Fluff Repair Budget by 10%
When you’re rehabbing properties, you always have that risk of spending more on the repairs than you expected.
We always have a certified inspector go behind us and make sure we’re not overlooking or underestimating repairs before we buy.
On top of that, we always add an additional 10 percent to our repair budget just in case.
We’d rather have it and not need it, than need it and not have it.
It just makes good business sense.
Stay On-Top of Buying Trends
To reduce your risk of not being able to sell, you need to have some confidence that there’s demand for property in that specific area.
We only acquire houses for flips in areas where we have proof that there’s demand.
We look for proof that the trend of of people buying in that area is either constant, or trending upwards.
You can get this information from a real estate agent.
Or you can get it yourself from Trulia.com, by researching the specific city or zip code you’re investigating.
Trulia.com will give you the following valuable information about a specific area:
- Median sales price trends: Lets you know whether the sales prices of properties in that area have been trending up or down, and by how much. The higher the prices, the better.
- Average listing price trends: Lets you know whether people are listing their prices for more or less over particular periods of time, and by how much. The more, the better.
- Number of listings: Lets you know the trends regarding how many properties have been listed on the MLS at certain points in time. You generally want to see this number trending downwards.
- Number of sales: They provide a chart that will show you the pattern of the number of properties that have been sold in that area. Of course, you want to see that the number of sales are trending up.
We also go to Movoto.com to get some information.
We use the ‘Market Statistics’ section of the website to analyze the number of days properties are staying on the market before they’re sold.
We want to see that number taking a dive. The shorter the amount of time it takes to sell, the more potential we’ll have to sell our own house quickly, once it’s fixed-up.
If this number is going down, it means that the demand in that market is increasing.
All of these factors help you get a gauge for how long it might take you to sell a property in that area after you’ve rehabbed it.
Have an Attorney
Real estate can be so complex, that it just makes sense to have an attorney on your side that can make sure your i’s are dotted and t’s crossed.
You’re in this to make money, not lose it. Make sure you have an attorney that can help you know what you’re signing, and can help you make sure your contracts are drawn up properly.
Make Sure the Title is Clear
You don’t want to risk buying a property that someone else has a lien on.
If you do, you could be putting yourself at-risk of losing the money you spent on the property.
Unless the property costs more than the fees the title company is going to charge you, it’s always in your best interest to close with a title company when you buy.
They’ll run a title search and make sure that you’re not buying a property that someone has a lien on.
Next: Knowing What Buyers Want, Property Insurance, and More…