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The key to successful flipping starts with identifying the "right" house. We have seen time and again ambitious real estate investors enter the flipping space, only to leave after their first house because they chose a house that did not fit the criteria for a solid flipping opportunity. Where the traditional real estate adage of "location...location...location" still applies, the fact of the matter is that a sometime more relevant rule for flipping homes is "condition...condition...condition". In this edition, we take a look at some damage areas to a home that can turn into an investors pay-day if identified and handled correctly:
Many times the houses you will look at will have been sitting on the market for quite some time. What started as "poor condition" can be made much worse as a result of water damage from broken or frozen pipes. As a result, walls can look damaged, rotten and moldy. This is a huge turn-off to a retail buyer because most homeowners have been told to stay away from major repairs and to look for such damage as an indication that the house is a "lemon". But we're here to tell you that as long as the damage is primarily superficial, broken pipes can be easy to fix and great leverage for a significant price reduction.
Not winterizing a property and/or turning the electric off while the house sits unoccupied can also cause water damage to the home. Many times if the house is a foreclosure, the bank will try to limit its exposure by failing to take the necessary safeguards to protect the home. This can result in burst pipes during the winter, overflowing sump pumps and even flooding of the basement due to poor landscape maintenance. Can you say "Domino Effect!!!" But similar to above, if the damage is primarily superficial, moldy dry wall can be easily removed, support beams can be treated and/or bleached and basements can be pumped out, leaving what originally looked like a disaster looking almost as good as new. Such water damage provides powerful leverage to get purchase price reductions and turn antiquated spaces into modern attractors to the home.
Now as long as the damage to a roof doesn't require too much structural repairs, a hole or leak in the roof can be one of those relatively small problems that can cause what appears to be big problems for prospective buyers. That in turn converts into a huge advantage in your subsequent price negotiations. Many times if there is a hole in the roof, even if the rest of roof is in relatively good condition, a buyer will have problems obtaining financing from the bank and thus shy away form the purchase. But with a little professional know how from a quality roofer, and some minor patch work on the walls affected by the leak, a strategic buyer can turn this red herring into some major green. Once again damage can be good.
A worn out, splintering deck can be twice the eye sore as no deck at all. Prospective buyers frequently dream of what their life would be like in their future home, and life in the backyard is a major part of those dreams. So an old worn out deck can not only spoil their visions of a relaxing Summer's day, but also scare them about the cost of replacing, removing or repairing the old deck. This once again is an opportunity for a savvy investor. With today's composite decking material, a work out deck can be effectively resurfaced in a day or two, and in so doing make a backyard newly renovated and the landscaping professionally designed. Cha-ching!
A beautiful pool can add tens of thousands of dollars to a home's value. Likewise, an old dilapidated pool can make a poorly landscaped yard look down right scary. If you can find a house that has a badly worn out pool, but one that is structurally sound, you'd be amazed at what some new pavers and a brand new pool liner can do for the appearance of a home. It can turn a dump into a high-end home that demands top dollar. The key is to know how to assess a pool's condition, turning what looks to the naked eye like a disaster into nothing more than a face lift. The key is to be sure that the framing is intact and any and all cement work is still structurally sound. If the structural aspects are sound, while your average buyer runs for the hills and/or struggles to get financing as a result of it being a danger and liability, you add it to your value proposition and increasing the selling price by thousands.
Nothing can enhance the resale value of a house more than a finished and full-functional basement. So when you come across a badly damaged basement or a completely unfinished basement, your eyes should light up with the opportunity to add tens of thousands on to the final sale price of your investment property. A lot of time this requires limited investment -- sheetrock, carpet, paint, some new partition walls, etc. In the case of a water damaged basement, you will want to make sure it is not a serious foundation leak, but if it turns out to be the cause of a bad sump pump or leaky upstair pipes, you may have little trouble fixing the cause and renovating the basement for a big payoff. Proving once again, that in many situations, "Damage is a Good Thing."
