Unfortunately, I have nothing to report about progress today. I wish that I could say that I have plaster, but no cigar. The plasters called this morning to say that they would be here tomorrow morning instead. I had to call the painters and push them up until Monday as a result. I am hoping they show tomorrow.
I did manage to make it to the Benjamin Moore store today. I picked up some samples. Those things are really handy. I will try them out tomorrow, hopefully some of them will work. Choosing paint colors, especially for your own house is a tricky task.
Saturday, August 28, 2010
Property Investment For Profit: Flip or Flop
Flipping houses refers to an investor buying a property and selling it in a short amount of time for a profit. A property can be flipped without making any repairs if it is bought at the right price or a property can be flipped after performing renovation to some extent. Flipping can be a very profitable, but also very risky.
Keys To A successful Flip:
1. Know your market- This is crucial. You have to know the value of your area. Know what comparable properties have sold for, and the competition. MLS is a great tool for market info. Public record will have information on sold properties. Local newspapers will have some information, but it is not very extensive. Talk to real estate agents who have been in the business for a while and get a feel from them about value. Be sure that you have a full understanding of the condition of the comps.
2. Search for a bargain- There are many reasons why a property will be undersold, especially today with the flavor of the market rich in foreclosure.
4. Examine Financing Carefully - Distressed properties are very difficult to finance conventionally. Hard money is extremely expensive and the deadlines are tight. It is easy to lose. and lose big. when dealing with loan sharks. Be careful.
5. Renovate for the Masses - Be true to the style of your house. Keep your own taste out of it. Remember you won't live there. Use neutral colors. Provide features that are in demand for your target buyers. Be sure your work is quality. Don't cut corners. It will only come back to haunt you later. Address issues that may arise at the Home Inspection. Do not over-improve by installing items that are costly and won't pay back. Be careful not to cut out any of your target buyers, like constructing a swimming pool in a family neighborhood.
6. Get in and out Quick - Time is money. Get it done fast and move on to the next deal. If you work all day, then don't try to do the work yourself at the project. What you save here, you may loose there.
7. Don't be Greedy - Your first offer may be your best offer. Be careful about holding out for a better offer, when already have a good one. Don't let your property sit on the market costing you money. Price to sell. Make your piece and get out.
Be realistic and Savvy. Does your deal make sense? Is it a no- brainer or will you be hoping for the best? How long will it really take to get the property flipped? How much will it really cost? These are factors that will have a direct impact on profiting or losing on the deal. If your unsure, then you had better consult with someone who knows. Have a back-up exit strategy, just in case you are unable to sell your flip, have a plan to rent, move-in, re-finance etc. If your too nervous or something doesn't seem right, then don't do it. There will always be another good deal. Savvy investors know when to pass and when to pounce.
woburn. I received an award from the Historic Commission for this renovation. http://www.wickedlocal.com/woburn/town_info/history/x1300270458
Keys To A successful Flip:
1. Know your market- This is crucial. You have to know the value of your area. Know what comparable properties have sold for, and the competition. MLS is a great tool for market info. Public record will have information on sold properties. Local newspapers will have some information, but it is not very extensive. Talk to real estate agents who have been in the business for a while and get a feel from them about value. Be sure that you have a full understanding of the condition of the comps.
2. Search for a bargain- There are many reasons why a property will be undersold, especially today with the flavor of the market rich in foreclosure.
- Auctions are a great way to acquire property cheap. Local newspapers will advertise scheduled auctions. You can also subscribe to auctioneers' website listings and the auctions will automatically be sent to you. Companies such as Hudson and Marshall have an online bidding process. They deal with a lot of REO (bank owned) property. I have actually bought 2 houses from them myself. One of them I acquired for 50% of the list price, the other about 75% of list. Banks are willing to negotiate because they want to unload foreclosed property as quickly as possible. They sell significantly under the value to get rid of it quick. Often times they take a loss. I love to purchase from banks because they are great with negotiation. You can really get a good deal.
- MLS - Search keyword such as "handyman special", "developer", "investor", "needs work", "motivated seller". These properties are not for just anyone and are more difficult as they may require special financing due to the condition. Watch the "Days on Market" and check the number of price reductions. These are keys to price negotiation. The longer a property is on the market the lower the offers. Multiple price reductions is always a clear indication of willingness to negotiate. A desperate seller is the best kind of seller. Some folks are pressured by a pending divorce, court orders, Town Health orders, etc. When a seller is under the gun, they will sometimes act irrationally and agree to a price that is much less than the value.
