Post on 18-May-2015
description
Get in the “Flippin” Game!
Presented by: Joleen Halloran, Keller Williams Platinum Partners
Sponsored by: Midwest LendingThe Bug ManChicago Title
Are you a flipper?
• What is your motivation?
• What is your skill level?
• What do you want to get from this experience?
• What is your patience level?
Get in the “Flippin” Game!
Benefits of Flipping
• Profits
• Creative License
• Manage the job your way
• Fun!
Get in the “Flippin” Game!
Risks of Flipping
• Financial Loss
• Stress
• Physical Injury
Get in the “Flippin” Game!
Mitigation of Risks of Flipping
• Financial Loss
(research properties, sound investment decisions based on facts, good marketing, cost analysis, contingency planning)
• Stress
(planning and scheduling, contacts and networks, time off, good support system)
• Physical Injury
(contractors, insurance, take care of yourself!)
Get in the “Flippin” Game!
Main Components of Flipping
• Financial
• Property (Buying and Research)
• Execution of Reconstruction
• Selling
Get in the “Flippin” Game!
Financial Component
• Cash
• Loans (Construction and Hard Money)
• Home Equity
• Investors
Get in the “Flippin” Game!
Property Component
• Finding the right home
Find a realtor that understands your needs
Understand your limitations on re-hab skills or costs
Location, Location, Location
• Knowing your market areaBe comfortable and confident with your target area
Utilize realtor provided comps to verify your plan
• Determining the offer and selling price
Estimate your costs and your desired profits
*** Don’t forget to include your quiet costs (holding costs, cost of money, cost to sell)
Get in the “Flippin” Game!
Check Out TheseLocal Opportunities
• Great Buy 130K - HUD
• Great Buy 88K – Fannie Mae
• Great Buy 68K – Great Flip MLS # 16443211 1003
SW Lea $68,000 3 bd/2ba
Get in the “Flippin” Game!
Get in the “Flippin” Game!
Bridges Company -- Offer Calculator Finished Price 9 NW Noel 119000
Materials Cost 22800Dumpster 600
Garage Doors Replacement 500Carpet (Approx 2.25 sp ft X 400) 800Tile (1.29 x 1000 sq ft downstair) *Includes grout and underlayment Includes Kitchen, 2 bathrooms) 1500Wood Floor in Living Rooms (spprox 2.79 sq ft X 350) 500Deck 400Exterior Repair 500Guttering 0Plumbing 1300Electrical 1900Knock Down Ceiling Application 400Kitchen Cabinets and Hardware 1800Equipment Rental/Finish Existing Floors 200Doors (1 French@299 + 2 or 3 replacement) 600Concrete Work 2500Paint 1500Lumber (misc updates) 1000Misc Hardware (vents, knobs, ect) 250Drywall and supplies 2500Counter Tops 700Hot Water Heater 0Furnace 0Window Glass Repair 1800Roof 0Permits/Inspection 0Utility Bills 3@100 0Air Conditioning Unit 0Lighting 350Appliances 1200 Total Rehab Cost (inc. labor) 30100
Total Holding 3400Labor Cost 10 weeks @ 700 7000 Total Profit 25000
Landscaping (Fencing, Flowers, Seed, Misc) 300Realtor Fee 0 Blue indicates areas for improvement in profits. Mortgage Payment 4 pmnts @ 550 2200Contingency costs 0Closing Costs 1200Profit 25000
Offer Price -60500Actual Offer Price 61000
Difference to make up in budget 500
(+ = amount that needs to be taken out of budget)(- = amount that can be added into budget)
Finish time 10 weeksMarket Time 14 weeks
Execution Component
• Make your plan
Define your flow and understand contingencies and constraints
Determine task schedule (don’t over commit)
Plan your supply purchases
• Understand your money flowBe aware of constraints for draws to pay contractors or purchase supplies.
Always keep an eye on your budgets
• Adjusting your plan
Adapt your plan for budget or schedule to keep on target
Get in the “Flippin” Game!
Execution ComponentExpense Tracking Worksheet
Get in the “Flippin” Game!
