Ben Moskel ! From High School English Teacher to Real Estate Investor

It is hard to believe that I started life in the working world more than 20 years ago as a high school English teacher.

 

As much as I enjoyed teaching, I knew it wasn’t the right career for me.  I knew I was in the wrong place.

 

I had a couple sales jobs, and those didn’t seem right either.

 

It wasn’t until I started flipping my first house in 2009 that I finally felt like I had found the right place.

 

I felt like I had figured out what I wanted to be when I grew up ; )

 

I used to wake up to an alarm clock at 5:15 am Monday through Friday to go to school and teach, and 6:30 am most weekends to coach track and field or volleyball, depending on the season.

 

I have never been a morning person.  My body never adapted, and I was always exhausted.

 

Now I wake up around 7:30 am each morning, excited to start the day and jump into the world of opportunity that real estate offers to anyone who wants it.

 

Does any of my experience sound familiar to you?

 

Do you feel like you are in the wrong profession?

 

It’s time for you to take action.

Ben Moskel - What are House Flippers Making Right Now?

Yesterday Ralph, a subscriber, sent us this question:

Is it possible to do flips and make a decent profit without doing the manual labor yourself? And if so, what is the average amount of money that needs to be invested into fixing up each property and what is the average profit after selling?

Here are answers to those 3 questions:

1. You don't want to be doing any of the labor yourself.

Your job is to oversee the flip.  You drive out to the property 2-3 times per week and check on the progress.

You should be doing your flips without touching a hammer.

This allows you to build and expand a real estate business that is sustainable over the long term.

2. Every flip has a different rehab budget.

Some flips require lots of work while others require only cosmetic repairs and upgrades.

The key is to get an accurate and realistic estimate of the costs before you make an offer on a house.

3. According to Realtytrac's U.S. house flipping report, the average gross profit per flip was $55,000 last year.

Redfin recently did a study showing the average gross profit per flip was $102,400.

Ben Moskel

The Redfin study included the purchase and sale prices from tens of thousands of flips.

Unlike Realtytrac, Redfin included the numbers from actual flips, and excluded certain transactions such as those between family members.

In other words, $102,400 gross profit per flip is likely more accurate.

IMPORTANT: This is the highest gross profit since Redfin began analyzing house flipping.

If you've recently decided to start flipping houses, your timing is right on the money.

Big Profits on a Small Flip - Ben Moskel

Here is another great potential flip

in Panama City, Florida for just $10,000:

Ben Moskel

This is a 3 bedroom, 2 bathroom 1256 sq. ft. home. in Panama City, FL.

Ben Moskel

The kitchen is rough, but since it is so small, it will be less expensive to replace.

Ben Moskel

If you look closely, you can see some mold or mildew on the wall.  While this scares off a lot of investors, it is actually relatively cheap to fix, as long as it has not caused structural damage.

Ben Moskel

If you look closely at this picture, you can see that this is a concrete block come.  This increases the value because of its extreme durability compared to wood.

Let’s look at the numbers:

Purchase price: $10,000

Rehab cost:  $25,000

Quick sale price: $59,000

Expected profit:  $24,000

By the way, I know some flippers who will flip houses in other states just for the adventure.

For example, they will find a good deal on a flip near Chicago in the summer.  They rent a cheap apartment for 2-3 months and knock out the flip.  They treat it as a vacation, since flipping a house does not typically require more than 5-10 hours a week of your time (as long as you are using contractors).

And since you traveling for the purpose of flipping a house, your entire vacation is essentially 100% tax deductible.

This isn’t for everyone, but it is something to consider if you are not tied down by a job or other responsibilities.

It’s a pretty neat idea if you think about it: you get to go an adventure and spend a couple months in a new exciting city and have an extended vacation while making a nice profit.

Driving Out to Look at Properties

Aside from getting a check at closing, driving out to look at a property is the most exciting part of

rehabbing a house.

In industry speak, this is called doing a "walk-through."

The purpose of the walk-through is to see whether a property shows potential.

You don't have to be a master detective and identify every single problem.

Your home inspector and contractor help you do that.

However, knowing what to look for is a valuable skill set. Do this right and you will uncover properties with the biggest potential profits.

But what if you don't have experience...how do you know what to look for?

Here is a basic checklist that our team uses when we look at the interior of a home.

(I'll share the exterior checklist in another email.)

1. Floor plan. The house should have a "normal" floor plan. Don't buy a house if it has a bizarre custom layout.

 

2. Kitchen. Look under the sink. See if the cabinet floors are discolored. Press on them with your hands.

A soft or discolored cabinet floor means there is a leak in the plumbing.  

Cabinets. Sometimes you can repaint cabinets and save money.  Old laminate cabinets will have a pinkish color.

Those look bad and need to be replaced.

In most cases you will be replacing the kitchen floors, but you want to make sure they are level. Put a marble on the floor and see what happens.

