Posts Tagged ‘Bedrooms’

How Do You Decide Which House To Buy And Flip?

At the end of my last post I mentioned that I planned to reveal a house flipping technique few understand. Before I reveal this under-used technique let’s talk about how to make the decision to buy a home for flipping.

Right now in your hometown I imagine there are several homes up for sale. In fact, just down the street from me is a small two-bedroom house that has been on the market for about a month. The family of the owner who passed away is selling it. I have been watching closely to see what type of interest there is in the house.

So far very little interest, I have only witnessed two people tour the home with their realtor. So I called a realtor buddy of mine about two weeks ago now so that I too could see the inside. This house is a perfect ‘flipper.’ I just don’t have the time or I would have bought it by already! Why is it perfect?

First, the bad on this property, no one seems interested. And from my opportunity to see inside, I know why too. The kitchen and both bathrooms are out-dated. The bedrooms are small. The basement is dark and damp with no egress. And finally it only has a 1-car garage.

The house does have a few good things though. The kitchens and bathrooms can easily be gutted and remodeled. Hardwood floors, in great condition, in the living room and both bedrooms. The roof is new in 2006. Siding is in good shape too. I also took a look at the service panel and could see that the home has been re-wired and brought up to code.

Put an egress in the basement and it could easily be a 3 bedroom, two bath home.

Asking price for this home is $95,000. My buddy figures that it is $10,000 too high, I think more like $15,000. But we both agree that it could easily sell for $125,000 after repairs.

Say I offered $82,000 for the house. Put $12k to $15k into remodels and sold at $125k.
I could make potentially $25,000 to $30,000

Now back to my question, how do you decide which house to buy and flip? Given the example above, for me, I should buy that house. I have the knowledge, expertise and contacts to do the repairs and make a ton of cash.

And that is the answer, in my opinion; if you are willing to do the work yourself then buy the house you’re considering and flip it. It is true you can still make money when hiring all the work done through contractors, just not nearly as much.

It’s true there is more to the equation than my simple example above. My purpose was to illustrate how not to make your decision to complicated when buying houses to flip. Decide before hand what your house flipping business plan will be before looking to buy.

By: George Christodoulou

About the Author:


George Christodoulou
If you have questions about house flipping or if your still asking” How Do You Decide Which House To Buy And Flip?”,
visit, http://houseflipblog.com for more information about house flipping.

Stay tuned to our new house flip author Doug Philip. He is sharing all her secrets as a contractor/flipper.

Tax Liens – Tax Deed Investing

Investing In Modular Homes

If you are in the right areas, there are big profits to be made with modular homes. The downside? You may need a lot of cash for these deals.

Modular homes are not just a step up from mobile homes. The new ones are usually built to higher standards than many regular stick-built houses. They have six-inch walls and lots of insulation. Once they are on a foundation, they often qualify for regular home financing, as opposed to mobiles, which you’ll always pay a higher interest rate on.

However, they are cheaper than a regular wood-framed home. This makes them a good choice for many home buyers, but what about investors? It depends how you use them. If they are already attached to a lot, you can just treat them like any residential property – as long as they are truly modular homes, and not classified as double-wide mobile homes. The latter are harder to finance, and you’ll pay higher interest.

Perhaps the most profitable strategy, though, is to start with land and put a modular on it. In many areas, a modular home on an acre of land might sell for $140,000, and yet the cost of the land and the necessary improvements plus the modular may be under $100,000. There is a great opportunity in those areas where this is true.

Modular Home Investing – An Example

Suppose you have been watching sales of homes around the edge of the city where you live. Every now and then you see a modular sell, usually on an acre or two of land, because many subdivisions won’t allow them. They seem to be consistently selling for around $135,000 or so if they have at least three bedrooms and two baths.

There are several suitable pieces of property in the area selling for $29,000 to $35,000. You can buy a 3-bedroom, 2-bath modular new for $64,000. The modular salesman tells you what you need to do to prepare a lot. Now you need to investigate the other costs.

The well drilling company that has been most active in the area says the wells are shallow in the area where two of the properties are. They can put in a well and pump for $3,800. The soils is sandy, so you can get a septic system installed for just $4,700. A power pole will cost $1,500, an asphalt driveway $2,800, and the foundation $3,200. Setting up the home and making the hook-ups is included in the purchase price. Closing costs and two months of holding costs will run about $3,000.

You decide that you are interested in the most expensive lot, the one that is $35,000. It has the nicest location, and it is in the area where it is cheaper to have a well put it.

Adding up all the costs, you arrive at a figure of $118,000. You think you can get more for the property, but you make a safe projection of $132,000. You realize that after $8,000 in commission and other closing costs, you would be left with a profit of only $6,000. That is not very motivating.

However, you have other plans. You have enough cash to start the project, and a home equity line of credit to finish it without getting a a new mortgage. You make an offer on the property of $32,000 which is accepted. Then you arrange for the well, septic system, and power pole to be installed. While this is going on, you start shopping for a repossessed modular.

You’ve seen them advertised in the paper for as little as $30,000. You let some dealers know you are interested in a “repo,” and a month later you get a call. A dealer has an almost new 3-bedroom, 2-bath modular that he will sell for $49,000. You agree.

You are spending $15,000 less on the home as originally projected, and you bought the lot for $3,000 less as well. You do $2,000 in landscaping that you didn’t include in your original figures. You have an extra $1,000 in holding costs because it took longer than originally projected to complete the project, and the other costs are $2,000 higher than anticipated.

The good news is that because you did the landscaping and paid for the better lot, the home sells for $138,000. Your total costs were just $113,000. Your total profit is $25,000. That is enough to make investing in modular homes interesting.

By: Steven Gillman

About the Author: