and I know would. I rehab a couple, two, three a year, and [00:04:00] I’m just kind of a grown since then. Uh, but one of the, one of the big kind of aha moments when I really think back on it was, uh, how much time and energy and everything I wasted on my.

Bunch of early rehabs, just because I didn’t have things well planned. My, my second rehab, I got done with the project. I realized in the envelope with all my receipts, I had 72 receipts personally, not what the contractor bought. 72 receipts personally, from trips to home Depot. Lowe’s Menards sure. Or Williams, all that type of stuff.

Yeah. Why I sit there and think about it. Between going to the store, going to a property either before or after going to the store, I probably spent 150 hours driving around, going to stores, going to the property for, for that single project. Yep. And obviously looking at it that is horribly, horribly inefficient.

[00:05:00] Um, so I look at it that way, going. Yeah, that kind of sucks. I mean, I got better over time incrementally, but just the fact that I didn’t didn’t coordinate anything, didn’t organize anything on the front end. I wasted so much time and, um, and so much money just kind of doing it that way that I look back and kind of just shake my head going.

Wow. I didn’t know a thing about why I was doing right, but like you said, I mean, You’re

Mike: [00:05:34] still making good money. So it’s like, ah,

Glenn: [00:05:36] still, still making money, real problems, Aiden, eight years of an it, the market here. So, I mean, so that covers up a lot. Yeah. But, but yeah, looking back on it, I mean, I think about the last bunch of years and said, I mean, that’s probably by doing things poorly and inefficiently and I’ve probably lost five figures on every property over what [00:06:00] it could have done or could have been if we had done it.

In an organized fashion and properly upfront. So, I mean, I sit here and go, well, I’m only lost a quarter million dollars or so over the last handful of years, it’s like, that’s no big deal.

Mike: [00:06:14] Yeah. I sure like to have that in your pocket, instead of all those receipts. Right.

Glenn: [00:06:17] That would be very, that would, that would be a much better position to be at an absolutely.

Mike: [00:06:21] Yeah. Yeah. And, and then, you know, uh, You know, I used to do that too. Of course you have multiple projects going on. Cause we ramped up really fast when we first started back in Oh eight and we would be. Commonly rehab in five, six, seven houses at a time. And so, like you said, I don’t even go to house anymore.

When I rehab now my contractor, we have a couple of text messages and things are run way more lean. Not everybody operates that way, but at the time I would have this pockets full of receipts or stacks of receipts. I don’t even necessarily know which house they’re from. It’s just isn’t that. So, so I know that you believe this, it all starts with kind of that upfront planning, like just being organized from the beginning.

So talk about that a little bit.

Glenn: [00:06:59] Yeah. I [00:07:00] mean, it’s the biggest thing I’ve really learned here is, I mean, I hired my project manager about 10 months ago. So I mean, I was making these mistakes even in the last year. So I mean been doing it for years. I was still making mistakes cause I was a one man show. I was doing everything in my business and if you get busy and you’re doing everything in your business, you’re doing everything in efficiently.

I mean, you’re not doing any of it to a level that. It necessarily needs to be at, in order to be really effective and efficient and, and successful. So once I brought her on, uh, She got trained. She, uh, and I told her, okay, bring the system back and implement it here. So all of a sudden we started doing complete scopes of work.

I mean, I just, I kind of played around with scopes of work before, but I never had complete scopes work. I didn’t have full material lists. I didn’t put together timelines. I mean, that was [00:08:00] pretty much. Talking to the contractors and they were in charge of things more than I was just because I did not, I didn’t put the plan together upfront to hand to them and actually take charge of the project.

I was just too busy, running around, doing everything to, yeah. Properly plan and manage the project. Yep. Yep.

Mike: [00:08:22] So, so what are some of the things that if you look back now, if folks are living in this right now, they’re like, I, that really resonates with me. Like I’m doing everything myself and I’m not doing any planning.

I’m just going, having a contractor. Give me a bid. If it sounds good, let’s go. So what are, what’s some kind of. I guess kind of high level guidance. You can give people that are flying by the seat of their pants. If they, if you will, with their rehabs of just some easy kind of a ways to kind of tiptoe and get started into this, maybe,

Glenn: [00:08:47] um, the, the biggest thing is to really, really know upfront what you’re going to do.