Don't be fooled by the scammers and get-rich-quick messaging frequently put out by our competitors. yes, there is money to be made in flipping houses, but you need to run your efforts like a business, and the fact is that many businesses fail because they can't reach their customers. Because they fail in their marketing efforts. After 20 plus years in the real estate business, Paul and I have made almost every mistake in the book when it comes to marketing real estate. So we would like to help you avoid making the same mistakes we made. Here are the seven marketing mistakes most frequently made by real estate brokers and investors:
Long term thinking and commitment is essential to a successful marketing strategy. Like any business, building a successful real estate business takes a lot of work. There are no shortcuts, and if you spend you time looking for them you are apt to miss the two most important words: Consistent and Persistent. Marketing is a long-term commitment that must be maintained and managed on a daily basis. Even if you don't have a massive amount of success right out of the gate, you still might be making the right decisions and utilizing the right tools -- give it adequate time before throwing in the towel. Formulate a marketing plan and stick to it. Use it as a roadmap, follow it and make small adjustments along the way based upon quantified results or lack thereof.
You can't stop your marketing efforts just because you think your efforts aren't baring fruit. We've seen so many of our colleagues tell us they tried a new tool or campaign but stopped because they didn't see immediate results. Marketing is a science of adjust-and-repeat. You have to you trend data to guide your efforts and your decisions. Nothing will likely work on the first try. You can't expect someone to do business with you, on one of the largest decisions of their life, if you are only willing to send them one letter, one email or one follow up. Without continual follow up all of your efforts and money will be wasted. It is far better to reach 100 people 5 times than to reach 500 people just once. You are building a relationship and relationships take time and iterative communication to form. It may take several attempts and multiple messages before a seller feels comfortable initiating a dialogue, and even after they do, you have to earn their trust with ongoing communication and consistent follow up.
We're not saying you have to be rich or wasteful, but you need to be willing to spend money if you hope to make money in the real estate market. A lot of our competitors love to use the get-rich-quick message to attract investors and students into the business. And while there are always stories of the select few that have turned nothing into riches, Paul and I have found that the reality is far more often one of commitment and perseverance. If you can't afford bandit signs, how are you going to find your first deal? The best real estate investors have money or know how to gain access to other people's money to help drive their business. Paul and I frequently ask those that are struggling in the real estate business how much they are spending on marketing and their answer is all too frequently nothing or very little.How can you expect to find deals if you aren't willing to spend the money to find them?
I know we just got done telling you that you have to be prepared to spend money to find the deals, but the next worse thing to spending too little is spending too much in too short of a time. Remember, our number one rule is to think long-term, so when you establish your budget, make sure you can fund it over several months or longer. To make your budget last, you need to learn how to operate on a shoestring budget, making sure each and every dollar you spend on marketing is increasing the trends that drive your business. Increased web traffic, increased social media engagement, increased lead generation, etc. Also, be careful not to put all of your eggs in one basket. Your marketing efforts have to work together, one supporting the other. Your goal should be to spend a little in all of the key categories like print advertising, signage, website traffic, paid search and social media and then slowly increase the spend int he channels that are creating the greatest return. By carefully monitoring the trend date for each of these channels, you can assure you get the best return for your money.
An effective marketing strategy, like any investment strategy, requires learning to live with a certain amount of risk.There is no such thing as a safe media buy or safe advertising campaign. So if you are completely risk averse, the likelihood of success drops dramatically, as you will see a lot more failure in your efforts than you will success. Fortunately, even a small amount of success can go a long way towards offsetting the failures. Paul and I have spent tens of thousands of dollars on different marketing channels that in the long run were complete failures. But along the way, because we never put all of our eggs in one basket, we would have one or two successes that would offset any missteps we may have taken. That is why it is important to start your strategy with small risks spread evenly over several different marketing channels. If you don't have that marketing expertise, ask around and or find a marketing consultant that can assist you. You'd be amazed at the breadth of knowledge you can bring into your business with a small monthly commitment from a proven marketing strategist.
People who are new to the real estate business have a tendency to talk about themselves or the company. They will spend hours trying to sell how great they are, without ever asking the customer about their needs, their goals and their objectives. Customers do not care how great you are, they only want to know what you can do for them. Your marketing messages must focus on the benefits your services provide the customer first and foremost to be effective. By asking them early on in the process about their needs and goals, you can then tailor your messaging to address multiple benefits you can provide and successfully align them with your customer's goals.
