Flipping Foreclosures (Part 2)

Now that you and your Realtor have identified your target market, it is time to start your search for that perfect prospect. Chances are you will be able to eliminate the majority of listings without leaving the comfort of your Realtor’s office, leaving you with just a few real contenders.

It’s now time to have your Realtor set up showings. Spend time taking a mental inventory of the needed renovations as this will help you further narrow the field. The goal here is to eliminate all but one property. Revisit the property; bring your camera and notebook this time to take detailed notes of the improvements needed. Ask your Realtor what renovations he/she believes will realize the best return on your investment, chances are they have seen your competition.

Ok, play time is over and it’s time to set aside those illusions of grandeur, in other words it is time to develop a business plan with a budget. One of the biggest mistakes I believe novice flippers make is overestimating one’s abilities and underestimating the amount of time needed to complete the project. Let’s be honest… the majority of us can’t draw a straight line let alone cut one. Please seek the advice of a contractor or someone well versed in building trades when developing your business plan.

When all is said and done and the numbers appear to make sense to you ask the advice of a few more people you trust; the old adage “Two heads are better than one”. Next time we will look at the offer phase, if there is ever a time to enlist a Realtor this would be it.

Merry Christmas

Flipping Foreclosures (Part 1)

Fueled by those late night infomercials promising a fool-proof method of making millions and the airing of HDTV’s many diy programs; we have all aspired to reap the limitless rewards of flipping foreclosure properties. I must admit those guys and gals on HGTV make it look so easy, But come on: they are Professionals with years of experience and every tool under the sky.

That doesn’t mean there are not opportunities out there for an above average handyman with access to idle cash and the intestinal fortitude for a potentially risky investment. With that said; Real Estate has traditionally been a very safe investment. However Flipping is not without risks. Over the next couple of weeks we will be looking at the process of “flipping” and ways to reduce the potential risk. Today we are going to look at getting started.

The Number one piece of advice I can give anyone who is considering flipping property; Do Your Homework. You have to know your target market; you have to know what types of properties are selling and the price range for which they are selling; you should know the average Days On Market (DOM) as well. All this information is crucial to the success of your project. I highly recommend enlisting the services of a Realtor as he/she will be able to provide you with this information and provide needed insight into market trends that can not be captured through an MLS database.

I have a knack for stating the obvious, but here we go; target properties with similar characteristics of those with the highest sales volume and enough wiggle room in the price to cover the cost of renovations and any projected profit. It sounds simple doesn’t it? However, I have read numerous stories of flips gone bad, real bad. So, Do Your Home work and use a Realtor. Next time we will look at the process of narrowing down your prospects.