What is the full scope of work that you’re going to do. And I mean, you may not know, and especially if you’re newer, a newer [00:09:00] investor, you, you may not know completely, like you may know, not knowing exactly what the fits and finishes are on the project that you, that you want to have there, but you can, you can have an idea of, okay, well, we’re painting the ceiling, painting all the walls and we’re painting the trim and not a different color.

You may not know what those colors are, but you at least know what those, what the scope of that is. Right. And just actually spending the time to actually spec that out, scope that out, everything like that is just a huge first step, because one of the mistakes that I’ve made and, and. I mean, a lot of people kind of doing low volume are really new to it.

Have is they go out, they get up on time quotes from contractors. They’re not quoting the same thing you’re sitting there. You have you call 10 and five show up and. Three give you quotes. And [00:10:00] it’s a week before week, week and a half before anyone gives you a quote and the three quotes are all different because the scopes of work are different.

And, and in the meantime you got them out there after you’ve already purchased the property. So you’re sitting on it for two weeks before you even consider any work starting. I mean, that’s, that’s all real waste. That’s all real money. That you wind up losing right upfront. Yeah.

Mike: [00:10:28] That’s the biggest, that’s the biggest opportunity here is the holding cost, right.

Is to kind of eliminate that, right?

Glenn: [00:10:35] Yeah. One of the, one of the little tricks that we use, I mean, I don’t know it’s a trick, but, um, when we’re buying a house, we tell the sellers that we need to get in there. Twice before we close on the property. And we, we don’t, when I walk through a property, I’m the acquisitions guy.

That’s my inspection. I don’t do additional inspections or anything like that. Other people do it different. I don’t, uh, but then I [00:11:00] tell them, I need to come through with my project manager. Once we’re going to take some measurements, we’re going to walk through, we’re going to figure out exactly what. It’s going on.

She puts together the full scope of work. Then she walks through it one more time with contractors, um, making sure we’re all on the same page with everything. So that the day we close, uh, that next day, the dumpsters there were trashing out, were ordering, ordering materials, everything like that. So we have as little downtime as possible.

Just, just one of the things that was really eye opening to me and I’d recommend a lot of people do is we kind of all think we’re a little better than, than we really are. Uh, so I recommend people count on their projects. How many days from the day you buy it? To the day you list it and just really figure out those numbers.

Because when I sat down and looked at that spreadsheet of all my, I mean, almost wanting to cry [00:12:00] cause it’s so long. Yeah. I didn’t realize it until I was really. Monitoring and looking at the athlete tracking, right? Yeah. That becomes

Mike: [00:12:09] one of your KPIs is, you know, a lot of people look at their whole period, but it’s usually from the time you sell it, but that doesn’t always tell you how efficient you are with your rehab.

Sometimes a deal falls through or other things that weren’t really for the rehab part. So yeah, that’s pretty good.

Glenn: [00:12:22] Right. Or even if, or even if you’re getting really good with the rehab portion it’s yeah. How long until you get started. Yeah. And if, and if you’re sitting on it a while until he got started, it doesn’t matter if it’s a day on rehab or a day sitting, waiting to rehab.

It’s a day of hold costs. That’s money out of your pocket that didn’t need to be out of your pocket.

Mike: [00:12:42] Yeah. Yeah, exactly. Exactly. So do you, are there any specific systems you use that you’re using to kind of document and track this or.

Glenn: [00:12:48] Um, we’ve done. We’ve utilize, I used a variety of different systems we’re transitioning right now.

Um, we’re transitioning to, uh, Ari IPM, which [00:13:00] is a Roddys Friday’s rehab system. Um, actually we’ve been kind of, uh, talking to those developer quite a bit, kind of helping to. Build it out, even more based off of kind of some of the functionality that we would really like to see on it. We’re transitioning over to that one.

But prior to that, we were using, um, using a few different things to manage one Assata for all the tasks that we need to do. And my assistant would every new property transition over to the list of here’s everything that we need to do. Yeah, then, uh, then for all our team communication, we do it all through Slack, create a new Slack channel for every property, every property.

So we can track everything in one spot. We’re not wondering, was that call, was it a text? Was it an email? All of our communication about a property is in one channel in Slack. So we can always find you

Mike: [00:13:54] have your contractors using Slack too.

Glenn: [00:13:57] We do not. No, we, we, we [00:14:00] use the tricky part. Our, our goal will be to have them using the, uh, um, using kind of the communication piece of Ari IPM.

