Here at CEB Capital, we are the funders. We give you the money you need to invest in your real estate flips or rehabs. But, you need a house before you need money, right? That begs the question: where do I find investment-worthy properties?
Since we normally meet you after you have a home in mind, we thought we would give you some hints when it comes to finding the diamond in the rough. Read on for our seven best places to find the most fruitful investment properties.
- MLS Search. While this is primarily done through a realtor, there are some websites available to do MLS searches through the database of ALL homes for sale in the areas you’d like to flip in. Realtor and Zillow are two very popular real estate search engines.
- Network. Realtors tend to be found in packs. They are always out trying to find elbows to rub and hands to shake. The more people you know, the higher your chances of getting an inside scoop. Therefore, don’t be nervous about going to local realtor network meetings (REI or BNI are two very popular networking groups). These professionals are all eager to help you find a home to flip because that means they are making money too.
- Auctions. Do you know if you have local estate sale auction company? If so, get their schedule. Follow their Facebook page and bookmark their website. Be ready. But, also, be educated. Make sure you are doing your homework and running comparables. Some deals just might be too good to be true.
- Classifieds. Not only does this mean websites like Craigslist, but also the actual paper classifieds. The newspaper can be full of ads for open houses or for sale by owner properties since newspaper is a very inexpensive way for homeowners to advertise.
- Fellow Investors. What?! Share my tricks of the trade and inside scoop with the competition? Yes. That’s exactly what we’re saying. This article from Bigger Pockets explains this concept beautifully. Investors are constantly making offers hoping that some will go through, but what happens when they all go through at once? They will need to unload properties they don’t have time to flip. That’s where you step in and scoop up the deal.
Thinking about flipping a home or investing in real estate is very exciting. You picture yourself walking through a construction zone picking out flooring and pointing out where changes need to be made. This is your vision. One that could make you large profits.
But, there’s more to flipping than being the foreman on the job site. You need to be well prepared BEFORE you put an offer in on a home that needs a little TLC. This will avoid big headaches down the road.
Here’s some tips on what to do before signing on the dotted line:
- Before you see a realtor, make sure you have a pre-approval letter. If you’re a cash customer, you won’t need this, but you’re wasting your and the realtor’s time if you don’t know what you can REALLY afford. You might think you know, but it all comes down to what you’re approved for. Without that, you more than likely are looking at the completely wrong type of house that you need to purchase.
- Research a real estate agent. Make sure you are working with someone who is familiar with buying real estate for investment. The majority of realtors are working with clients who are looking for primary residence or vacation homes. It’s even better yet if you can find a realtor who invests in properties herself. This will save you even more time. And we all know time is money and can kill a really good deal.
- Have a plan. How long can you afford to work on a home? How much do you want to invest into it? What time of year do you want to list the home? What are the BEST neighborhoods to invest in? These are all answers you need to have before buying. You don’t want to get talked into a home that needs major renovations and you have to have it back on the market in a month. This isn’t feasible and will cut into your bottom line. Plans are major.
- Have a team in place. We hate to break it to you, but most investors can’t pull off flips on their own. Who’s going to help you? Do you have agreements in place? Not only do you need to be ready to pull the trigger, but your team needs to know that: A. They are part of your team and B. That it’s Go Time.
- Don’t think you’ll skip due diligence. Think you’ll just do this quick without an inspection? Don’t need to look too closely because you plan on gutting the house? Think again! Don’t be in such a hurry that you can miss major structural issues with your investments. Be ready to take your time and make an educated decision. Again, money, money, money!
We love this first-hand flipper’s detailed diary of how his first flip wasn’t the big pay day he had dreamed about. However, the money wasn’t that big of a deal considering the huge hands-on education he received while flipping his first home.
Sometimes, you have to just dive into your first flip or rehabilitation. There are MANY lessons you will learn along the way, just like any profession. You don’t walk into your first job knowing as much as the CEO. It all takes practice and trial and error. You’ll have big wins and hopefully not-so-big losses. But, you have to take the lesson and apply it during your next big project. This is the most valuable asset a flipper can have. If you learned the lesson once, you’re much less likely to do it again.