Real estate is a crowded marketplace. Companies and individuals that struggle, usually do so because they have failed to differentiate themselves and stand out amongst the noise being created by all of those other "real estate experts". Part of your goal has to be figuring out your own niche and how you will stand out amongst the crowd. Instead of copying the ideas, actions and tactics of others in your field, you need to establish your own "brand", your own "voice" and your own "message". Paul and I have watched countless new real state professional come in and try to mimic the success of others in our field, only to realize that not only do they fail in their own efforts, but many times they also pull down the effectiveness of those they copy. The digital economy has exasperated this problem, with real estate investor after real estate investor copying the web sites, the social media posts and the overall strategies of others in their area. This commoditizes the marketplaces and result in a focus on price and spend. Add your own unique personality and flair to your messaging and in the descriptions of your benefits to your customers. Figure out ways to stand out and you will pave your own path to success.
Hi, we're Paul and Scott -- two life-long friends that have been helping folks on Long Island buy and sell their homes for over 20 years. Join us each month as we share our experiences and strategies for flipping houses for profit here on Long Island -- without the scams, the enormous financial outlays and the bait and switch tactics so often used in this market.
Its been a long, painful winter. Now it's time for Spring Cleaning -- a process that'll make you feel better and bring your home back to the organized space you love. But if the mere thought seems overwhelming, here are a few tips to get you started:
Whether your place is tiny or massive, spring cleaning can be a challenge. Spring cleaning is all about going beyond your usual dusting, mopping, vacuuming and scrubbing routine. Like all big undertakings, it's a good idea to make a list of the tasks to accomplished using good ol' fashioned pen and paper.
Do you want to do it fast or do you want to do it right? After you draw up your plan, spend some time thinking how much time to allot to each task. Sure, you can hit the highlights in a weekend, but if you want every square inch truly clean, you'll need to take more time. And if you're like Paul, you may need even a little bit more than that.
Scott's biggest advice is to make sure that you have all of the supplies you need before you get started. Nothing kills the momentum of a clean, once you are in it, than stopping to find the right tool, brush or bag. At a minimum, you'll need an all-purpose cleaner for everything from walls to floors and a glass cleaner for windows and mirrors.
Avoid the easy fix of shuffling piles of stuff to clean around them and then putting them right back. Before you can clean, declutter and organize by setting up three different bins (or boxes, whatever works): keep, toss and donate/sell.
Even with a great plan and all the right supplies, Spring Cleaning can still be too much work for one person. So make it a family event and work together on one room at a time. Delegate roles and create games as to who can get their tasks done first. Turn cleaning into a game and rewards those that do the best job the fastest. In Scott's house, the cleanest room gets to pick the Friday night restaurant.
Tackle each room from the top down -- going into each room and literally going from ceiling to floor. Keep in mind that cleaning from the top down might mean getting out an extension pole.
Don't let Spring Cleaning seem like an absolutely horrible, monumental and otherwise insurmountable task? Go over the list and pick the tasks that will benefit the most highly trafficked areas of your home. The kitchen should be high on the list, as is the family and/or TV room, foyer and downstairs bathrooms.
When the warmth and beauty of the new season is beckoning to you from outside your window, you don't want to find yourself knee-deep in a closet reorganization. So do a little each day and start your efforts early. Scott has even been known to bang out a room or two before his Wheaties.
We love to use a system called FIFO (first in, first out). Look for expired cupboard items, refrigerated condiments and medicine and get rid of those expired items. Don't just pull pantry items out and put it back in, actually check the expiration date on the jars, cans and boxes. When in doubt, throw it out.
Remember, don't just focus on the inside of the house. Grab some fresh air while attending to other home maintenance-type things that need your attention once spring has actually sprung. Check critical systems like air conditioners, gutters, and repair any winter damage caused to the landscape -- keep it slopping away from the house. If the winter was particularly rough, your roof probably needs an inspection for loose shingles or siding, rotting seals around the windows and doors and possible damage to your walkways. Be sure to inspect your deck or patio for wear and tear so as to avoid stubbed toes and splinters. A little racking, some sprucing up the flower beds, and then turn on the BBQ and enjoy.