"To the extent that the judicial profession becomes the daily routine of deciding cases on the most secure precedents and the narrowest grounds available, the judicial mind atrophies and its perspective shrinks."Irving R. Kaufman
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Are You Mentally Ready for your First Real Estate Rehab Adventure?
What kind of question is that? Well, it's one to ask yourself if you are on the fence, considering buying that first investment property...your first fixer-upper. We all know the benefits of doing so...money and accomplishment! You'll fix it up and reap ...
Getting a Real Estate Agent
The first thing to remember when finding a real estate agent is that they are all salespeople. You are a business to them and they want to sell to make a profit. Therefore, you should never let on that you need to sell your house ASAP, or you are in ...
Real Estate: Becoming A Broker
Why Real Estate? Real estate is security, a source of wealth and a path to prosperity. Real estate is the Great West, where new-age cowboys roam million-acre ranches on horses and Humvees, against a backdrop of majestic snowcapped mountains. It is a ...
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If you've been in the real estate investing business, or more specifically been flipping real estate, for more than a few days, you've inevitably gotten an email that reads something like this:
"Investor's Dream. This property will go QUICK.
- Property Address: 1234 Main Street
- Asking Price: $100,000 (Add or subtract zeros!)
- After Repair Value: $150,000
- Repairs: $15,000
- Profit: $35,000
- Details: Needs paint, carpet, tile, new kitchen, update bathroom, some roof damage.
- Tenant occupied. Need to evict!"
STOP! Before you read on... Take a guess at what you think the "real" profit's going to be on this real estate investment...
If you haven't ever gotten an email or fax broadcast like this, then rest assured, you will! I'm about to probably tick off all of the late night infomercials and pitchmen out there! Sure, I understand that when you've got 30 minutes (or 90 minutes, for that matter), that you've to sell what's sexy... not what's real!
Now it's my turn to expose the real deal on real estate investing! This goes for flipping real estate itself (i.e. properties) or simply flipping the contract (also known as assigning the contract). When you're flipping real estate, you need to be able to calculate the "real" bottom line and if your assigning the contract, you need to know your numbers so you don't get blacklisted from investors! This one piece of information will keep you from getting into trouble because of any "real estate bubble"!
Purchase Costs
Here goes... Have you EVER purchased and sold a piece of real estate for FREE? If you're not sure what the answer is... It's an emphatic NO... You are going to have costs to buy, costs to hold and costs to sell. This holds true even if you are buying a property for all cash. (Think title fees, attorney's fees, recording fees, etc.)
If you're not getting a mortgage, your purchase costs are obviously much lower, but nonetheless, there are costs associated with any real estate transaction. Plus, more than likely, if you're relatively new, you're probably not paying all cash for property anyways. You're probably going to be using a hard money investor for your initial real estate investing financing!
For a quick calculation, you can estimate anywhere between 3% - 5% for closing costs to just acquire the property. That's 3%-5% of the purchase price.
Holding Costs
How much is it going to cost you each and every day to own this piece of real estate? See, if you're making money in real estate, you'd better believe that there are a lot of other people that are going to expect to get paid and they get paid in the form of mortgage interest, property taxes, utilities, property insurance, etc. Each of these is an expense each and every day that you own the property. Here's an example... A hard money loan on a bread and butter type piece of real estate might run you 15%. Let's say you got the property for $100,000. Every month, you are paying $1250 in interest alone. Let's say that taxes and insurance are another $200/month and then utilities at $100. Right there, the property is costing you $1550/month - or roughly $50/day. See, why it's important to know your not only your holding costs on a real estate investment, but also how long it's going to be on the market before you can flip the property.
Selling Costs
Here's the third part of the real estate investing puzzle. When you want to turn around and sell this piece of real estate, it's going to cost you yet again! Are you going to use a real estate agent and pay a commission or 3-4-5% or even more? On $150,000, that's anywhere from $4500 to $7500 chopped of the top. Then, you can figure 1-2% in closing fees.
If you can remember this... and apply what you've just learned to each and every real estate deal that you do, you'll be safe flipping real estate in any market. You see, if it's a hot market, you can calculate less time for holding cost. But, in a slower market, make your offer based on 6 months or 9 months of holding costs. It's really simple math! And real estate really is a numbers game...
Recommended Resources:
Finding Deals: www.motivatedsellermarketing.com
Estimating Repairs: www.fixingandflipping.com
Finding Contractors: www.servicemagic.com
About the author:
Heather Seitz, the co-creator of Fixing and Flipping software, takes the guesswork out of estimating repairs. Learn how to estimate repairs and calculate profits in seconds. Click below for your free video and mini-course: http://www.fixingandflipping.com
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Jill on Money: Real estate, munis, life insuranceCBS NewsTo understand the issues surrounding the Facebook IPO, check out this quick video: The real estate market seems to be bottoming, according to experts like Ilyce Glink. I take that call pretty seriously, since Ilyce has been covering the housing market ... |
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Real estate spotlight, May 25, 2012Seattle Post IntelligencerBy AUBREY COHEN, SEATTLEPI.COM STAFF Is your dream to live on Lake Washington? How about in this home, 8750 Sand Point Way NE, listed for $3.395 million? The 6200-square-foot house has five bedrooms and 4.5 bathrooms, including a master suite with a ... |
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