When it comes to flipping houses, the most important part of the process if cultivating your exit strategy. This will enable you to hedge your expectations and keep your emotions in check. It’s easy to get caught up in the hype and income potential, but thinking about your exit strategy will bring you back to reality. Working on your exit strategy will enable to think about both the best case scenario and the worst case scenario so that you are ready to handle any unforeseen circumstances. While its great when everything goes right, it’s even better to prepared when things go wrong. The last thing you wan to do is scramble around trying to figure things out on the fly. Plan ahead and proceed with confidence. This is one of the key principles to real estate investment success.
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Boston Flips
Real estate investing may seem like a business that only requires speed, high risk tactics and reckless abandonment, but one of the most important skills needed to be successful is patience. Patience enables you to wait for the right deals instead of chasing the wrong ones.
There several strategies to build a profitable real estate business. One of the best ways for beginners to start investing in real estate is to wholesale deals to other investors. There are two primary ways to do this, assignment contracts and acquiring a property and immediately reselling it. This enables you to make a quick profit with no construction experience required. The key is to leave enough meat on the bone to make the deal attractive to investors.
For first time home buyers, the process of buying a home can be quite intimidating. One area of concern is the Market/Appraised value vs the assessed value. In a seller’s market, where values are appreciating, buyers get concerned when they see an assessed value that is significantly below the list price. The reason this happens is because the assessed value always lags the market or appraised value. Assessed value is what your town or city feels your home is worth and taxes you on that value, not the appraised value. As a result, sometimes the assed value may be $100,000 or more below the market value in a seller’s market . This is actually a good thing for buyers and home owners, because you’re able to pay taxes based on a lower valuation until your property is re-assessed. In a declining market, assessed values are actually higher than the appraised value. In these instances, you should contact the assessors office to assess your home to get the assessed value in line with the market value so that your property taxes are appropriate. With this understanding, buyers should base their purchasing decision based on a Comparative Market Analysis to get an understanding of the Market/Appraised value.
When purchasing distressed investment property that is occupied by tenants or a previous owner that may have lost their home to foreclosure, one of the best ways to get them out is the cash for keys strategy. Cash for keys is basically offering the occupants money in exchange for the keys. While it sounds simple, the key to success has less to do with the money, and more to do with addressing the needs of a particular occupant. The first call they receive should not be from an attorney. Using your attorney too soon may cost your more money, time and aggravation down the line. You want to start by approaching them and figuring out what they need in order to successfully find a new place. They may just want help finding an apartment or may already have plans to leave. Have the conversation and get at the heart of their motivation. If yo can’t find common ground, then have you attorney take over. Typically, tenants want first month’s rent last month’s rent and the Security deposit for their new place. Previous owners can be a bit more challenging as they are looking for a fresh start and may need more time and more money depending on the situation. Cash for keys works but new investors should be careful purchasing occupied distressed properties where there is no rent or income being paid.
299 W 2nd Street has been under construction for about 8 weeks. There were some delays due to the permitting process, but the framing is almost complete. The property is an attached single family and includes approximately 1500 Sqft, three living levels, three bedrooms and 2.5 baths. The developer is also working on adding a parking space, but that is still in the works.
When I speak to new investors looking to buy and hold real estate, one of the first questions they ask is what type of properties they should buy first. While purchasing a property that provides income potential is a wise investment, purchasing a multifamily is even better. If you buy a condo or single family and lose your tenant, you have zero cash flow. With a multi family you can carry it easier if you lose a tenant because you have multiple tenants paying rent. It is also harder to qualify for an investment property one you own multiple properties, so make the first one count by purchasing a 3 or 4 family with as little as 3% down. After your first purchase you will typically need 20% down for any additional investment purchases.
While most folks have a negative perspective on short sales, there is actually a bright side for sellers and buyers. As a short sale seller it allows you to take control of a bad situation, get some cash into your pockets (relocation assistance), and gets your credit on the road to recovery. While foreclosures put a 5-7 year scar on your credit, many of my short sellers are buying homes within 2 years. On the investment side, they create a great opportunity to negotiate directly with the bank without competition and before the property is auctioned off at a foreclosure auction where you have to compete with a ton of investors. http://BTRealtyGroup.com.
This is one of my favorite flips to date located at 66 Kingsdale St Dorchester. It went under agreement in under a week with multiple offers. Our goal was to blend old character with modern finishes and I feel we really executed our plan well on this one. If you or any one you know is looking to sell, my team and I are ready to buy anywhere in the Greater Boston area! 857-209-4450.
When it comes to flipping houses, real estate investors need to understand the to keys to pulling permits. The first item you must understand is whether or not you need a long form or short form permit. This makes a big difference and can significantly increase your time frame if it is a long form. The second key is asking your contractor if they have experience pulling permits in the Town or City you are working in. It’s not a deal breaker but this can streamline the process if they are familiar with the local inspectors.