3. Bathrooms. Because there is so much water flying around, moisture is a common problem.  

Check the floors for soft spots around the toilet. Stand in the tub. You want to feel a solid (not soft)

floor.

Look under the bathroom sink and do the same check that you did in the kitchen.

4. Bedrooms. Record the condition of the floors. Hardwood (under the carpet) and any overhead lighting are bonuses.

5. Ceilings and Walls.  Look for cracks. Some cracks suggest a foundation issue.

Otherwise, most cracks are likely due to age and can be easily repaired.

6. Electrical. - You don't have to be an electrician, but you can still check for a few things.

If electricity is on, test all the switches.

An old breaker box (the type with colored fuses) will need to be replaced.

7. HVAC. Again, you don't have to be an expert, but see if it looks old. If you're lucky it still appears

new and functional.

Hot water heaters are good for about 10 years. The yellow sticker tells you how old it is.

Use this checklist when you look at your next property.

Remember to bring a flashlight, a camera, tape measure and a notebook to jot down what you see.

TIP: Record your mileage when you drive out to look at properties. It is a tax deduction.

Are you ready to take the next step and start flipping houses?

Steps to Buying Bank-Owned Properties By Ben Moskel

A few weeks ago RealtyTrac released it's annual U.S. Foreclosure Market Report. Bank repossessions were up 38% compared to the year before.  Darren Blomquist, vice president of Realtytrac, said that right now we are experiencing

"the biggest bank-owned pricing discount since 2006."

"the biggest bank-owned pricing discount since 

2006."

"the biggest bank-owned pricing discount since 

2006."

If you're thinking about capitalizing on this trend, here are the 5 steps to buying a bank-owned property:

Step 1: Review the new bank-owned properties hitting the market each day. You can do this online from your computer.

Fannie Mae Foreclosures, VA Foreclosures, HUD Properties, auction sites, Zillow, and MLS/Realtor.com are solid sources of discounted bank-owned houses.

Step 2: Identify 3-4 properties near you that you're interested in.

Step 3: Drive out and look at the properties in person.

Step 4: Run the numbers and figure out what you're willing to offer on a property.

Step 5: Once the bank accepts your offer, order 

an inspection and set up lending if you're using hard 

money or private money to do the deal.

Here are two important things to remember about bank-owned houses:

- It's OK to make an offer that is significantly below asking price.  Banks often use the same listing

agent to handle dozens of properties. It's not unusual to discover that neither theagent nor the bank know anything about a property.

Also, banks are paying carrying costs on their houses (e.g. insurance, taxes, maintenance). They

are anxious to move properties off their books, even if it means giving you a big discount.

Would You Flip This House?

Take a look at this house:

Ben Moskel

Bushnell, FL 33513. 

Ben Moskel

 It sits on a full acre of land.

This is a beautiful home that has a lot of attractive features in it.

The current asking price is $92,500.

It needs about $40,000 in rehab expenses—mostly cosmetic.

Here are the numbers:

Purchase price: $85,000 (estimated)

Rehab costs:  $40,000

ARV: $179,000

Net Profit:  $54,000

When I see homes like this, I get excited.

Here is why I would flip this house:

1.  It is located in the country.  There is almost no competition if you decide to flip homes in rural areas.  For some reason, most people only flip in cities and suburbs.

2.  There is a HUGE profit margin in it. $54,000 is a very nice profit on a relatively small and simple flip.

There is a misconception that rural houses sit on the market forever because no one lives out in the country.

It is true that fewer people live in rural areas.

But it is also true that there are less homes available.  When priced right, rural homes do not sit on the market any longer than suburban or city homes.

If you are looking for an easy first flip with:

1.  A high probably of success

2.  A better than average profit margin

3.  Little or no competition

then flip a home exactly like this one, in a rural area.

Honestly, it is like cheating.  There is so much more profit to be made in a rural flip like this.

How to Establish Credit For A New Business

If you formed an LLC or a corporation recently you  may want to establish credit for the business. 

A business with an established credit history  can get credit cards, lines of credit with a bank,  real estate loans, auto loans, and unsecured loans for business 

purposes. 

Ben Moskel

Some of these financial products require a personal guarantee. However, if the corporation has sufficient assets and credit history, your corporate entity  may be able to stand on it's own and qualify for certain types of loans  without a personal guarantee. 

Unfortunately credit history is not established simply with the passage of time. Even businesses with a long track record of sales and revenue may have very little  to no credit history. It is a proactive practice requiring frequent use of  credit. 

Entire seminars are given on establishing corporate credit. However, a good place to start, especially for  new corporate entities, is with small retail lines of  credit. 

Ben Moskel

These typically don't require a personal credit check and can be used for business supplies. 

Consider opening an account with Quill (quill.com) and Uline (uline.com) and use is each month to purchase necessary supplies for your business. 

Use your corporate account (net 30 invoice.)  This will help establish corporate credit and help your business qualify for more advanced credit products.