BEFORE YOU GET STARTED€¦ · tate house flipping knowledge into profits. There are all sorts of ways to create wealth through real tate. Even if you're allergic to hammers. trategies

Dear fellow investor,

Steve and I hope you have found Really Flip web series both

entertaining and educational.

To watch the entire series again along with all the episodes of

Behind The Flip visit: www.New.Connectedinvestors.com/Binge

Make sure to signup to the Really Flip webinar so you can turn

this real estate house flipping knowledge into profits.

There are all sorts of ways to create wealth through real

estate. Even if you're allergic to hammers.

During the webinar Steve and I will take you through strategies

that can get you to six figures fast even if you don't have a

dime to your name. We also cover accelerated real estate wealth

building models for those of you with cash and experience.

Visit ReallyFlip.com to signup to the webinar.

Talk to you on the call,

Ross Hamilton

CEO of ConnectedInvestors.com

BEFORE YOU GET STARTED

Episode One: YA GOTTA KEEP THE

MONEY MOVING

The Really Flip team is passionate about removing the obstacles to successful real estate investing, so we designed these worksheets for every episode of Really Flip so you get the best take-aways to use in your own house �ipping

endeavors. Every episode was created to show you what it really takes to grow and run and successful real estate investing business. We’ve included a recap of key segments, quotes from the show and thought starters to help you apply the

lessons learned from real, boots-on-the ground investors. This is real-world investing, so a�er you view each episode, take a minute to go over the worksheet, jot down your own thoughts, challenges and actions steps that can start or grow

your own real estate investing business.

TIPS + TAKEAWAYSREALLYFLIP

Connected Investors Presents:

© 2016 REALLY FLIP • CONNECTEDINVESTORS.COM

Connected InvestorsThe real estate investors marketplace + community

http://reallyflip.com/

http://connectedinvestors.com/

SIGN UP FOR A CONNECT-THE-DOTS TRAINING Hosted by Ross Hamilton & Steve Du�on

Learn how to Flip Houses the Right Way...Fast, Less Risk and Big Pro�ts

LEARN EXACTLY HOW YOU CAN: + Find the best investment properties not available to the public

+ Figure out the numbers. The value, rehab costs, and more

+ Fund your deals using other people’s money (like Steve)

+ Fix it so it sells fast

And for those of you allergic to hammers!!!

Discover how to pro�t without doing the dirty work by partnering with contractors or �ipping to other investors.

In addition, you get all the workbooks,contracts, scripts and a detailed plan

to do your �rst or next deal fast.


HOW TO MAKE YOUR FIRST OR NEXT $100,000FLIPPING REAL ESTATE

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1

In this introductory episode, experienced house �ipper, Steve and Connected Investors CEO, Ross visit several completed �ip houses. They talk about the time and �nancial commitments, the risks and rewards, the missteps, the successes and maximizing opportunities in this business.

YOUR BUSINESS MODEL

“I hired a friend of mine and he and I worked six days a week over there and we were the chief cook and bottle washer, man. We did pretty much everything. I didn’t hire much, I didn’t have any money. I ended up doing, you know, two or three houses a year. Now I am doing 12 to 18 houses a year.”

Steve starting out doing 2-3 houses a year then ultimately grew his business to 12-15 houses a year. Every investor’s business model is unique in some form or fashion - typically driven by time, money, resources and skills.

Think about your business aspirations and consider if any of these business models �t your goals.

THE LOW VOLUME, HIGH NET INVESTOR One of ReallyFlip’s producers follows this model. She and her partner are skilled DIYers - so they seek out what they call “home runs” - the houses that will net them at least $50-60k plus each. Since they’re mostly hands-on with repairs, they’re limited by time in the number of houses they can turn each year - but each one has a big back end return. This model is easy entry if you have the skills to DIY your properties - and the time to devote to the work. There’s risk involved - if one deal goes bad, you may only have one or two others in a year’s time to recoup losses.