6/20/2010 Joleen Halloran -- 9 NW Noel Lee's Summit, MO 64081 Loan # Beginning Balance 35600
Date Actuals Sales Tax @ .0766 Actual Cost Category Description Purchased At
10/20/2009 $1.41 0.11 $1.52 Plumbing Plumbing Supplies Home Depot
10/16/2009 $20.78 1.58 $22.36 Lumber Misc. Rough In Supplies Home Depot
10/19/2009 $0.72 0.05 $0.77 Plumbing Plumbing Supplies Home Depot
10/16/2009 $325.00 0 $325.00 Trash-Clean Up Dumpster Sunshine Disposal
10/9/2009 $41.14 3.13 $44.27 Lumber Misc. Rough In Supplies Home Depot
11/5/2009 $279.00 0 $279.00 Labor Labor Costs Paul Cotton
11/5/2009 $3.99 0.3 $4.29 Lumber Misc. Rough In Supplies Owens Lumber
10/27/2009 $258.03 0 $258.03 Lumber Misc. Rough In Supplies Home Depot
10/27/2009 $97.57 7.42 $104.99 Lumber Misc. Rough In Supplies Home Depot
10/29/2009 $190.42 14.47 $204.89 Plumbing Plumbing Supplies Home Depot
10/22/2009 $350.00 0 $350.00 Labor Labor Costs Jon Renfro
10/22/2009 $474.00 0 $474.00 Labor Labor Costs Paul Cotton
10/22/2009 $200.00 0 $200.00 Labor Labor Costs Greg Belcher
Execution ComponentSummary Budget
Get in the “Flippin” Game!
CONSTRUCTION COST BREAKDOWN
Owner___Joleen Halloran___________ Job Location:___9 NW Noel Lee's Summit, MO 64063
Contractor:___Greg Belcher_____________ Contractor Phone:____816-305-4397________________
Labor and Materials Estimate Suppliers and Contractors Actuals Variance Amount (+/-)
1
Plans and Specificiations 0 0
2Permits and Survey 0 0 0
3
Excavating-Backfill Grading 0 0
4
Piers Footings Foundation 0 0
5Waterproofing 0 0
6Steal and Iron 0 0
7Lumber 1000 1716.88 -716.88
8Carpentry Labor 0 0
9Trash-Clean Up 600 461.47 138.53
10Roofing 0 0 0
11
Brickwork, Block or Stone 0 0
12Guttering 0 0 0
13Cement Slab and Walks 2500 0 2500
14Plumbing 1300 2194.13 -894.13
Execution ComponentFinancial Analysis
Get in the “Flippin” Game!
Joleen Halloran - Loan #87241
9 NW Noel, Lee's Summit, Missouri
Title Budget AmountLoan Closing - Funds
Available (9/30/09) Draw #1 (10/5/09) Draw #2 Interest Payment #1 Interest Payment #2 Draw #3 (12/11/09)
Rehab Costs $ 30,100.00 $ 6,500.00 $ 6,500.00 $ - $ - $ 6,500.00
Interest Carry $ 5,500.00 $ - $ 302.03 $ 303.25
Contingent/Other $ -
Total: $ 35,600.00 $ 37,564.62 $ 6,500.00 $ 6,500.00 $ 302.03 $ 303.25 $ 6,500.00
Remaining Funds: $ 37,564.62 $ 31,064.62 $ 24,564.62 $ 24,262.59 $ 23,959.34 $ 17,459.34
Loan Balance: $ 40,724.38 $ 47,224.38 $ 53,724.38 $ 54,026.41 $ 54,329.66 $ 60,829.66
* Loan can be advanced up by $78,289 per loan commitment.
* Draw #1 was for $7,000 which included $500 reimbursement of down payment and $6,500 for rehab.
Selling Component
• Begin your marketing early
Stick our sign and flyers in the yard as soon as you can
Staging
Emphasize your “Wow” factors
Place the time and effort to create curb appeal
• Don’t wait – call your realtorDetermine your timing to get house on the market
Get in the “Flippin” Game!
•
Get in the “Flippin” Game!
Ready to Start? Checklist
Do your homework (money, properties, products, techniques, suppliers, contractors)
Before you begin – research and feel comfortable with your resources and methods.