Again, we’re, we’re transitioning to that now. Um, but then we also used, uh, At one point we use house flipping spreadsheet. We actually use flipper force, which is made by the same guys who did the house slipping spreadsheet. It’s just online. So we utilize that tool or, uh, kind of managing the project too.

So there’s, I mean, there’s a lot of stuff out there to help you kind of put it together. But the challenge is a lot of people, even if they know they’re supposed to do it, they don’t do it. It’s it’s. Easy to go off and say, all right, I need to go look for the next deal. And you, you negotiated hard, you marketed, well, you got a good deal and you made your money there and then you lose it on the rehab.

You lose it on the whole time or you lose it on actually, uh, [00:15:00] spending too much on the road. Right? Right.

Mike: [00:15:02] Yeah. Those are great tools. We use Slack. I run a few different companies that we use. One of them we have. Gosh, probably 30 some employees. Now everything’s in Slack as much as we possibly can. Like it’s gotta be in there

Glenn: [00:15:13] just because,

Mike: [00:15:14] you know, email is just insane.

It’s a communicator, you lose stuff. And. Um, calls it’s not documented anywhere. So Slack is an amazing tool. Yeah,

Glenn: [00:15:24] it really is. I mean, if, if folks are not using that, I mean, just implementing that will do a lot for someone just implementing that one tool. It’s so powerful to have the communication in one channel rather than spread out everywhere.

Yeah.

Mike: [00:15:41] So as you start to put some systems and processes, this is a place to kind of better manage contractors. Inevitably, there’s some contractors you have that, like, they don’t want to hear that. Right. They’re like, ah, I know what I’m doing. I don’t need that. I don’t need this. And so how do you kind of find contractors that are open minded or how do you transition the ones that you have to say?

Look, we’re trying to get more [00:16:00] efficient here where sometimes efficiency means costing them more money, maybe because you know, they, there’s not as many change orders and stuff that they’re going to hit you up with down the line, but. Uh, I don’t think most contractors look at it that way necessarily.

It’s just, uh, you know, sometimes change is hard and for a contractor type person, it’s maybe especially hard because they do it their way. Usually it,

Glenn: [00:16:22] it, it is a challenge. And I mean, I’ve got some contractors I’ve used for years that once we once were starting to do it in a more regimented manner, Yeah.

It’s a matter of, no, we need to get this done in two months and it used to take three. Yeah. And, um, yeah, and here’s the full scope of work and here’s where our pricing. Uh, but, but the thing is, if, if you’re going to take it seriously, if you’re going to actually treat it like a business and run a rehab company, then.

Change needs to happen. And some folks will come along and play ball [00:17:00] and some will lot. And you just need to be the person in charge of it. If you’re not sure if you’re in charge of the project, you’re not in charge of the project. And if you’re not in charge of the project, that’s not going to end up well for ya.

Yeah. So that’s, that’s the big thing is just being crystal clear on what, what the scope is and everything like that. And especially in dealing with new contractors, you have all that stuff. You have your skew list, you have your timelines, you have your scope of work and you can kind of present it to them and say, here’s what it is.

I mean, how’s this work for you? I mean, does this look reasonable? Does, I mean, are there any challenges with that? Um, it’s a lot. It’s a lot easier to get better pricing that way than just having them walk through and they know full well, you don’t know what you’re sure. I mean, that’s, it’s just the nature of the beast.

Yeah. So, um, so what I mean [00:18:00] with us, with finding contractors, I mean, we. We’re in a bunch of investor, Facebook groups and whatever anyone’s asking. Okay. Do you have someone for this? Do you have a plumber? You have electrician, everything like that. I mean, my project manager, my assistant and I are always in there just trying to, trying to snipe those contracts and say, at least they’ve, at least they’ve worked.

To some degree, possibly with an investor before. So we at least wanted to engage in a conversation with them to see where they’re at, what they’re trying to do and see if there might be a fit. Um, and then the other thing that we really do is anytime I see a property or hear over a property that someone’s rehabbing or has rehabbed.

We checked to see who pulled, permits on those, because yeah, if there’s a plumber who already works with an investor and an established investors, sapling rehabber well, I want to have a conversation with that person because they already know that investors [00:19:00] are not paying top dollar prices. Right.

There’s some degree of. A potential reasonableness in their pricing and expectations and all of that. And if we can show them a really strong, solid process that we have put together for them, they may say, okay, well this will work out well for me, because I don’t have to not know when the job is happening when I’m showing up this, that, or the other thing, it’s pretty certain, there’s always changes and there’s always surprises, but.