THE HIGHER VOLUME, LOWER NET INVESTOR

This closely resembles Steve’s business model. He has multiple projects going at any given time, and has his own crews working at each property, and spends more of his time managing crews than swinging a hammer - though he gets his hands dirty on regular basis. With more projects in the works, it’s okay if the net is lower than the Low Volume, High Net Investor. This business model takes some ramp up time - unless you’re already in the home renovation business or a builder with crews on tap. This model does spread the risk across multiple properties - but also requires the investor to have lots of balls in the air and have excellent project management skills (along with a good source of capital to fund multiple ongoing projects)





THE PHONE CALL FLIPPER

This house �ipper doesn’t DIY and doesn’t have their own crew - they’re skilled at calling in the troops to do the repairs. The phone call �ipper relies on strong relationships with reliable contractors - as he or she may not be onsite daily. This business model is limited by the ability to �nd and manage quality contractors to complete the work on time and on budget. It’s fairly easy entry using this model, but does require some working knowledge of repairs and costs and a reliable source of capital since phone call �ippers o�en have more than one project in the works. This model also works well for the investor with out-of-town projects since their daily presence isn’t necessary.

When thinking about your own access to TIME, CAPITAL and SKILLS, which business model best �ts your ideal? Why will one work better than the other to meet your needs and desires?

THE REALITIES

”I probably spent three or four hours every single day managing the property among other properties that I’ve got going on at any given time and that was four months’ worth. So it took about four months to rehab it and just managing it was probably half a day’s work every day. So you know, 20 hours a week, about 240 hours.”

“Time is of the essence” is one of the most common phrases in real estate investing. And when it comes to making money �ipping houses, the amount of time you have to devote to �nding, �guring, funding, �xing and �ipping properties helps de�ne your business and the ability to “wash, rinse and repeat.”

A lot of aspiring house �ippers don’t have the experience to recognize everything that goes into pro�tably taking a �xer upper to the retail market for resale. As you start (or continue) building your business, identify the resources you have - or can access - in each of the phases of a residential house �ip





FINDING PROPERTIES - what tools do you have to help you �nd good properties for �ipping? The Connected Investors Marketplace is one. Connected Investors Cherry Pick is another. List at least THREE more (agents, online, local network, other?)

1.______________________________________________________________________

2.______________________________________________________________________

3.______________________________________________________________________

FIGURING THE NUMBERS - one of the most important aspects of this business is knowing and sticking to the numbers. The Connected Investors BPO app puts real world, local valuations on properties nationwide. What other resources can you tap into to evaluate the numbers on a property?

_________________________________________________________________________

_________________________________________________________________________

FUNDING YOUR DEALS - there are a lot of di�erent ways to fund a �x and �ip property. There are private money lenders in your own network - but you have to tap into them. What sources of funding can you identify?

1. CiX.com (the Connected Investors Lending Network)

2. Self-directed IRA (Look into this if you or someone you know has a retirement account)

3. __________________________________________________________________________

4. __________________________________________________________________________

5. __________________________________________________________________________

FIXING - Renovations get costly. Having the right plan and the right team to get the project done is critical. Connected Investors o�ers members two Apps to help house �ippers make even more money. The Contractor App puts quality contractors into your network. The Community Buying Group gives Ci member investors signi�cant discounts at vendors nationwide.

What resources can you tap into to get the job done and improve the bo�om line?

_________________________________________________________________________

_________________________________________________________________________

FLIPPING - this is where the rubber hits the road and your property goes to market. How will you market your property to your end buyer? If you haven’t thought of your own marketing, you should. Connected Investors DealinSite web system is a comprehensive website that investors use for buying, selling and renting investment real estate. What other strategies can you employ to get your property sold fast?

