Home Flipping About to Make a Comeback....

 

great snippet of an article from bigger pockets.com

How to flip a home like Al Capone...

The 6 Essential House Flipping Capos You Must Have

Although Al Capone had far more than six team members on his gang of criminals, you really only need to start with the essential six. In most cases, there are usually more than just five team members, especially as you grow your business. But the big six are the base number you’ll need – depending on deal flow and scope of your house flipping career.

1. Real Estate Attorney

Even Al Capone had his fair share of lawyers. Although he had a slew of criminal lawyer, he undoubtedly had some real state lawyers on his team as well. The guys did own Chicago after all…

For you, although you hopefully will never need the services of a criminal lawyer, you should at least have one good real estate lawyer on your team who you trust implicitly. Although you won’t need him or her to get you out of  grand jury subpoena (let’s hope), you need one on your house flipping team to make sure you stay within the confines of the real estate laws in your state and country.

Many new house flippers make the fatal mistake of refusing to hire an attorney. They know they need an attorney but decide instead to “go it alone” or hire some second rate Internet based legal service.

The bottom line is when it comes to finding an attorney; you get what you pay for. Don’t skimp here. Hire a qualified expert attorney who knows real estate law. Think of it as a wise investment instead of a cost; like car insurance. You certainly don’t like paying the premium, but when you get into that fender bender, you are sure glad did.

An attorney may appear expensive at first (especially after you get your first bill) – and especially if the attorney charges a retainer to take you on as a client, but in the end it will cost you a lot more if you hire an incompetent attorney or try using one of those other services.

2. CPA (Certified Public Accountant)

Unlike the accountant (the book keeper as they called him) in The Untouchables who eventually sang like a bird to the authorities and led to Capone’s eventual prosecution on tax evasion charges, your accountant will be your best insurance in keeping you out of trouble with the IRS. This is especially true with the more cash you make.

Like an attorney, hiring the right CPA can save you a lot of money whereas hiring the wrong CPA can cost you a lot of money. In the process of finding a top notch CPA, it may be frustrating to hear so many different kinds of answers regarding real estate and house flipping accounting issues. This is not uncommon as the U.S real estate tax code can be interpreted in many different ways.

Finding an accountant who is extremely familiar with U.S. tax laws for house flipping and real estate investing is best. But the bottom line is you want a CPA who meshes with works for you and does all he can to legally apply good accounting strategies both to keep your taxes as low as possible and not have to worry about the IRS.

Your CPA should also be involved with your business structure from a tax advantage standpoint, so consult with your attorney and make sure they talk with each other to pick a business structure that’s best for you.

3. Insurance Agent

It was probably tough for Al to get an insurance company to back his multi-million dollar bootlegging empire, but you should have no problem getting insurance for your flips. How you handle your insurance largely depends on how you set up your business structure. Make sure you hire and insurance agent that understands your business and can give you good advice on how to insure different types of properties.

Different kinds of house flips require different types of insurance, so make sure you ask him or her about homeowners, builder’s risk, and liability and although they won’t be responsible for it at the closing, make sure you get title insurance as well. Your house flipping insurance agent should be a one stop shop for you here.

4. General Contractors

Capone had lots of “trigger men” to do all his dirty work. And although he did brutally murder Albert Anselmi in “batter up” – most times he never pulled the trigger himself. As Ive written here before, there are pros and cons to doing your own rehab work. But mostly, I like to get dirty only in the research phases and let my contractors do the rest.

There are a couple of different ways you can handle how to hire contractors to do the renovations on your properties. This can make or break any deal so it is so important you hire the best ones you can. And the best ones you can really trust.

A general contractor is a singular company who runs the entire project; they are responsible for hiring all subcontractors as well. The subcontractors are tradesman like plumbers, electricians and carpenters. The general contractor is responsible for the entire scope of work, works within your budget and makes sure all the subcontractors perform their jobs well – on time and on budget.

If you can find a general contractor that can work with in your budget you set forth on the project this may be the way to go initially. Having a good contractor will especially help you if you are just learning how to get started flipping houses.

5. Real Estate Agents

Capone had many new business development people looking for new deals to grow his empire. And when it comes to flipping homes, you need people to be on the lookout for you as well, which is why real estate agents are such an integral part of your house flip team.

When it comes to real estate agents, you can search out an agent with experience who already is familiar with house flipping or you can train an agent yourself. You may end up working with a few in different territories that they specialize in.

