Introduction to Real Estate Investment - Flipping, Part4

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Okay, let’s say we have found a property, with a good profit margin.

We have made an appointment to see the property. When we go through the home, we find its a 3 bedroom 1 bath brick home. It has a nice yard, off-street parking and in a quiet neighborhood.

The home is a HUD foreclosure, asking price $52,000. We know from past home sales in the area, that the market price runs about $125,000. Taking into consideration, the current market, we will estimate the home selling value at around $110,000.

From our home inspection, the home will need the bathroom remodeled, a new roof and some cosmetic repairs, paint and floor coverings.

Now, for those that have no idea of how to price these things, you would need to refer to a contractor, that could give you a price. Since I already do contracting, I will already know the approximate cost of doing these repairs. Let’s add this up and see what we come out with.

Asking price: $52,000

Market value: $110,000

Cost of repairs: $16,550*

* Roof, $2800, bath remodel, $2300, wall repairs $750, prime and paint $2200, floor coverings $3500, incidentals $5000.

Taxes: $1200

Utilities: $500

Closing costs: $1300

Grand total Gross Profit: $ 38,450

While there are some other smaller costs here and there, they would be covered under the incidentals.

Now, do you think this is a profit you could live with? I know I could. Depending on the financing you use, being a loan, investors or otherwise, there share would come out of the gross profit amount.

The point here is that even if we had to resell this property at a 20% discount, we would still come out making money. These are the safe haven properties you want to target. Making your bottom line too thin can get you into trouble if unforeseen things come up. You want a nice, safe amount to work with. This way you have room to give and take.

So lets say a property doesn’t want to move. What are some options? One would be renting. Another could be lease optioning the property. I have found, that if the market isn’t buying, the amount of renters goes up. Lease optioning can be a very lucrative way to sell a property. You get the price you want, while receiving a large amount up front, and you get to hold the deed. The, depending on the term of the lease option, you will get the rest of the payout at the balloon date, while receiving payments in between. If they default on the lease, you recover the property and sell it all over again, while already being in profit.

The options are endless with real estate. No matter what the market or the economy, real estate is always your safest investment.

With that said, I would like to open up an opportunity for those of you that have been reading my posts. I am currently looking for investors, that would like to have a solid investment in real estate. My proposal is simple. I do all the work and help your dollars earn more.

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I am looking for 10-15 investors that would like to share in this profitable business. I have the experience and the contacts to do this business. I have 12 yrs experience in this field and my real estate agent is chomping at the bit for me to get going again. I would like to grow this business into a future powerhouse for those that want to participate, but needless to say, this isn’t a $100 investment opportunity.

With the uncertainty of the stock market and varies investments around the world, I can think of no other that can beat the safety and consistency of being invested in real estate.

If would would be interested in a solid investment, with solid returns, backed by improved real estate, then this might be for you. If you are interested in more information on this outstanding opportunity, please feel free to email me at JRMulhollemEntLLC@peoplepc.com

Thank you all for your interest. If you would have question about flipping properties in general or would need some advice, please don’t hesitate to ask. I would be happy to help in any way I can.

Until next time………

John

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