- Contact the Owner - If you happen upon a property that looks abandoned and distressed, contact the owner and ask them if they would be willing to sell it, or, you may even be able to acquire the property for FREE!!!
- Realtors - Build relationships with real estate brokers. They will often contact an investor as soon as a new listing is signed that meets the investor's criteria. It is especially helpful to promise back the listing on the other side of the flip. When it is completed let them resell it for you.
4. Examine Financing Carefully - Distressed properties are very difficult to finance conventionally. Hard money is extremely expensive and the deadlines are tight. It is easy to lose. and lose big. when dealing with loan sharks. Be careful.
5. Renovate for the Masses - Be true to the style of your house. Keep your own taste out of it. Remember you won't live there. Use neutral colors. Provide features that are in demand for your target buyers. Be sure your work is quality. Don't cut corners. It will only come back to haunt you later. Address issues that may arise at the Home Inspection. Do not over-improve by installing items that are costly and won't pay back. Be careful not to cut out any of your target buyers, like constructing a swimming pool in a family neighborhood.
6. Get in and out Quick - Time is money. Get it done fast and move on to the next deal. If you work all day, then don't try to do the work yourself at the project. What you save here, you may loose there.
7. Don't be Greedy - Your first offer may be your best offer. Be careful about holding out for a better offer, when already have a good one. Don't let your property sit on the market costing you money. Price to sell. Make your piece and get out.
Be realistic and Savvy. Does your deal make sense? Is it a no- brainer or will you be hoping for the best? How long will it really take to get the property flipped? How much will it really cost? These are factors that will have a direct impact on profiting or losing on the deal. If your unsure, then you had better consult with someone who knows. Have a back-up exit strategy, just in case you are unable to sell your flip, have a plan to rent, move-in, re-finance etc. If your too nervous or something doesn't seem right, then don't do it. There will always be another good deal. Savvy investors know when to pass and when to pounce.
woburn. I received an award from the Historic Commission for this renovation. http://www.wickedlocal.com/woburn/town_info/history/x1300270458
Friday, August 27, 2010
11 Days and Counting...Drywall!!!
YES!!! We have drywall. The hangers arrived this afternoon.
I spent yesterday at Walmart with the kids. I had a bunch of stuff that I had to get. I bought this awesome Lysol No- Touch Hand Soap Dispenser. I like it a lot. I wasn't sure if the touch sensor would be too sensitive and dump soap all over the counter, but it really doesn't. My kids are notorious for making a mess with the handsoap. I really like this machine. I will buy a couple more when we get in the house, one for each bath. So needless to say, I haven't picked up paint yet.
The soap refills also come in grapefruit and cucumber. I smelled them all in the store. The cucumber I liked the best.
My deadline is growing near, very near, not sure if I will make it. The plumber didn't show today. He still has to hook up the main drain in the basement and hook up the gas in the basement. He's telling me next week. Hopefully the paint will go on by Monday. I have a finish carpenter also scheduled for Monday. I don't normally like to do both simultaneously, but we'll have to make it work. He can cut outside to avoid dust on the new paint. We'll see how that goes. Tomorrow is plaster!!!
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| Hangers use stilts. |
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| Notice my daughter peeking in to see. |
I spent yesterday at Walmart with the kids. I had a bunch of stuff that I had to get. I bought this awesome Lysol No- Touch Hand Soap Dispenser. I like it a lot. I wasn't sure if the touch sensor would be too sensitive and dump soap all over the counter, but it really doesn't. My kids are notorious for making a mess with the handsoap. I really like this machine. I will buy a couple more when we get in the house, one for each bath. So needless to say, I haven't picked up paint yet.
The soap refills also come in grapefruit and cucumber. I smelled them all in the store. The cucumber I liked the best.
My deadline is growing near, very near, not sure if I will make it. The plumber didn't show today. He still has to hook up the main drain in the basement and hook up the gas in the basement. He's telling me next week. Hopefully the paint will go on by Monday. I have a finish carpenter also scheduled for Monday. I don't normally like to do both simultaneously, but we'll have to make it work. He can cut outside to avoid dust on the new paint. We'll see how that goes. Tomorrow is plaster!!!
