Buying or Selling a Home/Novice investors
u might be the RIGHT person, we have been looking for..we are in our mid 40's and lookin to learn how to FLIP houses in long island, NY
we have read MANY books, but are blocked by "THE FEAR OF THE UNKNOWN" and have yet to take that leap of faith and take any action. can you suggest where to look, how to find, how to bid, how to guesstimate improvements and profits. and possible owner financed deals. any suggestions or advice would be appreciated. we just don't know where and how to start
If you have fear of the unknown, that's probably healthy and smart. In the beginning, sacrifice profits for knowledge.
A) Start working with a real estate agent who can help with flipping.
NOT ALL AGENTS CAN HELP YOU. Find one that can:
1) Find potential flips.
2) Accurately explain what needs to be done, how much each renovation will cost (ballpark fixes)
3) Call the sale price of the improved property.
4) Let you know if it's a flippers market. Most flippers get burned by coming in too early - or hanging around too late. The right time is when distressed properties are sitting, and good condition properties are getting bidding wars. When distressed properties are being bid up, proceed with caution.
B) Financing. In LI you will need a source of capital. Personally, I think owner financed deals are a waste of time. If the owner has the money to fix it, he either will, and profit from it, or he won't, cause he wants him money now. Either way, he has little interest in letting someone else take a hammer to his property. Every flipper should have cash, because even the best make mistakes and have losses. IF YOU'RE NOT IN A POSITION TO LOSE 40-60K, RECONSIDER YOUR STRATEGY. Flipping is not "easy money" that "everyone" can do. It's not rocket science either, but I've seen plenty of people not make anything. Having 10 people put 10,000 in a pot means you'll have 100,000, but their money will be more expensive than a bank, and will hurt your returns.
C) Designers and Architects
Interview these people now. Later, you won't need them, or their expenses, but early on, you need help to make a property sparkle on a budget. 5K to each one will help you minimize your time on market, and let you learn the ropes of this part. You won't need them later.
D) Contractors - You will live and die by the contractor you choose, so choose carefully. He needs to come in on budget, he needs to be fast, he needs to know what he's doing, and do work that will resonate with your future buyers. Scour your area for renovations and stop by and ask the workers for cards, call the owners and find out what they charge for what. This will give you an indication of who can and who can't. Be nosy. Be skeptical. Don't listen to stories. Listen to customers, and talk to the worker bees.
e) Stop buying books and look at property. Go find distressed properties. Use your own models to figure out where they should sell, and how much it will cost to fix them up. Let other people buy them and fix them and see what they did and for how much they sold. If you work hard at this, you will get good at it fast. Your agent should help you see what needs to be seen. There is no substitute for this, and no book either. Every market is different.