___________________________________________________________________________

___________________________________________________________________________





THE RELATIONSHIPS

Ross: “How did you fund it? “

Steve: “Private lending. I’ve got relationships with several, I call them business partners. If you had to be technical, hard money lenders. They are like friends of mine and I’ve done a ton of business with these guys. The money is expensive but I’ve got such a solid relationship that I can be like, “Hey buddy, you know, I need $135,000 in two weeks right?”

No ma�er business model or level of experience, every successful house �ipper nurtures and manages a good number of relationships in order to keep the ball rolling. Steve mentioned his relationship with his private money lenders and how those relationships are bene�cial to his business. Clearly, he manages a number of relationships - from funding partners to renovation helpers and more.

What are the key relationships you need to develop, nurture and further to take your business to the next level?

DUE DILIGENCE AND YOUR REPUTATION

“You have to do what you say you are going to do with your sellers, your buyers, your lenders because the minute you fall through on a promise to any of them, you’ve just damaged your business model.”

Steve, as all smart business people should, takes his obligations very seriously. It goes back to developing and nurturing relationships. One of the keys to every aspect of house �ipping is due diligence - and not le�ing enthusiasm and inexperience drive your decisions.





A Private Money Lender _______________________________________________________

______________________________________________________________________

A House in a Marginal Neighborhood ____________________________________________

______________________________________________________________________

A Contractor ________________________________________________________________

______________________________________________________________________

A Property Located in a Flood Zone _____________________________________________

______________________________________________________________________

Materials Vendor ____________________________________________________________

__________________________________________________________________________

Real Estate Agent/Broker ___________________________________________________

__________________________________________________________________________

A home built before 1950 ______________________________________________________

_________________________________________________________________________

A Seller ____________________________________________________________________

__________________________________________________________________________

A Buyer __________________________________________________________________

__________________________________________________________________________

Take a minute to challenge yourself. We’ve listed relationships and tasks that are the keys to longevity for any house �ipper. Jot down the vetting process you might undertake as you approach a house �ipping project for each of these. What do you need to know? What are potential pitfalls?





AVOIDING MISTAKES

You know, in real estate, �ipping houses, I think what often gets overlooked is the extreme risk that can be involved. And as much as I hate to admit failure, I’ve lost money on some deals and we just happened to be at a property where I lost the most amount of money. I lost as much on this one deal as a lot of people make in a whole year. I really was in very serious risk of becoming a statistic. Almost went out of business.”

1. __________________________________________________________________________

2. __________________________________________________________________________

3. __________________________________________________________________________

4. __________________________________________________________________________

5. __________________________________________________________________________

What are the lessons learned?

Even though Steve is a very successful real estate investor, he’s not immune to mistakes. During this segment of the show, he talks about the challenges of one deal in particular - and is able to point to where he made his mistakes. He recovered and took some valuable lessons with him. Take a look at the segment and see if you can list the key lessons learned. We counted at least �ve.





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DURING THE REALLY FLIP WEBINAR, ROSS & STEVE SHOW YOU HOW TO...

• Get a �rst look at the best deals in your market (without doing any marketing)

• Easily run the numbers (without doing any math)

• Lineup the funding for yourself or your buyer (without any begging)

• Maximize pro�ts on each property using the Flip Matrix so you can get to six �gures fast (without any brain-damage)

• Take yourself out of the equation! (without skipping a beat)






Episode Two: NOW IT’S REAL























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1

In the second episode, Really Flip pro house �ipper, Steve takes us inside…

You get an inside view of family life as a full-time �ipper, the inside view of a crawl space and what it can reveal about a house, and �nally a peek at the growing pains associated with a successful house �ipping business.

BRINGING IT HOME

“Everyone has seen the shows on television and seen how “easy” it is to �ip a house and what the pro�ts are and the pro�t margin and how quickly you can do it. But there are a lot of jobs that need done and not a lot of people who want to do it. There are deals out there, and (for some people) - not a lot of money to be had to �nance these properties. There’s a time crunch and all these deadlines you need to hit.”