House Update: Second floor rough complete.
Essentially I am running two separate projects here. I have the garage to guest house conversion and the real house. I have been concentrating more on the guest house because my family and I will live in it until the house is complete. So it's priority. Although my focus has been the guest house I still have work being done on the house.
The second floor rough framing, electric and plumbing is complete.
Damn roof tarp blew off in the storm.
The second floor rough framing, electric and plumbing is complete.
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| Second floor laundry nook. |
We are also chugging away at the basement addition. The old concrete slab floor has been broken up and is being loaded into the dumpser to be hauled away. Tip: When doing a project like this, there are special dumpsters that are specifically for recycle materials such as asphalt, brick, concrete and dirt. Think ABCD. They are cheaper than a general construction debris dumpster and the price includes much more weight.
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| Dumpster for only asphalt, brick, concrete and dirt. |
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| We had to remove 2 layers of concrete. |
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| Concrete bagged and ready for transport to the dumpster. |
We are preparing the first floor for the installation of an LVL. An LVL is used to support joists when a wall is being removed to achieve open space. We had to build a temporary wall to support the floor joists above so that we can insert the LVL. I have removed the rear staircase of the house and will remove the wall that separated the rear bedroom of the first floor and the kitchen. Doing so will leave me with a very large space at the rear of the building to expand the kitchen.
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| temporary wall to support joists above |
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| staircase has been demolished. Notice the hole in the floor. |
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| The hole where the staircase reached the second floor. We framed it in temporarily for safety. |
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| Stair demo. |
Damn roof tarp blew off in the storm.
FREE HOUSES!!! (Really)
The bulkreotrader is running a contest to give away 3 free houses. For those who do not win, there are ways, to get your own free property. I have had 2 owners in the past couple of months contact me to take the deed of their property for free. Both properties are near mine and both need work, but they are free nonetheless. One of them would require back tax and water to be paid. The other requires no payment...and... the owner will even cover the cost of the title insurance. (I have not taken advantage of either of these deals simply because I am in the middle of an extensive renovation of my own house and could not oversee these properties from out-of-town at the moment. It would just be a distraction.)
These deals are out there, mostly in depressed areas of the country. Some owners simply want the property out of there hands. They don't want the liability of owning it. They may have the Health Department or the Building Department in their town pressuring them to make repairs that they can't afford. It isn't difficult to acquire deals like this. Here's How:
Be Realistic - Your neighbor down the street in your quaint suburban neighborhood isn't going to deed his house to you for nothing. I don't care how much work it needs. Search depressed run down areas where folks don't realize the hidden value in the real estate.
Don't count on flipping - More times than not these types of free properties don't have much turnaround profit margin. The value lies in the rental. The real estate market of theses areas is very low and that's why they are free.
Abandoned - Look for properties that are boarded. That is a sure indication that they are vacant and may have been abandoned. Look for overgrown yards and busted windows. Check to see if the electric and gas meters are in place.
Utilities - Call the Electric and Gas Company. They will usually be able to tell when the last time the service was on. That is the best indication of how long the property has been vacant.
Public Record - This is a great tool for locating owners. Also, check the town's real estate assessment records to see where the tax bills are going.
Back Taxes/Water/ Liens - Generally, when you acquire a free property it has been abandoned by the previous owner, which means they are probably tax deliquent. There may also be an outstanding water bill. There may be other liens on the property such as mortgages. These types of liens and bills will carry over to a new owner. Be sure to check how much is owed before finalizing the deal.
Expect to Renovate - Almost 100% of the time free properties will need to renovation. Free properties are run down and most have been neglected for years and years, that's why they are free. Some of them may need extensive rehab, while others may need clean-up and fairly minor repairs.
Watch Hidden Costs - Upon examining the property it may not be obvious that all of the copper has been stolen or that the pipes had burst at one time. Also, dry rot may be hidden in the walls. The furnace and hot water heater may be fried (if they are there at all). The roof may leak and the house may need other repairs that aren't completely obvious at first glance.