Now, we don’t recommend you just willy nilly make a purchase and start knocking down walls. That’s just nuts. But, we do recommend you go into your first deal with your first goal to be learning. Your second goal should be making money. This will also take a LOT of stress off of you. You’ll be more open minded to each step of the way and willing to store away lessons of how you will do it better next time.
We will do the best we can to predict how things will pan out. But, we won’t be there to hold your hand while everything unfolds. Consider us your training wheels!
For more information, give us a call or email us today for a Welcome Kit!
We all know 2008-2009 brought with them a hideous avalanche of real estate investment nightmares. We all heard horror stories of homes selling for pennies on the dollar of what they were purchased for. Many Americans were under water on their homes and had to start from scratch with a new home and brutally damaged credit score.
After surviving the bubble popping, it’s no wonder there is still a lot of trepidation when it comes to real estate investing. But, we are here to assure you. Now is the time. Real estate is back and it’s safer than ever.
Here’s our favorite reasons to put our money in real estate:
- According to U.S. News, the tax breaks and deductions when investing in real estate is one of the biggest pros. With real estate, you have more deductions and breaks available to you than most investments. For instance, stocks require annual tax consequences. Even if you’re not taking withdrawals, you’re still paying on those dividends.
- One of our favorite facts, real estate investments have been THE best performing investments since Barack Obama became president for his first term. So, since the real estate bubble burst, it came back with a vengeance.
- Mortgage rates. While these numbers tend to ebb and flow, they are still in record lows. While our parents were paying 10-15%, in some cases, for their first homes. Homeowners today have interest rates at a fraction of that cost. That’s a huge change. But, this won’t be the case forever.
- Diversity. While putting all of your money into real estate isn’t the wisest choice, neither is having all of your money in the stock market. Real estate gives you that portfolio diversity that any wise investor desperately needs.
- Purchase prices are expected to rise. According to Realtors.com, home prices are expected to rise between 4-5% over the next year. Meaning, buying now will leave you with an even larger profit once sold.
Still want to talk through the numbers? Great! We have a team ready to walk you through the ins and outs of your next project. Give us a call today.
Let’s face it, not everyone can be a real estate investor. It takes some patience, hard work and big time dedication to make money. A very small percentage of real estate investors come out the other side of their flips or rehabilitation making the money they thought they would make.
Now, don’t get scared. There is a way to get a better running chance at successful flipping. While it may not work for everyone, we at CEB Capital believe it is extremely important to have a real estate mentor. If you are working with us on your lending, we pride ourselves in mentoring each and every one of our clients as much as possible. However, there are some clients that are easier to guide than others.
That’s why we’ve come up with this list of traits that our most profitable and easy-to-work-with clients have had that help get the job done.
- Open Communication: We’re busy. You’re busy. We get it. But, we need to have reliable ways to get in touch with you. We aren’t talking about magazine subscriptions. This is a very huge investment and there will be questions from both of us along the way. Make sure we know when you’re available and we will ensure the same.
- Technology: We’re not talking iPads on every table of your house. But, you will need: a mobile smart phone, a computer and a printer. This should be the bare minimum to be able to manage your business from home.
- Honesty. We’re not here to help you “hide” money. Real estate investment is a very serious project. There is no money laundering or gray area. We will not help you and, in the end, you will not help yourself if this is your motivation. Also, don’t lie to us. This is the surest way to end your professional relationship and possible other serious issues.
- Realistic Expectations: If we could turn your $20,000 house into a $1 million payout, we would be on our own island somewhere. But, seriously, you need to thoroughly analyze cost of investment from every angle to understand what your final “win” will be. We can help you run the numbers and show you in black and white. You just need to be prepared and constructive with the answer.
- Funds to Invest: We know, you’re coming to us for money and to do that you need money? The answer is: Yes. Investing in real estate is not as easy as investing in primary residence loans (i.e. the home you live in). You won’t get 95% of the cost of purchasing and renovating your home in the loan. You need to be prepared to open your checkbook as well.
Now, that wasn’t so bad? With these five character traits, you’re well on your way to becoming a successful mentee as well as real estate investor. Need to know how to get started? Please contact us and we can help you on your way! Happy flippin’!