The ABC’s Of House Flipping
While house flipping can be very lucrative, you can lose everything with one bad decision. It’s important to approach this profession with caution and educate yourself as much as possible.
Before you even dream of entering this field, you have to be great with your hands or at the very least well versed on the topic of trades and renovations. You should also have a feel for the market. The last thing you want is all your profits sunk because you bought at the wrong time. It’s not as fun and easy as it looks on TV. This is a job that is not only very stressful but requires a lot of hard work.
It goes without saying that you need investment capital and excellent credit before embarking on a project of this magnitude. This step-by-step guide will set you in the right direction, but it’s important to remember that this isn’t an exact science. Never be complacent and always stay on your toes.
1. Scouting Homes
The most typical way to find homes is through the regular channels, finding a real estate agent, searching online, etc. However it’s important to be patient, always look out for the right deal.
The best bang for your buck is foreclosed homes. Make a habit of routinely checking the Internet for new foreclosed homes. Once you find one that looks good, never buy it on a whim. Always see it in person and bring an inspector.
The real estate market is generally steady, but there can be significant fluctuations from time to time. The last thing you want is to be a victim of these fluctuations. The most important thing to take into consideration when scouting a new home is locations. The better the location, the easier to flip. Selling fast mitigates the risk of these fluctuations. It’s also important to have great relationships with contractors so you don’t get caught with them dragging their feet.
3. What to look for in a house
It’s important not to purchase a potential tear down. What you’re looking for is a home that is structurally sound and only requires cosmetic upgrades. That’s why it’s important to have an inspector to verify that there is no mold or asbestos and that the wiring is sound. You also have to ensure that it’s built on a solid foundation.
4. Which renovations to focus on
As mentioned in step 3 you want a house that only requires cosmetic renovations, structural ones are very pricey. Even when narrowing it down to cosmetic, make sure you are focussing on cosmetics that will actually increase the value of the house. For example, installing a swimming pool is very costly and while it attracts more buyers, it won’t make you any extra money.
The most important room to focus on is upgrading the kitchen. Fresh tiles, a new backsplash, and marble or granite counter tops are essential. It’s also vital that you upgrade the appliances to stainless steel.
Other essential renovations include upgrading the bathrooms, installing fresh hardwood floors and fresh paint of course. Be sure not to neglect painting and landscaping the outside of the house to increase curb appeal.
Once you’ve located a sound house in a good location and finished all the renovations, flipping it should be a cinch. Also, it’s a good idea to be proactive and look for buyers before the project is complete.
When you bought the house with the pool, it looked like it was going to be all fun in the sun and splishin’ and-a splashin’, but now that the first signs of fall are appearing (the emergence of Pumpkin Spice signals just six more weeks of summer), it’s time to figure out how to protect that pool through the winter.
Before You Start Closing, Consider the Climate
Depending on where you live, you may need to take further or lesser measures to protect your pool through the winter. Your goal, ultimately, is to keep that pool and its systems from experiencing any sort of freezing. A frozen pipe, a frozen filter, anything like that could be a very expensive replacement in the spring when you open your pool again.
If you know for a fact that it never gets below 50 degrees Fahrenheit where you live, for example, you might not want to close your pool all the way. But, if it freezes frequently and there’s lots of snow, well, you’re going to have to break out bigger firepower. Living here in DFW, we are a little bit inbetween, it may or may not freeze or snow, but you want to be prepared! This meant as a general guide to pool closing, that being said, your mileage may vary.
Pool Closing Made Easy
Closing a pool isn’t that big of a deal if you have all the right tools and materials on hand. It can be a complicated situation, though, because of all the parts that you’ll need to check as you go. Take your time, keeping in mind the risk of freezing in your area versus the cost to replace the frozen component, and you’ll be ok.
These are the necessary basic steps to closing a pool in a middling sort of climate like here in DFW:
Step 1: Deep clean your pool. Vacuum the entire pool, brush the walls, skim the surface, remove any and all debris. This way you’re starting fresh again in the spring.