Weigh the Cost to Value Ratio - Just because the property is free, doesn't automatically make it a good deal. Calculate the cost to renovate plus the cost to pay off liens, taxes and water, then decide if the property will still fall below the market value.
Examine Market Conditions - Is there a reason why this property has been abandoned. If the property is not saleable or rentable when it's complete. then it's useless, unless your plan is to sit on it and hope the market improves.
Be Wise, Not Foolish - Savvy investors know when to pass, and when to pounce.
These deals are out there, mostly in depressed areas of the country. Some owners simply want the property out of there hands. They don't want the liability of owning it. They may have the Health Department or the Building Department in their town pressuring them to make repairs that they can't afford. It isn't difficult to acquire deals like this. Here's How:
Be Realistic - Your neighbor down the street in your quaint suburban neighborhood isn't going to deed his house to you for nothing. I don't care how much work it needs. Search depressed run down areas where folks don't realize the hidden value in the real estate.
Don't count on flipping - More times than not these types of free properties don't have much turnaround profit margin. The value lies in the rental. The real estate market of theses areas is very low and that's why they are free.
Abandoned - Look for properties that are boarded. That is a sure indication that they are vacant and may have been abandoned. Look for overgrown yards and busted windows. Check to see if the electric and gas meters are in place.
Utilities - Call the Electric and Gas Company. They will usually be able to tell when the last time the service was on. That is the best indication of how long the property has been vacant.
Public Record - This is a great tool for locating owners. Also, check the town's real estate assessment records to see where the tax bills are going.
Back Taxes/Water/ Liens - Generally, when you acquire a free property it has been abandoned by the previous owner, which means they are probably tax deliquent. There may also be an outstanding water bill. There may be other liens on the property such as mortgages. These types of liens and bills will carry over to a new owner. Be sure to check how much is owed before finalizing the deal.
Expect to Renovate - Almost 100% of the time free properties will need to renovation. Free properties are run down and most have been neglected for years and years, that's why they are free. Some of them may need extensive rehab, while others may need clean-up and fairly minor repairs.
Watch Hidden Costs - Upon examining the property it may not be obvious that all of the copper has been stolen or that the pipes had burst at one time. Also, dry rot may be hidden in the walls. The furnace and hot water heater may be fried (if they are there at all). The roof may leak and the house may need other repairs that aren't completely obvious at first glance.
Weigh the Cost to Value Ratio - Just because the property is free, doesn't automatically make it a good deal. Calculate the cost to renovate plus the cost to pay off liens, taxes and water, then decide if the property will still fall below the market value.
Examine Market Conditions - Is there a reason why this property has been abandoned. If the property is not saleable or rentable when it's complete. then it's useless, unless your plan is to sit on it and hope the market improves.
Be Wise, Not Foolish - Savvy investors know when to pass, and when to pounce.
Thursday, August 26, 2010
Property Investment For Profit: Got a Backbone?
I'm not going to lie. Real Estate Investing in NOT easy, especially when you first get started. Whether your flipping or converting or renting or whatever, there is a lot to learn and most of it comes the hard way. After completing my first renovated flip, I swore that I would never attempt another. I got over it and a few months later I was back at it.
This stuff is definitely not for the faint of heart. It can be stressful and there are deadlines. To be profitable you must have a good plan and when your plan goes astray, (and believe me it will) you have to be strong enough to hold it together and roll with the punches. Revise your plan and move on. Mistakes will happen, it's how you react to them. I know folks who have lost their shirt in this business. I also know people who have made a small fortune.
If and when you run into trouble, ask for help. Have a mentor, someone who has done similar deals to the one that you are doing. Be sure you trust your mentor or whomever is giving you advice. Don't listen to your grandma, your friend, and especially not the guy next door. Everyone thinks that they know something, but it's your money.
Make sure that you have a reserve funds for when things go bad. One of the biggest stresses is because of money, of course. Make sure that you have enough for your entire project. There will be many unforseans, even for seasoned investors. Running out of capital is enough to make you want to jump out of that new window that you just installed.
My rule of thumb is, if your too nervous, don't do it. Things are bound to go bad when you don't feel confident. Take risks, but calculated risks. Be sure that your profit potential far outweighs your risk of loss. The best deals are ones with almost no chance of loss. These deals are rare, unless your doing rental, but they sure are sweet.
