Multi-family homes are not necessarily more profitable. They could be easier to sell, though, depending on your market.
In my experience, the best thing to do is hire a local expediter or land planner. It’s a very tedious process doing it on your own. Every local municipality has their own nuances and it’s worth it to pay the professionals to handle it.
Anyone should save up if they want to get into this business, but you should never use your own money to buy a house to flip. Rather, they should go to a hard money lender to finance the flip. If the lender refuses to let you borrow the money, chances are that it isn’t a good deal.
It’s really important to find a superstar in your area. Never be afraid to approach them and don’t think they are too busy to take your call. Try to negotiate the best deal you can and get them to sell your home.
Place it everywhere, including the Internet. More younger homebuyers are using the Internet to find the house they want. Also, set the price lower than the asking price; that way, it will show up on more search engines.
The average time frame to flip a house from beginning to end is 4-9 months, depending on how much work it needs. If I were to buy a home, it would take eight weeks to fully renovate it, one month to market it, two weeks to send out contracts, inspections, return the paperwork, then another 60-90 days for it to close.
If you have an opportunity to buy a house based on today’s interest rates, act now. Buy yourself some real estate. It’s the best investment you can make.
Don’t buy properties that are on busy roads. Avoid homes with any real damage. What you need to avoid is a deal that is going to be a “money pit” that is too hard to sell.
The myths about flipping homes are that every deal works out. When you watch the typical HGTV show, they don’t show you the cost of borrowing money, the headaches of dealing with municipalities, and pulling permits, or the taxes you have to pay. In New York, when you flip a home in less than a year, you may be charged a short-term capital tax, which can be 25%. People make house flipping out to be very glamorous, and think we’re rolling in piles of money, but we’re not.
I recommend a separate L.L.C. for every deal. It’s just the simplest, easiest and most secure way to keep everything separate.
In a lot of municipalities on Long Island, if you hire a contractor and he’s going to pull permits, he needs a license. If you own a home as a homeowner and you do the work yourself, I believe there are some municipalities that will allow you to do the work on your own. Please check because each municipality has a different set of rules.
If someone decides to take out a hard money loan to flip a home, the process is usually pretty simple. Your typical hard money lender will require you to order an appraisal to make sure the value of the home is there at the time you purchase it. They’ll want to know what you are going to do to the home and the appraiser is going to give them an “as is” number and an ARV (After Repair Value) to determine the house’s value after repairs. The lender will also give you a draw schedule, meaning they will lend you the money based on the repairs you made as promised and that they were done correctly.
In my opinion, the best return on investment is the good old single-family, four-bedroom, two-bathroom capes. The middle-of-the-road, cheaper homes — that’s my sweet spot.
When investing in real estate, you should avoid investing in neighborhoods or towns that you are unfamiliar with.
When I flip a home, I try to leave it as much of a blank canvas as possible. Let people come in and decide what they want their home to look like. Don’t make the home your home.
With the shortage of homes on the market now, the only way to find homes to flip is by what we call “direct-to-seller marketing.” What we do is, we buy tremendous amounts of data from various companies, we scrub that data all against each other and then we run that data through multiple sources to get various information and then we reach out to these leads via mail, text messages, and phone calls. You have to be really careful when dealing with systems that do this so that you do not call anyone on the do-not-call list. We invested a lot of money and hired a lot of companies to automate our outbound marketing to make sure it’s all done legally and properly.
I know how much a house is worth flipping by using a model most investors use once they purchase a home called the ARV (After Repair Value). After the repairs are made, investors take home 70% of what the home is worth.
The biggest marketing tip is price it right. Do not overprice your home. The market will dictate what you get for your house. Hire a professional photographer and use the photos that best represent your house.