Also, there are a number of REO (real estate owned) agents. These are agents that specialize in selling bank foreclosures. There are also real estate agents that specialize in short sales. These are agents that work with banks to sell a property for the seller before it goes to foreclosure. No matter which one you choose, this team member is vitally important for your deal flow.

 6. Wholesalers

Capone of course dealt with some pretty shady characters…and with wholesalers there’s no shortage of them. However, there are some extremely good ones as well who can be a tremendous source of house flip deals for you. Like anything in flipping houses, you get the good with the bad.

Although wholesalers have and probably will continue to have an uphill battle with their real estate reputations, I find that wholesalers are a great source for house flips.

You can find wholesalers everywhere. These are the “I buy houses” and “we pay cash for houses” signs you may see around town. Despite any reservations many house flippers might have on wholesalers, if the numbers make sense, then it’s worth it for both of you. They make money and you make money, everyone wins.

You can also meet wholesalers at REIA meetings, through a quick Google search as well as calling the numbers on those signs. Once you contact them, build the relationship and see what happens. You have no obligation to do a house flip with them, but they may be a great source of new house flips for you.

Selling your home? The cards are in your favor

interesting article from CNN Money.com

Renovate your home before you sell
 

Selling your home? In most parts of the country, you have finally regained the upper hand.

 

To get your best price, though, you need to finesse your timing, list competitively and match your marketing strategy to local conditions. Lower your sights to make more money.
Rising prices breed rising hopes: In a recent poll, brokers complained that 75% of homeowners think their agent's recommended listing price is too low. Pricing your property above recent sales to cash in on the momentum may slow down deals, and sitting on the market too long can stigmatize a house.
Catch buyers' attention -- and get multiple offers -- by pricing your home in line with comparable sales, says Rick Turley, president of Coldwell Banker San Francisco: "Then let the market take it higher."
Trading up? Move fast. Downsizing? Go slow.
It's tempting to postpone selling to hold out for a better price. But if you want to move to a larger place, act sooner rather than later. True, higher-end homes aren't rising as quickly, but the gap is small. So while you'll be able to sell your home for more if you wait, the appreciation on the trade-up home will be greater.

When you're downsizing, the math works the other way, so it pays to wait.
The case for these strategies should strengthen as gains slow for cheaper homes. "Investors are driving the lower end of the market, and there is a point when the investor opportunity becomes less attractive," says Richard Green, director of the University of Southern California's Lusk Center for Real Estate.
Smooth out your home's rough patches.
Repair that leaky roof and address other obvious structural problems, or you'll have to subtract the cost of doing so from your price. "In today's economy, many buyers don't have as much savings left over after their down payment for improvements," says Teri Herrera, a broker in Bellevue, Wash.
Smaller fixes that pay off the most, according to a HomeGain poll of real estate professionals and consumers: cleaning and decluttering, brightening (adding lamps and clearing window obstructions), and solving electrical and plumbing problems.

Sellers who stage their homes -- rearranging or replacing furniture to bolster appearance -- usually do so just before an open house. The better time to glamorize: right before you post your listing online, where 90% of buyers look first. Says Realtor.com president Errol Samuelson: "Web appeal is the new curb appeal."

Use a professional photographer and get tight shots of fixtures and other details. The cost: $200 to $500 for a gallery of 30 to 40 photos. Homes between $300,000 and $400,000, shot professionally, sold for about $3,000 more than those with amateur images, Redfin found recently.
Guard against low appraisals.
While rapidly rising prices may attract more buyers, the upswing can make it harder to close a deal. One-third of realtors polled in December reported setbacks from low appraisals, including delays in closing, lowered prices, and cancellations.

The problem: Appraisals can come in low because they're based on transactions as old as six months -- out of date, perhaps, in today's market.
Solution: Have your agent personally oversee the process, accompanying the appraiser to point out improvements and supplying data about the latest comparable sales.
Help investors find what they're looking for.
Investors amounted to one-fifth of all homebuyers in January, but are a much larger share of some markets; 38% of deals in Sacramento and 45% in Orlando, for example, involved absentee buyers. Signs of an investor market: a steady stream of resales of foreclosed homes (you can find that info at zillow.com/local-info) and the conversion of many homes in your neighborhood into rentals.
If your area fits the bill, choose an agent experienced in investor sales; she should create a flier that highlights how easy it is to attract tenants, the rents that nearby homes command, and other pertinent bottom-line info. Says Charlotte Sears, president of Coldwell Banker Residential Brokerage in Atlanta: "All investors want to know is what their margins look like."

