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.