WHAT’S YOUR FLIPPING PROFILE?In Episode One Tips & Takeaways, we outline di�erent business models. Think about the important aspects of your life - family, work, �nances and more. Which pro�le best �ts your lifestyle, skill set and business aspirations?

THE LOW VOLUME, HIGH NET FLIPPER• Typically, one or two properties in the pipeline - less need for deep pocket funding.• Hands-on; o�en tackles DIY. Subcontractors used for big jobs like roofs or HVAC.• Time & Skill Intensive• Looks for ‘home run’ deals since time limits the number of properties that can be completed

THE HIGH VOLUME, LOWER NET FLIPPER• Multiple Projects at any given time. A full pipeline of active and potential deals at all times.

Needs a reliable and �exible source of capital for acquisitions and projects.• Manages a crew and also uses subcontractors• Frequently on site inspecting properties, planning, overseeing projects and problem solving.• Multiple deals annually means margins per deal don’t have to be home runs - base hits work

well.

THE PHONE CALL FLIPPER• Able to scale projects since not actively involved in renovation work.• Must have trusted sources of skilled labor and materials as well as �exible funding.• Checks in on progress but not active on job sites. Oversees the work of subcontractors or has

a general contractor to manage projects and subs.• Margins need to be somewhere between base hit and home run since there’s no savings from

tackling work or management.





Your Goal and Your Role

Everyone’s needs are different and every house �ipper’s business model is different. The key is to de�ne your goal and your role in your business and mesh it with your other life commitments and desires.

NOW IT’S REAL

“So I am always excited when I buy a new property for �ipping or any other purpose. That said, there is always a little bit of butter�ies because now it’s real like, “Now I owe the money.” The property better make money because if it doesn’t make it, it’s going to lose it and that’s inexcusable.”

Before even ge�ing to closing, there are a whole series of obstacles to clear. Steve mentions the money - as a high volume �ipper, he needs access to OPM (Other People’s Money) to fund multiple projects. He found, as many �ippers do, that “Money Follows Opportunity” and when there’s a good property, plan and project in place, the money is available.

When thinking about your own access to funding, where can you access money for acquisition costs, holding costs and renovation costs that can carry you from acquisition to resale? Be sure to check out Really Flip’s workbooks and more for resources to launch or expand a house �ipping enterprise.


NOW IT’S EVEN MORE REAL

Despite your best due diligence - whether it’s a thorough property inspection or a good title search, expect the unexpected. The key is to be prepared with some padding in your budgets and the ability to respond quickly to problem solve the inevitable issues that will arise. If you’re a new �ipper, you must have people you can trust and the tenacity to stick with an issue to get it �xed. In the Really Flip “FIX IT!” workbook, there is a whole series of “Gotcha” checklists to help with Due Diligence and a Pre-Purchase Property Inspection and Budget to help map out a good plan.





What’s your level of experience today and what do you aspire to? How can you launch or expand your house �ipping business using the skills and resources you have today? What do you need to grow for the future while minimizing risk and maximizing reward? Identify the gaps and locate the resources to �ll those gaps.

BRAINSTORMING YOUR BUSINESSComplete the following statement. First select one of the following and then complete the statement. This helps you de�ne WHAT you want your business to be.

YOUR “WHAT”

I aspire to be a (SELECT ONE)

A. Low Volume, High Net Flipper - One of Really Flip’s producers follows this model. She and her partner are skilled DIYers - so they seek out what they call “home runs” - the houses that will net them at least $50-60k plus each. Since they’re mostly hands-on with repairs, they’re limited by time in the number of houses they can turn each year - but each one has a big back end return. This model is easy entry if you have the skills to DIY your properties - and the time to devote to the work. There’s risk involved - if one deal goes bad, you may only have one or two others in a year’s time to recoup.

