Flipping Houses For Dummies. Ralph R. Roberts

for completing the project

       Reliable contractors who can begin working on the property immediately

       A date on which you plan to put the house back on the market

      Plan your flip at least as carefully as you would plan a two-week vacation. Other chapters in this part can help you lay the foundation for a successful flip.

Building an All-Star Team

      When you’re gambling with more than $100,000 of your own or someone else’s money, learning by trial-and-error can be catastrophic. A safer way to develop the skills and foresight needed to reduce costly mistakes is to learn from others. Develop your own house flipping team and rely on the following professionals to guide and educate you:

       Real estate agent

       Financier/lender

       Accountant

       Title company

       Appraiser

       Home inspector

       Real estate lawyer

       Contractor

      In Chapter 3, I describe the role that each of these valuable individuals plays on your team, and I provide some criteria for selecting the best of the bunch. I also devote an entire chapter (Chapter 13) to building and managing a rehab team.

      

Hiring professionals may increase your costs but can save you a considerable amount of money in terms of time, doing the job properly, and avoiding costly mistakes. Just be sure to calculate the cost of those professionals into your investment when determining how much to pay for the property.

Finding and Buying a Flippable House

      

The most critical stage of flipping a house is finding and buying the right house to flip. Buy a lousy house in a lousy neighborhood for more than it’s worth, and you’ve already lost the game. Finding a house with substantial profit potential is quite a challenge, but as a flipper, that’s the fun part. Flipping is an adventure, a treasure hunt, and a poker game all rolled into one.

      Finding and buying a property is a four-step process:

      1 Scope out a fertile neighborhood — often an area with homes that are at least 20 years old.See Chapter 5 for details.

      2 Zoom in on a dontwanner — a distressed property that the owner obviously doesn’t want or can’t afford to keep.A distressed house usually has a distressed owner. See Chapters 6, 7, and 8 for various ways to find distressed properties. (Landscape maintenance is typically a good, early indication of a distressed property.)

      3 Research the property carefully and then calculate the most you can pay for it and still earn a decent profit.You should be fairly certain that you’ll earn at least 20 percent for your trouble. See Part 3 for more about researching and evaluating properties and calculating a maximum purchase price.

      4 Haggle with the seller to purchase the house at a price that virtually ensures you’ll profit from the flip, as I explain in Chapter 12.In some cases, you won’t haggle with sellers but bid at an auction instead; see Chapters 7 and 8 for details on finding and buying properties in foreclosure and other special markets.

Rehabbing Your Fixer-Upper

      Buying a house to flip is like buying a beat-up antique at a garage sale: You got the house for a bargain because it needs work that the seller hasn’t the time, money, or desire to take on. By cleaning up the joint, fixing whatever is broken, and making a few renovations, you can bring the property up to market standards and sell it for its full market value. In the following sections, I walk you through the types of repairs and renovations you can make.

      Planning repairs and renovations

      Repairs and renovations require careful planning and execution to keep them on schedule and within budget. Before you begin, prioritize your repairs and renovations so that you know what’s most important; I give you all the tools and tips you need in Chapter 14. Invest your time and money in the repairs and renovations that promise the most bang for your buck — and then if you need to trim costs, you can skimp on the less important stuff.

      

Schedule the work so that it proceeds logically. If you install new tile or carpeting or refinish the floors before painting the walls and ceiling, you risk ruining the new tile, carpeting, or flooring. A good rule of thumb is to work on the infrastructure first — the foundation, electricity, plumbing, heating, and air conditioning. Then, work from the top down, starting with the roof and finishing with the floors. Likewise, depending on the location, you may need to schedule curb appeal renovations in the spring, summer, or fall — such as new landscaping or siding or a new roof.

      Applying makeup

      The ideal house for a first-time flipper is one that requires only cosmetic work — what I call makeup. Cosmetic work, covered in Chapter 15, includes the following low-cost repairs and renovations:

       A fresh coat of paint throughout the house, including base trim

       New siding, fresh paint, gutter replacements, and other external tweaks

       New wall-to-wall carpeting in any rooms that need it

       New light fixtures

       New outlet and light-switch covers

       A thorough cleaning, inside and out

       Window washing

       Storm window and door repair or replacement

       Lawn mowing, weeding, and trimming trees and shrubs

      

Cosmetic repairs don’t add as much real value to a house as, say, a new kitchen may add, but they attract buyers. Often a house is undervalued simply because it’s unkempt and not drawing any buyers to look at it. For example, a do-it-yourself paint job on older kitchen cabinets can add that extra punch to your property without sinking any additional cost into your kitchen.

      Making a good first impression

      Curb appeal is everything when you’re trying to sell a house. If prospective buyers pull up in front of a house that looks disheveled, they’re likely to drive off before you have time to open the front door. To sell your