rehab

Our Real Estate Investing Model in Detail

by Michael Zuber | February 8, 2012

The questions I get most frequently via email from the BiggerPockets audience are: – Can you tell me more about your model? – Why do you think it works? – Can I copy your model in my market? – How can I participate in it? Instead of responding to emails weekly around these topics, I thought [...]

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Real Estate Interviews

Interview with House Flipper & Real Estate Rehabber: Tom Tarrant

by Joshua Dorkin | June 21, 2011

Tom Tarrant is a real estate rehabber or house flipper, and one of the top real estate investing bloggers out there. In our interview with Tom (30:44 minutes), we get into topics including real estate blogging, building credibility, how your blog can be used to increase dealflow, rehabbing strategies, picking the right house, a unique [...]

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Commentary

Commentary: Foreclosure – The Human Element

by Bill & Jackie Patterson | March 9, 2011

We recently spent a full day looking at REOs for good candidates to fix and flip. Although we specialize in short sales, since Bill is a contractor, we also buy REOs to remodel and flip. We were examining these homes looking for opportunities to make a profit, but as we went through home after home, [...]

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Real Estate

The Myth of “No Rehab” Rehabs

by J Scott | January 12, 2011

In the course of a typical week, I get to see and hear about a lot of properties for sale to rehabbers. Inevitably among them are properties advertised by sellers or wholesalers as “No rehab needed” or “Move-in ready condition!” Now, every time I read an email from a wholesaler that says a property needs [...]

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Financing Real Estate

The Hard Money Loan Funding Process: A Guide for Rehabbers

by Joshua Dorkin | December 2, 2010

You spot a house that you would like to rehab or flip and decide make an offer. You plan on financing through a hard money lender, but haven’t yet done this kind of deal, and wonder what happens after you’ve got the house under contract. Here’s a brief look at the process: All hard money [...]

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Real Estate Investing

How to Quickly Come up with an Offer Range for a Real Estate Flip

by Ryan Moeller | October 3, 2010

When making offers on properties to flip, it is important to have a good system. I believe that you should be able to quickly figure out your offer range, make lots of offers, and then do thorough due diligence once a property is under contract. The 3 things you need for getting an offer price [...]

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Rehabbing

Better, Faster, Cheaper

by J Scott | June 9, 2010

There’s a popular saying in the technology industry (an industry where I spent much of my career): “Better, Faster, Cheaper — Pick Two“… Basically, the idea was that you can build something at 1) higher quality, 2) in less time, or 3) for less money — but you can’t do all three of those simultaneously. [...]

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Real Estate Investing

Is it Time to Re-Adjust your Real Estate Investment Strategy?

by Alex Cortez | May 2, 2010

Real estate investing, like any other business venture, needs to be quick to adjust to changing markets, circumstances, and long-term goals. With a volatile real estate market, perhaps it’s time for flippers and rehabbers to adjust their business models.

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Real Estate Investing

Investing in “the Ick Factor”

by Florence Foote | April 6, 2010

I just finished reading a Michael Lewis article in Vanity Fair about Dr. Michael Burry, the physician-turned money manager. Burry is profiled because of his remarkable success in buying credit default swaps to bet against the subprime loan market. He saw what many of us saw – that subprime loans were a ticking time bomb, [...]

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Real Estate Investing

How I Made $50,000 on my First Real Estate Deal Even Though I Did Everything Wrong

by Stephani Davis | January 7, 2010

I first got interested in real estate investing about six years ago after watching a late night Carleton Sheets infomercial. I ordered the course, and after reading it from cover to cover the day the UPS guy dropped it off on my doorstep, I was chomping at the bit and ready to make my first [...]

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Flipping Houses

The “Affordable Custom Home” Real Estate Rehabber/Investor Niche?

by Ryan Hartman | December 6, 2009

When I was active as a Realtor working primarily with investors in Philadelphia, most of my business revolved around finding “Propertunities” for investors to rehab and hold or sell for a modest profit, usually in the that 100-200k range where there were always plenty of buyers. Of course, one of the most stressful stages of [...]

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Rehabbing

12 Improvements That Didn’t Pay: Learn From These Rehab Mistakes

by Justin Pierce | November 29, 2009

Two weeks ago I wrote a warning about over-improving and last week I told you about a house that I over-improved. I went long last week and I didn’t get to share any numbers with you. This particular flip was unique because there was another rehab home just around the corner from mine. It was [...]

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Rehabbing

Rehabbers: Know the Warning Signs of Over-Improvement

by Justin Pierce | November 15, 2009

Rehabbing or flipping is almost 100% art. There are very few hard and fast rules. The goal, like in any business, is to maximize profit. Many times I have quoted the old saying that you make your money when you buy a property, and I stand by that statement. Once you’ve made a smart buy [...]

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Real Estate Deals

Persistence is a Virtue. The Story of How I Got My Latest REO Deal.

by Justin Pierce | October 25, 2009

Let me tell you a story about how I made a bundle of money this week. It’s the story of how I captured my latest deal. Now when I tell you the story you may think that I’m counting my chickens before they’ve hatched but you really do make your money when you buy. Never, loose site of that important fact. In this case the money is made and in the bank. Now until the home is sold the money is mine to loose or keep, depending on how I manage the project.

Persistence and Ambition Lead to a Working Relationship

You could say it started about a month ago. A young ambitious Realtor contacted me when he saw my ads stating that I buy houses. He sent me about a half dozen listing and to my surprise the list had potential. I am a licensed and active Realtor but I appreciate a go-getter when I see one. I can only cover so much ground myself and I love to enlist the services of ambitious people. We looked at a few of these properties on his list and we made some offers but nothing came through. The beautiful thing was that this young Realtor came back with another list of properties. That is how I knew he had the stuff. Many Realtors say they want to work with investors but when they actually see the nature of the game they roll out quite quickly. The fact that this guy came back told me he was real deal.

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Real Estate Investing

5 Steps to Calculating the Purchase Price for a Rehab Property

by Justin Pierce | October 18, 2009

Knowing what to pay for a home is critical in the rehabbing game. I’ve come up with my own method for determining my purchase price for a property. While I don’t think my method will work for everybody, maybe it will give you a good place to start or perhaps, some new ideas.

There are a lot of different variables that you’ll have to take into account on any specific deal; I’m interested to know from other rehabbers how their math looks.

Calculating the Purchase Price for a Rehab Property

Step 1: Know the value of the property. – That is the resale, after repairs value of the home. Make sure you view actual recent comparable sales. Once I feel confident I know what a property is worth I deduct 26% from that price. 20% is what I like to shoot for in a profit. With the market firming up here lately I’ve been cutting that margin to 16% on real good deals. On bigger deals or on deals that feel a little more risky I stay firm with the 20%. I wouldn’t go much lower than 16%.

Historically homes sell on average for something around 8% less than asking price. If you’re only pricing in a 10% profit then you might end up just doing a practice flip. A practice flip is a deal where you don’t make any money. Essentially you donate all of your time and effort for free to the end home buyer. The other 6% is the number I put in for closing costs when I sell the home. I’m a licensed Realtor so I list the home myself, which will save me a little. So in my case, 4% goes to Realtor fees and the other 2% is what I budget for other closing costs. You can choose to try to sell the home yourself and save the Realtor commission. If you are not a Realtor and you plan on hiring a Realtor then you probably will need to budget 6% for the Realtor fees plus another 2-3% for closing costs. I always anticipate having to pay some of my buyers closing costs.

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