Real Estate Investing
by Justin Pierce
| September 13, 2009
Every once in a while I catch an episode of Flip this House; I have to admit, it is entertaining and it does show the drama involved in fixing up a home. However, I am very amused when they show the final numbers. I have watched episodes where a first time rehabber has bumbled and stumbled through the process and yet still manages to make a profit in the end, according to the show. This and other shows might make one believe that a flip is a sure bet. When they do the numbers they normally list the Purchase price, the fix up costs, and the sales price. Wow, are they missing a bunch of stuff.
Please take my advice: Do NOT start that flip if those are the only categories of expenses that you are anticipating.
The REAL Costs of Flipping a House
Here are the actual costs of one of my recent flips.
Purchase Price:
Contract Prices: $213,000
Wholesaler: $12,937
Total Price: $225,937
*This deal was brought to me by a wholesaler. So my purchase price consisted of both the amount that I paid the owner (in this case a bank) and the finder’s fee that I paid the wholesaler.
Costs of Money:
3 Points: $7,312.50
Broker Fee: $2,437.50
Holding Costs: $9,500.00
Lender’s Lawyer: $1,220.00
Total Costs: $20,470.00
The cost of money or the cost of capital to me is everything that the lender charges for the use of his money. Note that in this case (which is pretty standard) I paid the lender 3 points and I paid the broker 1 point. Note that there is also a lawyer; this lawyer is not the title company. This is the lenders lawyer who writes up the contracts and the deed. He’s the one who does his very best to shackle me to ensure his client gets his money back. The lawyer represents me in no way at all, but I get the privilege of paying for his services. Most hard money lenders will either have this fee or some sort of administrative fee of about the same price.
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Real Estate Marketing
by Glenn Plantone
| September 10, 2009
This past week, my Re/Max broker gave me an award congratulating me for having the 9th most sales in the region. In order to achieve this, I had to sell over a million dollars in real estate in each of the last two months. And I can tell you… you have to sell a lot of condos at $30,000 to sell over a million dollars in real estate. This got me thinking a little bit about what am I doing right. I asked myself, “What am I doing that has afforded me the ability to sell so much real estate in what some call the worst housing market in our nation’s history? What do I perhaps do differently than the average Realtor, that enables me to do a lot more business?
Thinking Like An Investor
The first thing I do, is that I think like an investor, not like a Realtor. I understand what the investor wants and I find it for him. Savvy investors in today’s market want good, new houses or condos at the lowest price possible, with the highest cash flow, and the greatest appreciation potential. More than ever, investors know what they want and they are able to make a good, fast decision about buying it provided you get them the necessary information in an expeditious manor. In today’s market you have to be ready to pull the trigger immediately if you see a good investment property. The key is to train both your investor clients and your owner occupants to be as aggressive as you need them to be in order to get the deal under contract and closed.
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In a city or a large town it’s fairly easy. You probably have hundreds of agents to choose from and you just keep going until you select one that meets your needs. Choosing someone to work with in a very small town is a horse of a different color. You may need to choose from a very small number and it’s possible that none of them will seem to fit the bill. I was recently faced with having to make that choice myself when it was time to list a property.
A great tool that’s available can be found at 
Joshua Dorkin
Charles Feldman
Ted Karsch.
The BiggerPockets Real Estate Show (sort of): Episode 3
by Joshua Dorkin | January 3, 2009This episode covers such topics as setting your goals, localized real estate markets, the challenges for real estate agents and brokers in the current market and more.
Any thoughts? Comments?