Get in the “Flippin” Game!
Ready to Start? Checklist
• Make your plan and set your limits – set objective goals
• Obtain your financing• Get a realtor (hint hint – I am a realtor)• Look and procure your property• Put your budget and schedule together• Execute your flip project
Get in the “Flippin” Game!
Ready to Start? Checklist
• Start your marketing• Sell your home• Celebrate and start planning your next
project!!
Get in the “Flippin” Game!
General Tips and need to know facts
• Be Prepared to work hard• Don’t forget that the money is made when
you buy the property – not when you sell it.
• Include your “Wow” factors into your budget and your plan
• Re-hab appropriately to your price point!!
Get in the “Flippin” Game!
General Tips and need to know facts
• Develop a strong network of contractors, suppliers and support services
• Add value to your property any time you can (additional bath, open up dated floor plans)
• Look for easy updates that add value and beauty - (fireplaces, cabinet facing, knobs and pulls)
Get in the “Flippin” Game!
General Tips and need to know facts
• Expect to run into unknown issues• Keep your cool• Don’t forget the importance of curb appeal
(flowers and shrubs are cheap and the payback is big)
Get in the “Flippin” Game!
Distressed Property
Rules: Traditional vs. Distressed
• They’re different!– Price– Speed– Decision-Making– Communication– Negotiation
Knowing these differences will give you clear
expectations—and help you get what you want!
Rules – Price
Traditional
• Seller motivation and emotion play a big part
REO• Priced to sell by
institutions with no emotional stake
Short Sale• Priced by listing agent
and owner; bank must agree to this price
Rules – Speed
Traditional
• Normally proceed with all due haste
REO• Offers get quick reply• Last-minute closing
delays common
Short Sale• Slow offer response • Acceptance brings fast
close
Rules – Decision-Making
Traditional
• Homeowner/seller decides
REO• Bank or lender decides
Short Sale• Seller decides what
offer to accept; lender must approve
Rules – Communication
Traditional
• Good communication expected but not always practiced
REO and Short Sale
• Banks, listing agents pressured by volume—hard to reach
• Buyers must insist on—and provide—great communication
Rules – Negotiation
Traditional
• Negotiation common on price, condition, and terms
REO and Short Sale
• Some negotiation possible with Fannie Mae REOs
• Short sale negotiation rare—properties sold “as is”
Seize the Opportunity
Six Realities Define Your Opportunity1. Buyer’s market—capture value now!
2. Mortgage rates are great, but for how long?
3. Affordability—home buyer dollars going further
4. Number of foreclosures remains high
5. Foreclosure inventory nearing peak
6. All parties motivated to sell
Percentage of buyers who bought distressed property tripled from 2008 to 2009.
Opportunity: 203k Loan
FHA-backed Home Purchase and Renovation Program
– Purchase price and documented repair/rehab costs bundled in one loan
– One set of closing costs– 3.5% down; can be gifted– Eased qualification standards– Loan limit range $271k-$730k– Possible energy-efficiency add on
Foreclosure Trends – Moving Up!
What’s Stopping You?
What have you heard that concerns you about buying?
Ignore the Myths
1. Myth: Foreclosures are mostly low-end, in poor condition, and in bad areas.
2. Myth: Foreclosures have lots of title problems including liens.
Ignore the Myths
3. Myth: The best foreclosures get soldin bidding wars.
4. Myth: Loans are hard to get for foreclosures.
Ignore the Myths
5. Myth: Foreclosures take along time to close and aren’t worth the wait.
6. Myth: The best opportunities havealready been snapped up.
Be Ready to Go
1. Motivation
+
2. Preapproval
+
3. Expert Advice
= Success
Be Ready to Go
1. Strong Motivation
Know your “Big Why”
Have criteria set and be prepared tomake decisions.
Be ready to communicate clearly at all times.
Be Ready to Go
2. Preapproved Wallet
Whether all cash or financed, solid buyers are the winners in this market.
Be Ready to Go
3. Expert Distressed Property Agent on Your Team
In this market, more than ever, you need great representation!
Quality advice counts.
Let’s Get Started—Now Is the Time
What Questions Can I Answer?
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