B. High Volume, Lower Net Flipper - This closely resembles Steve’s business model. He has multiple projects going at any given time, and has his own crews working at each property, and spends more of his time managing crews than swinging a hammer - though he gets his hands dirty on regular basis. With more projects in the works, it’s okay if the net is lower than the Low Volume, High Net Investor. This business model takes some ramp up time - unless you’re already in the home renovation business or a builder with crews on tap. This model does spread the risk across multiple properties - but also requires the investor to have lots of balls in the air and have excellent project management skills (along with a good source of capital to fund multiple ongoing projects)

C. Phone Call Flipper- This house �ipper doesn’t DIY and doesn’t have their own crew - they’re skilled at calling in the troops to do the repairs. The phone call �ipper relies on strong relationships with reliable contractors - as he or she may not be onsite daily. This business model is limited by the ability to �nd and manage quality contractors to complete the work on time and on budget. It’s fairly easy entry using this model, but does require some working knowledge of repairs and costs and a reliable source of capital since phone call �ippers o�en have more than one project in the works. This model also works well for the investor with out-of-town projects since their daily presence isn’t necessary.

This model works for me because (list all of the reasons this business model or a combination of business models will work for you. Include things like time, funding and skills) .

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________





THE MISSING PIECES - YOUR “HOW”

Think about what you HAVE and what you NEED to take your house �ipping endeavor to the next level. This helps de�ne HOW you can get from point A to point B.

FINDING GREAT DEALS

Every house �ipper has to have a deal pipeline that reliably brings good properties to the table.

WHAT I HAVE WHAT I NEED

FIGURINGThere shouldn’t be any guesswork in evaluating deals and projecting pro�ts. You need e�ective formulas a tools.

FUNDINGEven if you �nd and �gure good deals, without funding it’s nothing more than a good idea. Identify your sources.

FIXINGWhether you are DIY or hands-o�, you have to have some level of oversight with every project. What do you have or need to succeed?

FLIPPINGExecuting a pro�table sale is no accident. There’s strategy involved. What resources do you have or need to successfully re-sell a �ipped property?




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Episode Three: IRONS IN THE FIRE























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1

In the third installment of Really Flip, pro house �ipper Steve takes us on a tour of several properties and shares some ideas for the episode’s feature property, “The Parsonage.” We focus on three very important aspects of �ipping houses including Figuring the Numbers, Understanding Your Market and Your Buyers, and What to Fix and Why

IRONS IN THE FIRE - THE COST OF MONEY

“Shortly after acquiring this property, I had this fantastic problem of four properties that we were renovating got pre-sale contracts. Now you’ve got serious hard deadlines to meet because with any type of contract, purchase or sale, there are deadlines to meet - and if you don’t meet them you delay the �ow of money. So as a result, other properties are still costing money, but they aren’t under a hard deadline so they tend to get pushed to the wayside and that’s kind of what this one suffered from early on.”

YA GOTTA KEEP THE MONEY MOVINGOne of the holy grails of house �ipping starts with the basic formula used for making o�ers on �x & �ip properties. It’s called the Maximum Allowable O�er, or MAO for short. It goes something like this:

ARV $150,000 Value of property a�er repairs

Loan (Cost of Funding) 6,000 Origination fees, Closing fees, Interest

Repairs 25,000 All expenses related to renovations

Holding Costs 2,000 Insurance, Utilities, Taxes, HOA, other

ReSale Fees 9,000 Realtor Fees (6%)

$108,000 ARV minus costs to �ip

x .70

$ 75,600 Maximum Allowable O�er

The MAO is just the beginning. Whether you’re doing one �ip or a dozen, the numbers don’t lie and having a clear �nancial outlook is critical to any successful house �ipping endeavor. There are a number of other important formulas including Determining the ARV, Calculating the Cost of Money and more. In the Go Figure! Workbook, you’ll �nd more than a dozen “Cheat Sheets” to help run the numbers on investment real estate and keep the money moving.


Look at the formula above. Which of the line items would you expect to increase due to project delays?




