Flipping Houses In Albuquerque NM
This article will provide you with a good start to flipping houses in Albuquerque NM. This article is about buying a property with the intent to make repairs and sell the home for a profit in a relatively short period of time. This article is not about wholesaling or buying a home and living in it for a few years while making repairs.
Where Do I Get Money For Flipping Houses?
The first step to flipping homes is you have to have money to pay for the house, the repairs, and cost of owning the home. If you can write a check for the house and you have enough cash to pay for all repairs, skip to the next section. There are a lot of ways to obtain the money to purchase a home to flip.
Hard Money. Hard money lenders will lend money to flippers in order to buy the home and make repairs. You will need some of your own money in most cases. Hard money usually comes with a high origination fee and high interest rates. Hard money loans are usually short term in nature.
Home Equity Line Of Credit (HELOC). If you have a lot of equity in your home, this may be an option for you. HELOOCs are offered by many lenders and is a reasonably inexpensive way to obtain cash for flipping houses or other purposes.
Private Money. Private money is borrowing from family, friends, or other individuals. Talk to family and friends to find out if they are interested in lending you money. Make sure everything is in writing so there are no misunderstandings.
Partners. You can look for other investors to partner with you and work with you to find and flip houses. A partner can be a great way to get started flipping houses until you have the cash to go on your own.
Bank Money. Most lenders will not lend money to flip houses. However, some of the local banks may be willing to loan you money.
How Do I Find Houses To Flip?
In today’s hot real estate market, this may be the most difficult part of the process. You must find homes that can be purchased well below after repair value (ARV). I am going to describe a few ways to find homes. There are plenty of ways to find homes, do some research and be creative.
Multiple Listing System (MLS). There homes listed in the MLS and you will need a real estate agent to help you here. You probably want to find a real estate agent that understands the dynamics of flipping houses. In a seller’s market, it is tough to find homes priced low enough to flip. However, there are deals to be found. You will need to move quickly if you find one in the MLS, there is a lot of competition for these homes. We have every foreclosure on our website, check out foreclosure homes in Albuquerque NM and foreclosure homes in Rio Rancho NM.
Targeted Mail Campaign. Do some research and find out if there are parts of town or other demographics that may be ready to sell. There are a fair amount of home owners that do not want to deal with selling their home through a real estate agent. Some home owners understand their homes need repairs and updates and simply don’t want to deal with all the hassle. The key is trying to find these home owners.
Bandit Signs. You see these signs placed everywhere and they are all about the same. We buy homes fast for cash. These signs are inexpensive and they do work.
Driving For Dollars. Drive around neighborhoods and look for the ugliest home in the neighborhood. This might be some one ready to sell to an investor. Look for big yard sales. Many times the large yard sales are the first step in getting ready to sell their house. Stop in and ask the owners if they are ready to sell their home.
Door Knocking. Get out and start knocking on doors and ask home owners if they are ready to sell their home. Ask them if they know anybody looking to sell their homes.
There are many other ways to purchase homes to flip, use your imagination and do some research to find other options.
So you found a potential home to flip. What are the next steps? Read on to find out.
What Is The After Repair Value Of The Flipped Home
You found a home and now what do you do? My first step is to determine the ARV of the home. While determining the ARV, you need to understand the condition and the final finishes you will need to do to the home. There is not just one ARV of a home. The ARV is determined by the level of upgrades and finishes. You are most likely going to need a real estate agent to help you with this step. This is a critical step in the house flipping business. Make a mistake here and you won’t be in the home flipping business very long.
Estimate The Repair Costs Of Your Potential Flip
This is another critical step in the process. You can’t make big mistakes here. I have flipped enough homes that I have a good handle on most required repairs and upgrades. There are times I may call contractors, suppliers, and search on line to prepare my cost estimate. I have created a spreadsheet with most repairs listed. This helps me from forgetting some repairs. If you don’t have this experience, you will need to get help. You can request estimates from contractors, suppliers, or others that have the skill set to price repairs and upgrades. I always add a contingency to my estimate. I use a contingency between 5% and 20% depending on the age and condition of the home. You will almost always find additional work that you did not identify in this step.
Estimate Your Carrying Costs While Flipping Your House
You are going to incur costs while you own the home. Here is a list of costs you may incur: property taxes, insurance, utilities, interest if you borrowed money, and maybe home owner’s association fees. There may be other costs you will incur. Estimate your carrying costs per month and multiply by the number of months you expect to own the home.
Estimate Your Expected Profit For Flipping The Home
I base my expected profit on the amount of risk I perceive that I am taking. The higher the risk the higher the expected profit margin. The minimum profit I am willing to take is $20,000 for low risk flips.
Estimate Your Cost To Sell The Flipped Home
Selling a home is going to cost you money. Here are fees to consider, real estate commission, appraisal, title policy insurance, title commitment, title settlement fee, survey, recording fees, HOA resale fees, and inspections. Customary closing costs vary from state to state. You need to make sure you understand what is customary in your area.
How Much Should I Pay For A House To Flip?
This is the approach that I take to determine the amount to pay for a house to flip. It is simple math and my spread sheet is set up to assist in determining the purchase price. The calculation is After repair value – repair costs – carrying costs – profit – costs to sell your home. This is the amount you can pay for the house.
The 70 percent rule is a common term used among many real estate investors when flipping houses. The 70% rule states that a house flipper shoul pay 70% of the ARV minus the repair costs when purchasing a house to flip. I prefert the steps descibed above in the section title How Much Should I Pay For A House To Flip.
Is Flipping Houses Easy?
The answer is absolutley not. It is hard to find homes to flip in today’s real estate market. There is a lot of competition finding these homes. It sure looks easy in all the TV shows and it is not. You can make a lot of money flipping homes if you can develop a steady stream of homes and have the money lined up.
Do I Need To Attend A House Flipping Training?
There are companies that provide training in how to flip houses. I am sure they provide a lot of good information about flipping homes. Most of the training will cost between $20,000 and $40,000. I think you can find all the information you need on line or in a few books. I think you are better off to use the cost of training to flip your next home.
Sell Us Your Home In Albuquerque NM
Myers & Myers Real Estate does buy homes and we will typically pay cash for your home. Call us at 505 401-7500 to get a sales price on your home.