| Flipping Homes...Flipping Houses... What
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| | just don't necessarily need to know every
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| is everyone flipping over?
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| | hinge or piece of hardware that's off.
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| In the past five years, you've obviously
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| | If your home inspector can give you a
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| heard the buzz surrounding flipping
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| | ballpark estimate of costs, that's all
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| homes. There's a new TV show popping up
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| | the better. This way, you've got a second
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| weekly, it seems. And it's hardly even
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| | set of eyes looking out for you.
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| possible to keep track of them all these
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| | *** BONUS TIP *** You can often use a
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| days.
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| | home inspection to ask for credits or
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| But, what's the real scoop behind all the
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| | renegotiate the purchase price.
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| "flipping houses" buzz? And is it right
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| | Step 4: Don't Get Emotional
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| for you?
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| | Flipping a home can be emotional by
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| In this article, we're going to dispel
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| | nature. Murphy always rears his ugly head
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| some of the myths surrounding flipping
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| | when you least expect it. So, don't
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| homes and also give you the steps in case
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| | become so desperate! Don't let your
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| you want to jump in.
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| | emotions get involved. If the numbers
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| First off... the term "flipping houses"
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| | don't work, move on to the next house.
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| often refers to two different things:
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| | There are plenty of homes on the market
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| 1. Wholesaling - also known as assigning
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| | to flip and there's no reason to take on
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| the contract - is when you simply put a
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| | a bad deal just to do a deal! On the
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| property under contract and sell the
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| | "flip" side - no pun intended - many
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| contract to someone else, usually another
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| | people believe their improvements have
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| investor.
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| | increased the value of the property above
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| 2. Retailing - or rehabbing - is when you
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| | the original value they had estimated.
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| actually buy the house you are going to
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| | This can be VERY dangerous because you
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| flip, do the repairs, and then sell the
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| | can wind up holding the property longer,
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| house, usually to an end buyer, or
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| | making less money, and getting left with
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| homeowner.
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| | a bad taste in your mouth. For instance,
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| On TV, they're showing the latter:
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| | they estimated the property would be
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| buy-fix-sell.
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| | worth $250,000 at the beginning, but
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| There is a lot of money to be made
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| | wanted to "test the market" at $275,000
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| flipping houses, but if you don't do it
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| | for a few weeks. This is not recommended
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| right, you can also LOSE a lot of money.
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| | as the majority of traffic will come in
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| What you don't see on the television show
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| | the first 2 weeks that follow after you
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| is how they find their properties, how
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| | first list the property for sale.
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| much it costs to acquire the properties
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| | Step 5: Know Your Numbers
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| and, in most cases, the profit. It's
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| | Late night infomercials and shows like
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| funny how these programs very rarely tell
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| | "Flip This House" or "Flip That House"
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| you HOW MUCH the person REALLY made from
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| | don't get into the real details of the
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| the deal (not the gross profits, but what
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| | deal. You hear stories like this:
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| they put in the bank after all is said
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| | investor buys the house for $200,000, put
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| and done).
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| | $25,000 worth the repairs into the home
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| So, how do you go about flipping homes
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| | and sell it for $250,000, putting $25,000
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| (aka House Flipping) the RIGHT WAY -
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| | into their bank account. These don't take
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| where you make a good chunk of money in a
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| | into account buyers closing costs when
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| relatively short period of time? There
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| | you buy - holding costs including taxes,
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| are really only 7 steps to flipping
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| | insurance, utilities and mortgage
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| houses. And if you follow them, you will
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| | payments - and selling costs when you
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| make money!
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| | finally sell.
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| Step 1: Flip A House Close to Your Home
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| | In the real world, you must know:
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| Look in your own backyard for deals. Too
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| | - Purchase costs: Upfront mortgage fees,
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| many people look at properties that are
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| | attorneys fees, regular closings fees,
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| too far away for their first deal. I know
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| | title, survey, etc.
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| from firsthand experience. The first
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| | - Carrying costs: It's more than just the
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| house I flipped was 4 hours away and it
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| | repairs! When you're flipping real
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| took a lot out of me. You want to be
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| | estate, you're likely paying higher
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| close enough to supervise the job and/or
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| | interest rates than on, let's say, a
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| to work the house at night and on the
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| | primary residence or second home. In
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| weekends. Plus, you'll probably have a
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| | addition to the repairs, you've got to
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| better idea of the values if the property
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| | consider monthly payments, taxes,
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| is in close proximity to where you live.
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| | insurance, utilities, etc.
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| Step 2: Find the Right House to Flip
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| | - Selling costs: Again, you've got
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| Not every "deal" is really a deal - even
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| | closing costs and possibly real estate
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| if you can get it cheap! Keep in mind the
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| | commissions to consider.
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| location of the house you are flipping.
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| | Step 6: Make A Plan... And Stick To It
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| Is it in an area where people are buying?
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| | Create your "House Flipping" plan and
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| Or is it in an area dominated by rentals?
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| | stick to it. Decide what you're going to
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| Pay attention to the condition. For your
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| | do, when you're going to do it, and how
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| first few deals, look for properties that
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| | you're going to do it before you even
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| need cosmetic repairs only. Cosmetic
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| | close on the property. Then, you're
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| repairs include paint, flooring, kitchen,
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| | simply managing the project and tracking
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| landscaping, etc. Save the houses that
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| | your progress - not reinventing the deal
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| need structural repair, roof repair, HVAC
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| | every other day. You'll know, at any
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| repair, major plumbing, and major
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| | given time, where you stand on the deal.
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| electric repair for more seasoned
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| | You'll stay focused by keeping the bottom
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| investors. You could open up a can of
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| | line in front of you all the time.
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| worms that you're not able to deal with
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| | Step 7: Expect the Unexpected
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| financially and from a time perspective.
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| | Any time you're flipping homes, you'll
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| Step 3: Have A Through "House Flipping"
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| | run across SOMETHING that you simply
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| Inspection
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| | didn't expect. Whether it's an issue that
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| A "House Flipping" inspection is slightly
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| | pops up 2 hours before closing that needs
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| different than your standard home
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| | to be handled or a big surprise when you
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| inspection. You're going to ask your
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| | peek behind the drywall that you had to
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| inspector to look thoroughly at the 5
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| | replace! You'll almost always run at
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| major systems (plumbing, electric, roof,
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| | least a little over budget or hold it a
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| HVAC, and structure). The cosmetic
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| | little longer than you anticipated. But
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| repairs will be less important since
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| | at the end of the day, you'll have the
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| you're going to be renovating the home.
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| | satisfaction of taken an ugly house and
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| Expect to change out ceiling fans,
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| | turned it around and depositing a healthy
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| cabinetry, flooring, etc. These are the
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| | check in your bank account. Keep your
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| reasons you're getting a great deal in
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| | expectations in check and you're in for a
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| the first place. You don't want your
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| | big pay day!
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| inspector to "skip" the other items, you
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