KNOW YOUR MARKET - KNOW YOUR BUYER POOL

“One of the things that drew me to take interest in the property was that I am active right on the other side of the block - so I am already a believer in the location. It’s very quiet out here. You could consider it rural but it’s three minutes from downtown Wilmington. It’s becoming a real popular place and downtown Wilmington is booming. So anything that has this rural or suburban or even country feel like this does, but you’re �ve minutes from all the action - those are attractive characteristics of a property.”

FINDING INVESTMENT QUALITY PROPERTIES

When identifying properties for potential �x and �ip projects, it’s important to know your market and know your buyer pool. In any community, you’ll �nd pockets of homes that ful�ll di�erent buyers’ needs. As you develop your �x & �ip strategies, you’ll be able to target particular areas and even the styles of properties to help meet your business objectives. As you begin the process of �nding potential properties, you also have to consider how the project �ts into your business model.

DETERMINE YOUR TARGET PROPERTIES

Can I easily travel to the property? Proximity matters - as you’ll make many trips to the property

What is the price range I am comfortable with? What sells in your area and how much risk can you bear? Look for your information from your local Board of Realtors® - they keep statistics on in-demand price ranges and a number of other helpful measures.

What age,size and style of home should I consider? There are many considerations - older homes require more extensive renovations like electrical and plumbing. Two story homes can bring their own set of challenges. Larger homes take more time and more money. And �nally (and most importantly) what are buyers buying in your area?


There’s no single best way to �nd good deals on investment quality properties. There are a lot of great ways to locate potential �x & �ip deals and it’s up to you to determine your best deal �nding techniques. Most investors use a variety of approaches which are covered in detail in FIND IT!, a comprehensive guidebook on locating the best o�-market deals in any community.





THE DECISION PROCESS - WHAT TO FIX AND WHY

“Your ideas could just go crazy anytime - and certainly when you �rst walk in a house. You know, we are still wrestling with the stairway to the second �oor here because it’s just a behemoth. We’ve got a couple of ideas. If we choose to �nish off the second �oor like I think we will, I might look into a spiral staircase if I can get one affordably because it will be a nice feature that is functional and a great feature.”

Ask any house �ipper, it’s easy to get caught up in the ‘what ifs.’ “What if we did this? What if we added that?” Renovation budgets are important - and they have to be based on making choices that will help the property sell fast for the right price. The key to making the right renovation choices lies in knowing your market and knowing your end buyer.

Inside the "FLIP IT" workbook, there are all kinds of worksheets and decision-making tools.




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Episode Four: WHEN IT RAINS,

IT POURS























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1

The fourth episode of Really Flip �nds Steve involved in more problem solving as the work on the Parsonage progresses. His top-notch crew put his ideas into action while he deals with a couple pre�y major setbacks. Will it sink the project? Stay tuned!

IDEAS INTO ACTION - HAVING RELIABLE CONTRACTORS

“It occurred to us that this house has to have a back deck out here. With a backyard this big, certainly someone is going to want to grill steaks out here and hang out in the backyard. So we kind of had to reengineer the house a bit to accommodate the hallway to a backdoor. The house did not have a backdoor prior to this so we designed that into the �oor plan. Then I’ve got one of the guys on my crew, one of my regular guys; he’s been with me for several years now.he’s just a wizard at building decks like this, man. I mean, he could do it blindfolded. I basically showed up a couple of days later to this absolutely gorgeous back deck.”

Steve has been �ipping houses for a good number of years now, and his business model demands that he have regular crews to work on up to a dozen projects at any given time. But not every house �ipper has a dozen projects or needs to employ a crew. What every house �ipper needs are reliable contractors to turn their vision into reality.

In the Really Flip FIX IT! Guidebook, you’ll �nd an entire section devoted to �nding and hiring quality contractors for the many jobs that come with �xing and �ipping a house.

• WHERE WILL YOU FIND RELIABLE CONTRACTORS?

