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Start Flipping Houses With Team Thayer Real Estate Eugene Oregon
How to Get Funding to Flip Houses
In a perfect World you have some capital set aside to flip houses. However, you can also use other people's money to flip houses and use only a fraction of your own money.
This strategy is called using "Hard Money." Hard Money Lenders issue short-term loans for rehabbing houses.
Getting a hard money loan is easier than getting a loan from a bank. There is less paperwork and your credit history is not as big of a factor. Often you can receive the funds in 48 to 72 hours.
Some Hard Money Lenders issue “No Doc” loans. They do not check your credit. They do not look at your income. However, a No-Doc lender requires a larger down payment than most other Hard Money Lenders.
Keep in mind this is a brief overview of how “Hard Money” works. Every Hard Money Lender has its own terms, conditions, and policies. Each state has its unique laws, rules, and regulations.
How to Find Cheap Houses
New investors often get discouraged because of a lack of inventory in their area.
Have you ever thought to yourself: “My town is too small to flip houses…” or “My town is too big and too competitive to flip houses…”
While every market is different, you can almost always find good properties to flip. Here are some of our favorite places to look for cheap real estate:
Bank Owned/REO Properties – Major U.S. Banks are motivated to sell their foreclosure properties. Why are banks so motivated to sell their houses?
Banks have “carrying costs” each month for any house in its inventory. Carrying costs include property tax, insurance, and maintenance such as landscaping and/or snowplowing services.
There is also the added risk that squatters will vandalize a property. In inner cities it is common for people to break into vacant properties and steal copper plumbing. This causes thousands of dollars in damage that the bank is forced to pay for.
Banks further lose out because an unsold house represents cash that is tied up. Banks prefer that their money is “out on the street” earning them interest.
All of these factors create opportunity for you to purchase bank owned properties at a deep discount.
HUD/VA Properties – HUD and VA Homes are also referred to as government foreclosures. A HUD property is a house with an FHA-backed mortgage that went into foreclosure. A VA property is a house with a VA-backed mortgage that went into foreclosure.
You can often pick up cheap HUD and VA properties. On the Free DVD you will discover where to find HUD houses with incredible potential priced between $10,000 and $20,000.
Off-Market Distressed Properties – These are homeowners who need to sell quickly. If you move quickly you can get houses for 30% - 50% on the dollar.
One example is a property where back taxes are owed. Homeowners who default on property taxes find themselves in a precarious situation. They must sell quick even if it means accepting a low offer.
Buying a property for 30 cents on the dollar for example, gives you lots of equity in a deal.
Want to see real life examples? Complete the form at the top of this page to get the Free DVD.
What Repairs Should I Make to Get Top Dollar?
Some people get carried away and do too many renovations. They find themselves trying to sell the equivalent of the “Taj Mahal” in a blue-collar neighborhood.
You don’t want to flip the most expensive house on the block. Do renovations that bring a house up to standards on par with other houses in the neighborhood.
Kitchen and bathrooms: redo them from top to bottom. If you are not sure what materials to use, look at homes that have sold for top dollar per square foot in your area and copy them.
Flooring: in most flips, use laminate hardwood flooring in the major living areas, and carpet in the bedrooms. Laminate hardwood flooring is
difficult to tell apart from real hard wood. It is not only much more durable, and scratch resistant; it is also less expensive.
Paint: Paint every room in the home. If the walls have a lot of minor flaws in them, use flat paint. Otherwise, use eggshell. And always use earth-tones.
Landscaping: Donald Trump himself stated that you get a $10,000 return for every $1,000 you spend on landscaping. It is amazing what rocks, trees, and shrubs can do to increase the perceived value of a property. A good rule of thumb is to budget 1% to 2% of the final expected sale price of your home for landscaping.
Plant a couple flats of fresh flowers the day before putting the house on the market. This simple, inexpensive final step will put a ton of extra cash in your pocket.
Roof: if the home needs a new roof, replace it. But factor this into your costs before you purchase the home.
HVAC: Make sure the home has a working heating and cooling system. In some areas air conditioning is now mandatory.
Garage: Other than paint, do not spend much money here.
Back patio: this is an often overlooked but very important area. A simple $1500 deck with two chairs, a small table in between them, and a couple wine glasses sitting on the table paints an awesome picture in the head of the potential buyer.
Make sure your general contractor has addressed each of these items in his quote. If you make these simple improvements, you will be able
to sell your property for top dollar and maximize your profits.
Justin Lee Thayer is Lane counties expert in market analysis for real estate investors.