Own vs. Rent Calculator

from Realtor.com

 

This calculator will help you to compare the costs of renting to the costs of buying a home. Since there are all kinds of forces at work behind the scenes (interest, property taxes, tax savings, appreciation, opportunity costs, closing costs, selling costs, etc.), comparing the cost of renting to the cost of buying is a lot more complicated than just comparing the monthly mortgage payment to the monthly rent payment. This calculator attempts to forecast the net effects of all the hidden forces so you can make an informed decision...

 

Click here for Own vs. Rent Calculator

Home prices in 20 US cities rise by most in 7 years

Banner year for 2013...

 

Home prices in 20 US cities rise by most in 7 years Denver Post

 

WASHINGTON — Home prices in 20 U.S. cities rose in the 12 months through July by the most in more than seven years, helping boost owner equity.

The S&P/Case-Shiller index of property values in 20 cities increased 12.4 percent from July 2012, matching the median projection of 31 economists surveyed by Bloomberg and the biggest year-to-year advance since February 2006, a report from the group showed Tuesday in New York.

Gains in home and stock values are contributing to increases in household wealth that are helping bolster consumer spending, the biggest part of the economy. Nonetheless, the appreciation in property values may cool over the rest of the year as mortgage rates close to a two-year high temper demand.

"Prices may come under a little downward pressure as demand slows," Lindsey Piegza, chief economist at Sterne, Agee & Leach Inc, said before the report. "There was a rush of activity as homebuyers anticipated mortgage costs may rise further," she said, and the recent jump in borrowing costs means "housing activity will slow from here."

Another home-price gauge also showed improvement. Values climbed 1 percent in July from the prior month after a 0.7 percent increase in June, according to figures from the Federal Housing Finance Agency.

Estimates in the Bloomberg survey ranged from gains of 10 percent to 13 percent. The S&P/Case-Shiller index is based on a three-month average, which means the July figure was also influenced by transactions in June and May.

Colorado flood victims face tight rental market-If you have any available housing please try and help flood victims how you can...

If you have any available housing please try and help flood victims how you can...

Denver Post

As if flood victims didn't have enough to worry about, they face extremely tight rental markets in Boulder, Weld and Larimer counties.

"It is going to be a challenge because this is not happening at a time when there is a bunch of rental housing," said Ryan McMaken, an economist with the Colorado Division of Housing.

Apartment vacancy rates ranged from an average of 5.1 percent in Fort Collins to 3.6 percent in Longmont, 3.4 percent in Boulder and a rock-bottom 1.4 percent in Greeley, according to the most recent state tallies.

Allowing for the natural turnover in apartments, about 3 percent is considered a fully rented market, McMaken said.

"Prior to the flood ... the Greeley- Evans area had one of the lowest vacancy rates in the state," said Tom Teixeira, executive director of the Weld County Housing Authority.

Exacerbating the situation is a mismatch between what flood victims want and what the market is offering, said Tom Orlando, director of relocation at Housing Helpers in Boulder.

Flood victims want month-to-month leases, proximity to their damaged homes and yards for their pets. All of those requests are tough to fill in an already-tight market, he said.

Robust resales this summer shrank the supply of condos, townhomes and detached homes for rent. Vacancy rates for those properties metro-wide were 2.2 percent in the second quarter.

Orlando said he is steering flood victims down the U.S. 36 corridor to apartment communities in Westminster, Thornton and Northglenn, where average rents are about $350 a month lower than in Boulder and landlords are finding supply.

"Surprisingly, there have been a lot of apartment communities that had availability come out of nowhere," he said.

McMaken also notes that a construction surge has apartment vacancies in downtown Denver at 6.9 percent, although monthly rents are also higher at an average of $1,537 in the second quarter.

South central Denver and southeast Aurora are other areas with vacancy rates above 6 percent and, in the case of Aurora, average rents below $1,000 a month.

U.S. home sales hit 6½-year high but could slow soon

I'm starting to see the same thing...