• WHAT QUESTIONS CAN YOU ASK TO MAKE SURE THEY’RE RIGHT FOR YOUR JOB?

• WHAT SHOULD ESTIMATES INCLUDE?

• WHAT ARE THE PAYMENT OPTIONS?





BUILDING A REPUTATION WHILE REBUILDING A HOUSE

“This is getting more and more exciting now, particularly because we’re entertaining a prospective buyer. There was this couple driving in the neighborhood and they are moving to Wilmington in part to branch out from the church of which they are already apart. Ding! I’ve got a parsonage, right? So the next time they came to town they came over here. They fell madly in love. They are like, “This is perfect!” We are really on the homestretch here of putting a contract together with these folks. In fact, we expect to have it in writing this afternoon. And we have been killing ourselves working hard on this house. It’s almost done. We’ve got a buyer lined up. We’ve even got a proposed closing date - the �nish line is in sight. Coming to fruition. We’re psyched”

DEALING WITH “SETBACKS”

Every property and project has its own set of issues to resolve. That’s why you’re in the game, right? Take a problem house and �x it - and make money in the process. Three of the most important phases of any �x and �ip project include:

1. The Inspection

2. The Budget

3. Due Diligence

The Inspection should not be taken lightly and can reveal really important de�ciencies in the property. Knowing those de�ciencies in advance and addressing them with a budget and work plan can keep the project on track. But, would be �ippers may not know what to look for; and seasoned �ippers can get too comfortable and miss important details. The best defense for both kinds of �ippers is #1) Using a “hole -poker”. This is someone you trust to pick the property and the deal apart to help keep you out of trouble. #2) Always use an Inspection and Budget worksheet. Having everything on record keeps the numbers straight and the project plan intact. In the Really Flip GO FIGURE! Workbook, you’ll �nd property inspection worksheets, budget planners, and a whole series of formulas and worksheets to keep the �nancial house in order.





ADDRESSING THE PARSONAGE “SETBACKS”

Steve discovered several pretty signi�cant issues after work had begun on the property.

What were they? And what areas of Due Diligence should have helped address those issues?


When it comes to Due Diligence, you simply can’t be too careful. There’s a multitude of questions you need to ask about things like:

• The Structure(s) - What needs need work to meet code and appeal to your end buyer?

• The Infrastructure - Are the utilities su�icient? Are there existing but outdated services?

• The Land - What, if any, issue does the environment create at the location?

• The Legal - Is the land really what you think it is?

• The Authorities - What permit or other overarching authority issues could you face?

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________




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Episode Five: THIS IS IT























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1

The ��h episode of Season 1 of Really Flip brings the Parsonage project to a close. Steve walks us through the property - sort of a “before and a�er” tour. He talks through the renovation decisions and the pride he and his team take in bringing homes back to life. Ultimately, with multiple projects in the works, he concludes that he could have used several di�erent strategies to make a pro�t with the property.

“When we bought this house this hallway did not exist. However, I knew that any buyer would want a back door to a back deck so we actually consumed some of the bedroom with this wall here, added the back door out to the back deck. Now you can have your grill out there and grill steaks, drink beer and enjoy your backyard.

When we bought the house this was the master bedroom. It’s no longer the master bedroom. It had a bathroom, a teeny-tiny, like barely functional sized bathroom just off of it. We moved the master suite, consumed some of this room with the wall for the hall way to the new back door and deck. We deleted what was the bathroom and that became part of the kitchen. We opened up the kitchen consuming what was the original, undesirable master bathroom space.”

MAKING DECISIONS - BEFORE YOU BUY AND WHEN YOU RENOVATEThe best house �ippers begin the renovation thought process before they even buy the house. In reality, that means there is a screening process of sorts that happens during the �rst visit to the property. You might ask questions like:

WHAT ARE THE MUST DO REPAIRS LIKE ROOF, HVAC? Knowing the big ticket, must-do items helps plan for the rest of the project and the budget - and all of that impacts the purchase price. Every decision impacts the budget and the timeline. Consider how the property, the project and the pro�ts �t into your other priorities during the project’s time frame.