They have a good level of certainty if you have it well planned out.

Mike: [00:19:36] Yeah. Yeah. So now that you have a project manager, are you still using a general contractor or is that project manager managing all of the different trades?

Glenn: [00:19:43] We, we are. We are just, I mean, literally right now in the process of forming our own construction company.

Okay. So, I mean, we’re going to have the, we’re going to have the general under. Under a different company of ours [00:20:00] will be the general contractor enabled to pull the building permits. So, so I mean, my investing company will hire that company who will hire all the subs. Yeah.

Mike: [00:20:10] Yeah. Once you get, once you truthfully, that’s mostly what the general contractor is doing is coordinating all the activities and material flow and stuff like that.

Right. So once you get that down, you know, it’s logic and you have a dedicated project manager, it’s kind of that’s that fills that void, right?

Glenn: [00:20:26] Yeah, it makes, it makes everything a lot easier. And I’ve, I’ve gotten to a point now where pretty much I will I’ll walk the property with my project manager. I mean, I walked the property to buy it.

And then I walked the property with my project manager to go off and work through the scope of work and everything like that. Um, I get pictures multiple times a week of where we’re at with things at the project, uh, just through Slack so I can see what’s going on. But then honestly, I, I don’t see the [00:21:00] property.

I don’t go to the property again. Maybe ever, um, I’ll, I’ll typically go just because I’m a broker and I list my own stuff right now. My assistant’s getting licensed and we’ll be listing it soon, but, um, I may go at that point or I might not even go and I’ll just list the property so I don’t have to go.

Right. So. So we’re at a point now where my job is to fill the pipeline. Yep. I mean, once I get something in the pipeline, I can just kind of hand it to my project manager. Who’s, who’s amazing at what she does as just pass it off. Here’s the next one. Here’s the next widget to put on the conveyor belt and you know what we do, you’re, you’ve experienced enough of ’em already with us.

You’ve got a clue of how we’re doing things and. And all of that at some, at some point, hopefully it’ll just be a matter of, I won’t even have to walk through to put together the scope of work. Right. Just because it’s like, you know [00:22:00] how we do this, I don’t need to be there. Right. Um, but we’re not quite there yet.

We will. Yeah. Yeah. That’s great.

Mike: [00:22:07] So in any other tips for people that are trying to get started and get more efficient, trying to move down that path of how do they make that transition early on a lot of stuff we said,

Glenn: [00:22:14] I think we talked about

Mike: [00:22:15] your, it makes a ton of sense. Sometimes people are like, well, what do I, what do I do first?

Like, what’s the first thing I should do. So what do you recommend any other tips or tricks you could share?

Glenn: [00:22:25] I mean, honestly, honestly, the better you organize it on the front end, the better everything is going to go. I mean, I know people. When I’ve, I’ve posed the question in a variety of Facebook groups over the last month or so saying what’s your biggest challenge in the rehabbing business and almost invariably they say tractors.

And the reason I think they say contractors is because when push comes to shove on all the, on all the projects, the contractors are the ones who are in charge. Because you’re not in charge because you [00:23:00] don’t know how to be in charge. Yeah. Um, you haven’t put together the plan, they’ve put together a plan for you.

They’ve put together the timeline, they’ve put together the budget and they’ve put together your scope of work for you so effectively. They’re managing the project and not, you. Yeah, and that’s just going to be more costly, upfront. It’s going to take longer. Um, and variably, there are change orders and, and a change order that costs 10 grand would have cost three grand in the original scope of work.

So it’s really spending the time upfront and. Putting together documentation and the single biggest thing is the scope of work. I mean, you can have the conversation about, okay, what are the timelines and kind of work on your skews. And if you’re, if you’re a newer, you may not even have your list of skews and you may be doing.

Something like I used to do where each project is a little bit different. I didn’t use the same [00:24:00] tile everywhere. The same doors, the same hardware, the same, everything like I do now. Uh, but back then it was what’s on sale. Okay. Where’s where’s the deal here. Where’s the deal there. So you may not know your skews upfront.

Like getting a clear scope of work is number one priority. So you can hand that off to folks and have contractors through and get a number of bids. And they’re all working from the same point. Yeah. They’re not all making up their own thing.

Mike: [00:24:32] Yeah. That’s good. Good stuff. Cause so, well, Glen, if folks wanted to reach out to you or get ahold of you one way or another, what’s, what’s a good way to connect.