Step 2: Test the water. Check that your pool is properly balanced before you put it to bed. This means a pH between 7.2 and 7.8 and alkalinity between 80 and 120 parts per million. If you’re running toward the high sides of these ranges, that’s ok. Check the hardness, too, since calcium deposits can form in your equipment over time.
Step 3: Shock the pool. Shocking the pool right before closing will help it stay as clean as possible over the winter. A 15 minute fast dissolving shock treatment is absolutely fine since you won’t be using the pool again. If you have chronic algae problems, a winter algaecide will be a good addition. Use the same dose as is listed on the bottle for opening the pool.
OPTIONAL: Many pool owners skip the manual adjustments and use a winter closing kit to prepare their water for the long dark march of winter. If you choose to go this way, read the instructions carefully. Some require you run the filter, others do not.
Step 4: Time to plug it up. Remove the eyeball fitting on your return line and plug it with an appropriate plug. Remove the skimmer basket and put it into storage. You can leave the skimmer in the pool if you use a winter skimmer cover to protect it from accumulating water. With a skimmer cover, you can also leave more water in the pool, rather than having to drain the pool below the skimmer level.
Step 5: Protecting the moving parts. The pump, chlorinator and all the hoses (including the skimmer hose) need to be drained and brought inside to prolong their lives and protect them from the cold. Filters should also be winterized according to the type you have installed and kept indoors.
Step 6: Put the cover on. Start by inflating your air pillow, then tossing it toward the middle of your pool. If you have a hard pool cover or are otherwise concerned about the water level, this is a good time to lower it a bit. Cover the pool and, when needed, install a winter cover pump to keep water from accumulating on the pool’s cover.
That’s all there is to it! You can totally do this — piece of cake.
Millionaire To Millennials: Owning Your Home Can Help You Retire Sooner!
In a CNBC article, self-made millionaire David Bach explained that: “Buying a home is the escalator to wealth in America. Homeownership can also help you retire early, that is, if you pay your mortgage off.”
Bach suggests that homebuyers should, “Take out a 30-year mortgage, but with the intention of paying it off in 25, 20 or ideally, 15 years.”
How does he suggest you do this? Here’s the secret:
“…If you were paying $1,000 a month, now you’re going to make $1,100 payments every month. Inform the bank that you are doing this and that you want the extra $100 a month to be applied to the principal (not the interest).”
WHAT WILL HAPPEN TO YOUR MORTGAGE?
Bach explains that, “If you keep this up, you’ll wind up paying off your 30-year mortgage in about 25 years. Increase your monthly payment by 20 percent, and you’ll have that mortgage retired in about 22 years.”
Whenever a well-respected millionaire gives investment advice, people usually clamor to hear it. This millionaire gave simple advice – buy a home and pay off your mortgage early so that you can retire sooner with the money you will have saved.
Homebuyers Willing to Sacrifice ‘Must-Haves’ in Favor of Good School Districts
It should come as no surprise that buying a home in a good school district is important to homebuyers. According to a report from Realtor.com, 86% of 18-34 year-olds and 84% of those aged 35-54 indicated that their home search areas were defined by school district boundaries.
What is surprising, however, is that 78% of recent homebuyers sacrificed features from their “must-have”lists in order to find homes within their dream school districts.
The top feature sacrificed was a garage at 19%, followed closely by a large backyard, an updated kitchen, the desired number of bedrooms, and an outdoor living area. The full results are shown in the graph below.
Buyers are attracted to schools with high test scores, accelerated academic programs, art and music programs, diversity, and before and after-school programs.
With a limited number of homes available to buy in today’s real estate market, competition is fierce for homes in good school districts. Danielle Hale, Chief Economist for Realtor.com, explained further,
“Most buyers understand that they may not be able to find a home that covers every single item on their wish list, but our survey shows that school districts are an area where many buyers aren’t willing to compromise.
For many buyers and not just buyers with children, ‘location, location, location,’ means ‘schools, schools, schools.’” (emphasis added)
For buyers across the country, the quality of their children’s (or future children’s) education ranks highest on their must-have lists. Before you start the search for your next home, meet with me and let me explain the market conditions in your area.