IS THERE FUNCTIONAL OBSOLESCENCE? In the case of the Parsonage, there was no door to the back yard and only one small bathroom. Adding doors, moving walls and relocating plumbing is very costly and those kinds of renovation decisions should be considered before you buy. Why? Because they MUST impact the o�er you make on the property and how you plan your exit strategies and timelines. In some cases, you may decide to: Walk (and not purchase the property), Wholesale (still make a pro�t but less than a �ip) or Proceed (the project and pro�ts �t into your game plan).





“I wanted to be selling this at least three months prior to now if not four. We bought the house at the end of August last year. Immediately after we bought it, we had several other projects that became massive priorities. So right away I was not able to put the resources on the house that I thought I would when I bought it. So we came out of the gate basically behind schedule because we couldn’t even start working on it. That said, the other projects were all wildly successful so something had to give - so it was this, right? It’s always gratifying seeing the place turned into a masterpiece like this; however, �nancially if I (had known what I know now and) wholesaled it, I probably would have made just as much money and I would have turned it quickly. You know, there’s the right way, the wrong way and my way.”

WHAT IF THERE ARE UNKNOWNS?

Every property has unknowns - but there are ways to minimize their impact. First on the list is due diligence. Your �rst visit to the property can’t reveal all of its warts. Your due diligence period allows you to more carefully inspect, plan and budget dollars and time. In some cases like courthouse auctions, thorough due diligence is nearly impossible. The smart house �ipper plans for the worst - and only makes o�ers that can cover worst case scenario.

The decision making process with any �x and �ip property isn’t based on your “gut” or “maybes.” House �ipping involves risk and that risk can be calculated. There are tried and true formulas for successful house �ipping that help you minimize risk and maximize pro�t. Due diligence and a realistic renovation plan is critical for success. For Steve and the Parsonage project, a critical element cut into his pro�ts. While the project was still pro�table, it didn’t net to his expectations.






FILLING THE PIPELINE

Every house �ipper approaches their business di�erently. Think back to to Episode Two and the exercises to help you solidify your business model.

Every property a �ipper decides to take on should �t into the big picture - and that picture determines the number of properties you need in your deal pipeline.

Your deal pipeline is driven by your ability to locate great deals on investment quality real estate. There are many, many e�ective strategies and tools for �nding great deals. The best deals are found in the “o�-market” properties and despite what you may hear in your local market, there are always great deals to be had. The key is to employ e�ective strategies.

House �ippers, wholesalers and landlords may use any of the following techniques for �nding deals:

• Social Media and Online Marketing

• Pre-Foreclosure Marketing

• Direct Mail

• Farm Neighborhoods

• Driving for Dollars

• Bandit Signs

• Door Knocking

• Craigslist and Other Online Sources

• Networking

• Bird Dogs

There are pros and cons to each techniques - we cover them in detail in the FIND IT! Workbook. How you use them really depends on your business model along with your time, skills and resources.





WHAT’S YOUR PROPERTY PROFILE?

When you think about what you want your house �ipping business to look like, consider the business models we’ve outlined in other workbooks and what you need from each property. This helps you de�ne the types of properties and deals that meet your bigger objectives.

PROPERTY, PROJECT AND PROFIT

Older homes (pre-1950) are okay. I can handle the unique aspects of an older home.

The property needs to be within a (______) minute drive of my locale.

The acquisition cost must be less than ($_______________)

The renovation cost must be less than ($_______________)

The renovation and re-sale timeline must be less than (______) months

The pro�t must be at least ($__________) for a (______) month project




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BEFORE YOU GET STARTED€¦ · tate house flipping knowledge into profits. There are all sorts of ways to create wealth through real tate. Even if you're allergic to hammers. trategies