Glenn: [00:24:38] Um, well, we’re, uh, Easiest way is probably going to be email. And, um, and with all this stuff, we’re talking about project management, we’re actually launching a company to help folks with. The project up for upfront, upfront planning and organizing part of projects. The website is R E [00:25:00] project management, calm and a weave.

We don’t have the website up yet. It’s, it’s a coming soon page, but, uh, it’s, it’s coming up soon. Uh, but someone can reach me through there. Uh, or my direct email addresses Glenn with two N’s. At R E I project management, calm. Awesome. And honestly, with what we’re doing, I figure the, uh, the, the, the folks who can benefit the most are, are really the folks who do, who are newer, do a smaller volume.

Of houses. If someone’s doing 10 plus houses a year or something like that, they should probably learn to do it, learn to do the whole thing themselves. I mean, it just makes sense because they’re doing that type of volume. Yeah. But someone newer, smaller volume kind of like I was for a whole bunch of years, I look back and wish, um, and wish I had.

Couple hundred thousand dollars more in my pocket from [00:26:00] actually having done that. Right? Yup.

Mike: [00:26:01] Yup. No doubt. Awesome. Well, Glenn, thanks again for joining us. Thanks for sharing some of your insights.

Glenn: [00:26:05] Thank you very much for having me. I’m happy to be here. Glad to be a part of the group. Um, I enjoy the insights I get from being in there.

Mike: [00:26:12] Good. Good. It’ll only get better with time, so awesome. Everybody. Thanks for joining us today on the flip very professional real estate investor show. Again, if you haven’t yet joined our private Facebook group or really broadcast the show in there, and it’s more experienced real estate investors, sharing their stories, tips, and tricks and, and, uh, knowledge and maybe helping each other with, uh, Getting over war wounds and their issues.

I guess we all have some issues, but as you can go to  dot com slash professional, we’ll redirect you to the professional real estate investor network group. In Facebook, you can find access. You can access that seven years of shows able over 1500 shows on flipnerd.com simply by going to flipper.com.

There’s a shows button there where you can get access to this and all of our other shows. And if you want to watch these live, we broadcast them in the Facebook group, uh, generally once a week. So appreciate you guys a bunch. [00:27:00] We’ll see you on the next show. Thanks for joining me on today’s episode, there are three ways I help successful real estate investors take their businesses and their lives to the next level.

First, if you’re in search of a community of successful real estate investors that help one another, take their businesses to the next level and a life changing community of lifelong friends. Please learn more about my investor fuel real estate mastermind. By visiting investor fuel.

If you’d like a cutting edge solution for the very best done for you lead generation on the planet where we’re handling the lead generation. For many of America’s top real estate investors, please learn [email protected]

And lastly, if you’re interested in a free online community of professional real estate investors, it isn’t full of spam solicitations and newbie questions. [00:28:00] Please join my free professional real estate investor Facebook group by visiting  dot com slash professional.

Source: flipnerd.com

How to Make $30,000 a Month Flipping Houses

I have flipped more than 200 houses in my career and while I love flipping, it is not easy! We have flipped 26 houses per year multiple times, and I can truly say that the more houses you flip, the more problems you have. Now, when I say house flipping, I am talking about buying houses, remodeling them, and selling them. Some people say they “flip houses” when they are wholesaling, which is buying and selling houses very quickly without remodeling them. Over the years, I have made $30,000 a month flipping houses and even more. It takes money, a team, and thick skin to make that kind of money, but it is not impossible by any means.

How much can you make on a single house flip?

I have written articles like this before and I love to break down the numbers to see how to actually do this, not just live in a fantasy world where good thoughts allow money to fall into your lap. I am also a fan of good thoughts, but that is not all it takes! The last article I wrote in this format was how to make $10,000 a month with rental properties. I love rentals and to be honest, I prefer rentals over flips, but flips allow me to buy more rentals.

I buy flips from $100,000 to $300,000 and they tend to make me from $20,000 to $50,000 per flip. I have made $100,000 or more on a flip before and I have also lost money on flips before. For the most part, I want to make at least $30,000 on every flip I do. That also makes this article really easy to write. If you want to make $30,000 a month flipping houses, flip one house a month. There the article is done!

While that math is simple, the task of flipping one house a month is not simple. Flipping one house can be tough let alone 12 ina year. We have done more and will continue to do more but it was not easy to get to this point. You can see a video of one of my best and most interesting flips below:

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Why is flipping houses hard?