You must expect things to go wrong. Plan for the worst and not be surprised when it really happens. This is a very exciting and rewarding field...if you can make it.
This stuff is definitely not for the faint of heart. It can be stressful and there are deadlines. To be profitable you must have a good plan and when your plan goes astray, (and believe me it will) you have to be strong enough to hold it together and roll with the punches. Revise your plan and move on. Mistakes will happen, it's how you react to them. I know folks who have lost their shirt in this business. I also know people who have made a small fortune.
If and when you run into trouble, ask for help. Have a mentor, someone who has done similar deals to the one that you are doing. Be sure you trust your mentor or whomever is giving you advice. Don't listen to your grandma, your friend, and especially not the guy next door. Everyone thinks that they know something, but it's your money.
Make sure that you have a reserve funds for when things go bad. One of the biggest stresses is because of money, of course. Make sure that you have enough for your entire project. There will be many unforseans, even for seasoned investors. Running out of capital is enough to make you want to jump out of that new window that you just installed.
My rule of thumb is, if your too nervous, don't do it. Things are bound to go bad when you don't feel confident. Take risks, but calculated risks. Be sure that your profit potential far outweighs your risk of loss. The best deals are ones with almost no chance of loss. These deals are rare, unless your doing rental, but they sure are sweet.
You must expect things to go wrong. Plan for the worst and not be surprised when it really happens. This is a very exciting and rewarding field...if you can make it.
Wednesday, August 25, 2010
13 Days and Counting...finally stopped raining.
We have these massive, sunken in, trench hole impressions all over the back yard. Looks like an earthquake hit. The rain soaked the soil and the trenches that we had covered back up with soil are starting to re-appear. Some parts of the yard are so soft that when you step, your entire foot sinks.
Tomorrow I'll have to have the guys take some soil from the basement to fill it in. Did I mention that I was digging up the basement floor? We broke up the old concrete slab with a sledge and jack hammer (my neighbors love me). So now it's time to dig the floor down and pour a new slab. I have to do this because I need 7' of headspace for the basement rental unit and now I only have 6'8".
Anyhow, I'm a little pissed at my plumber. I asked him 3 times if the exhaust flume for the tankless water heater needed to go inside the wall. He told me "no", 3 times. Now today he tells me that it does. Are you kidding me? The bloody drywallers are coming Friday. I hope that he gets it done by then.
This tankless number will be interesting. I've never used one before, but I guess they are supposed to be very efficient and very fast. We'll see. I'll report back on that.
So, the drywall and plaster supplies arrived today. 35 sheets of board. He told me that they would start Friday instead of tomorrow and be done by Sunday. I'm fine with that. It only leaves me about a week to wrap up everything else, but there's nothing that I can do, so I'm not going to stress myself out. (Yeah..right...as I spit out the tip of my nail)
Still haven't figured out any paint colors, but I did get a painter ready for Sunday or Monday or... whenever.
I really don't think that I'm going to make my deadline with so many delays, but I'm going to continue to push anyhow.
Tomorrow I'll have to have the guys take some soil from the basement to fill it in. Did I mention that I was digging up the basement floor? We broke up the old concrete slab with a sledge and jack hammer (my neighbors love me). So now it's time to dig the floor down and pour a new slab. I have to do this because I need 7' of headspace for the basement rental unit and now I only have 6'8".
Anyhow, I'm a little pissed at my plumber. I asked him 3 times if the exhaust flume for the tankless water heater needed to go inside the wall. He told me "no", 3 times. Now today he tells me that it does. Are you kidding me? The bloody drywallers are coming Friday. I hope that he gets it done by then.
This tankless number will be interesting. I've never used one before, but I guess they are supposed to be very efficient and very fast. We'll see. I'll report back on that.
So, the drywall and plaster supplies arrived today. 35 sheets of board. He told me that they would start Friday instead of tomorrow and be done by Sunday. I'm fine with that. It only leaves me about a week to wrap up everything else, but there's nothing that I can do, so I'm not going to stress myself out. (Yeah..right...as I spit out the tip of my nail)
Still haven't figured out any paint colors, but I did get a painter ready for Sunday or Monday or... whenever.
I really don't think that I'm going to make my deadline with so many delays, but I'm going to continue to push anyhow.
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