Denver Post

WASHINGTON — Sales of U.S. homes rose last month to the highest level since February 2007 as buyers rushed to close deals before mortgage rates increased further.
Yet the gain could represent a temporary peak if higher rates slow sales in coming months.
Sales of previously occupied homes rose 1.7 percent to a seasonally adjusted annual rate of 5.48 million in August, the National Association of Realtors said Thursday. That level is consistent with a healthy market.
August sales reflect contracts signed in June and July, when mortgage rates were rising steadily. The Realtors group cautioned that buyer traffic dropped off significantly in August. That points to fewer sales in the fall.
Higher rates could also depress homebuying next year, the Realtors said. The group forecasts that sales will average 5.2 million in 2014. That's still better than the 4.19 million sales in 2010, when the housing market bottomed.
"We should expect some giveback in sales over the next several months," said Thomas Feltmate, an economist at TD Economics.
Steady job gains and low mortgage rates have fueled a recovery in housing since early last year.
The average rate on a 30-year fixed mortgage was 4.57 percent last week, near a two-year high and more than a full percentage point higher than in May. That's when Federal Reserve Chairman Ben Bernanke suggested that the Fed could soon scale back its $85-billion-a-month bond purchase program, which is intended to keep interest rates low.

Seven Costly Mistakes Sellers Make

always good information to keep in mind from realtor.com

There are always appropriate steps to investing in real estate and hopefully, you've garnered many of them right on these pages. However, there are also inappropriate steps sellers can walk down when it comes time to put their house on the market.

For instance, the seller in Virginia, who thought the half bath the builder had located at the front of the house would really be better situated toward the back of the main level (though all the other similar models had the powder room in the same place for the previous 20 years). He got hung up on this detail so much, that he just had to move it -- and did -- for thousands of dollars, just so he could get it on the market the "right way." His hang-up may have settled some deep-seated emotional need for him, but it didn't draw any more buyers, and it drained his bottom line. You might say, that was a costly mistake.

Real estate broker and author Sid Davis has identified in his book "A Survival Guide to Selling a Home," another seven costly mistakes that many sellers make when it comes time to put their home on the market. In my business, I've seen each one of these mistakes played out and it just makes me shake my head as to why, sellers forge ahead with unwise strategies, instead of listening to the voice of an experienced professional.

The seven costly mistakes

Mistake 1: Putting the home on the market before it's ready. Most times this happens because the seller gets impatient or is a procrastinator and has pushed himself up against a moving deadline without getting the pre-sale work done. So it comes on the market with the horrible carpet (that gets replaced during the marketing of the home); or they are painting it while it goes on the market. Presentation is everything -- so get the work done before marketing the property.

Mistake 2: Over improving the home for the neighborhood. This happens with additions, bump outs, and upgrades that make the home stick out from among its competitors so much that it's an anomaly, instead of a nice addition to the community.

 

Mistake 3: Pricing the home based on what the seller wants to net. This pricing strategy always ends in failure. Sellers can control the "asking" price, but they don't control the "sales" price. The market does. It doesn't matter what the seller wants, the price is determined by the black-and-white, matter-of-fact reality of the market.

 

Mistake 4: Hiring an agent based on non-business factors. Make sure you're hiring a professional with a proven track record. It might be nice to hand over your largest asset to your nephew who just got his license -- but make sure he has a mentor to keep your deal from going south.

 

Mistake 5: Getting emotionally involved in the sale of the home. This is one of the biggest challenges home sellers face when putting their house on the market. Once you decide to sell your house, it's no longer a home, but a commodity. It needs to be prepared as a commodity, marketed as a commodity, and priced as a commodity. It doesn't matter what you "want," only what the market can bear on pricing. People are going to come in to kick the tires, so to speak, and you can't get emotional about how they may or may not appreciate the nuances of your home of seven years.

 

Mistake 6: Trying to cover up problems, or not disclosing them. Most states have a property disclosure/disclaimer form -- use it wisely. Just because you disclaim doesn't mean you cannot be sued later for the leaky basement, or dilapidated heating/air system that's discovered 30 days after settlement.

 

Mistake 7: Not getting your ducks lined up before trying to sell. This would involve financing, reading the fine print on your current mortgage to ensure no pre-payment penalties, not listening to the particulars of your local market, etc. If your local market is dictating lower home prices, then lower it early, not later -- it will cost you more. If the local market dictates selling your home first, then buying second, do it in that order, or vice versa.

Avoiding these mistakes is not that difficult. There are plenty of resources (like this publication) and professionals, who are there to help you step over the pitfalls. Do the research early, and listen to that voice in your head (it's probably the whispers of the finance, real estate, insurance person who's warning you of a hole you're about to step into). Sell well.