A lot of people watch the house flipping television shows and think flipping is like what they see on TV. You buy a house, change the floorplan, decide what are the best design choices, and boom you make $50,000 or $100,000. The reality of flipping is much different from the television shows. Here is a break down of how it actually works:

  • Line up financing: Most people do not have the cash to flip houses so they borrow money from hard money lenders, friends, or the bank.
  • Find the deals: There are a lot of people who want to flip houses. The deals are not just sitting there for anyone to buy who wants to make $50,000. It takes a lot of work and patience to find the deals from the MLS, wholesalers, auctions, direct marketing, etc.
  • Find contractors: I do not do any of the work on house flips myself. I use contractors and subcontractors to handle it all. If you want to make $30,000 a month flipping houses you will need to hire contractors as well. Finding decent people to work on the houses is one of the toughest parts of the business.
  • Decide on what to repair: On TV, they usually go all out making tons of repairs to properties because that is what gets attention. In reality, the goal is to make only the repairs that are needed to sell the house. The bigger the remodel, the longer it takes and usually the less money you make.
  • Manage the repair process: Things rarely go as planned so someone has to manage the repair process and make sure the work is being done on time and the right way. Some of the biggest disasters come when a flipper trusts their contractor without oversite and huge mistakes are made or no work is being done.
  • Sell the house: It is not always easy to sell flips either. I am a real estate broker and list my flips for sale on the MLS. It is in almost everyone’s best interest to use an agent to sell their houses which cost money. You also need to make sure the home is clean, the work is completely done, and possibly stage the home.

Many things can go wrong during a flip and even experienced flippers like myself sometimes lose money. You have to stay on top of things and constantly tweak the business model. Materials are always getting more expensive as is labor and other costs. We are always finding new ways to get better deals in order to keep that same amount of profit.

To get that $30,000 average profit on a house everything needs to run smoothly and you need to assume there will be extra costs along they want that you are not accounting for.

My book Fix and Flip Your Way to Financial Freedom (197 reviews) goes over the ins and outs of flipping and how to actually do what I talk about in this article. It is on Amazon as an ebook, paperback, and audiobook. 

How much money do you need to flip houses?

Another roadblock for many investors is finding enough money to flip houses, especially if they have a lot of deals at once. There are lenders who will finance flips but the investors almost always need some of their money as well. You may be able to finance 90% of the deal but it is tough to finance all of it. There are also carrying costs, and financing costs while you own the property. The more money you borrow the more that money will cost you. We tend to need $50,000 or more per flip we do. If we have 10 flips going at once, that means we have at least $500,000 of our own cash tied up in those deals when we use loans. If we used all cash we would have $3,000,000 tied up in those ten deals!

It takes a lot of flips going at once to make $30,000 a month because it takes a while to flip a house.

How long does it take to flip a house?

I would love to say it takes three months to flip a house but in reality it takes much longer. We have a lot going at once so we cannot always start working on them right away. It may be a month or two before we can start the work, then it takes time to complete the work, and it takes time to sell the house once it is done as well.

Our fast flips take from 3 to 6 months to complete but may take from 6 to 10 months and a few take over a year from the time we buy them to the time we sell them. I would say our average has been around 8 months from beginning to end.

Because it takes so long to flip houses we need to have a lot of flips going at once to flip 10, 20 or even 26 houses a year which we have done a few times.

How many flips do you need going to make $30,000 a month?

If you want to make $30,000 a month flipping houses and you make $30,000 per flip that is pretty easy math. You need to flip 1 house a month or 12 houses a year. If it takes us from 6 to 10 months to flip a house that means you would need to have from 6 to 12 house flips going at once.

It took me many years to get the point where I could do that many flips, but we usually have from 15 to 20 flips going at one time and that equates to 20 to 26 flips a year selling.

Just remember this is all theory and reality can be much different! You might have some flips that lose money or take way longer than you think that drag down all of your averages. It may take more flips to make that goal or less if you manage to increase your profit margins.

If you decide to build a business like I have where you hire people to help you must factor in those costs as well. I have a project manager, bookkeeper, and other people who help with the flips as well. I also have many other things going on like this blog, my real estate brokerage, my rentals, and more!

If you want to see all of our flips in action be sure to subscribe to the InvestFourMore YouTube channel!

Source: investfourmore.com