Thursday, August 2, 2007

Flipping Houses For Dummies

/by Roberts, Ralph R., 2007/

Signs of an Attractive Fixer-Upper

Located in desirable neighborhood with good schools
Ugly duckling (утенок) in the neighborhood
Priced to make money for rehabbing
Good bones – good structure
The return on investment is 300 to 500% of the cost of repairs
Taxes are owed on the property
Absentee (уклоняющийся) landlord
Probate (по завещанию) property
Foreclosure property
Owners facing bankruptcy
Owners getting divorced
The work needed is something you’re capable of doing yourself
Documents related to house turn up nothing unusual
Reliable title company verifies paperwork
Great floor plan
Rooms with character and class
Hardwood floors hiding under carpet
Roomy kitchen with an inviting layout
Roomy master bedroom
Two or bathrooms, at least one of which is roomy

Signs of a Potential Money Pit

Water stains on wall board
Water stains on ceiling and sheetrock sagging
Foundation building in or out
Mold in the attic
Mold on walls
Knob and tube wiring or aluminum wiring
Rotting windows with water stains down walls
Standing water in crawl space
Sagging floors
Sagging roofline
Neighbors from hell
More cats than humans in residence
Located in a high-crime district

House Staging Checklist

Staging a home can add 7-10% to the sale price.
Mow and edge the lawn
Sweep the entryways and lay down new doormats
Scrub the house right before showing
Hide family photos, religious icons, or political paraphernalia
Clear the clutter off the countertops
Furnish rooms with attractive furniture (no vacancies)
Keep the toilet seat cover down
Fling open the windows and turn on all the lights
Set out attractive bouquets of fresh-cut flowers

Cosmetic Job Checklist

Painless landscaping makeover
Trim trees and brush
Pull weeds and dead plants
Plant fresh shrubs and flowers
Declutter the yard
Mulch the flower beds
Mow and edge the lawn
Fill driveway and walkway cracks

Quick curbside facelifts
Remove any window air conditioners
Repair or replace windows and screens
Apply a fresh coat of paint (except on brick)
Paint the front door and threshold
Repair and paint or replace the gutters
Replace the front and rear storm doors
Replace exterior light fixtures
Replace the mailbox

Interior beauty tips
Thoroughly clean and scrub the house, including the windows
Replace all wall-to-wall carpeting (unless it’s covering a beautiful wood floor)
Apply a fresh coat of paint (neutral tones only)
Repair doors and doorknobs
Install new window blinds
Install or update light fixtures
Replace all faceplates (on light switches and outlets)
Replace heat registers
Install new smoke detectors

Quick and cheap kitchen makeovers
Install a new stainless steel sink
Install a new faucet
Replace damaged or out-of-date countertops
Paint or refinish the cabinets and install new hardware (knobs and hanles)

Bathroom brush ups
Install a new vanity (cabinet and sink)
Install all new fixtures
Replace the toilet seat
Replace the shower curtain
Caulk around sinks, toilets, tubs, and showers
De-mildew the shower or bath

Cellar sprucers
Sweep the cobwebs out of the rafters
Seal all cracks in the walls
Whitewash concrete or cement-block walls with a sealing paint
Paint the floor using a gray or beige
Stuff pieces of new insulation between the joists where the joists meet the outside wall


If you can’t get a house for 25-30% or more below what you estimate to be its market value, keep looking!
Holding cost (=mortgage interest + property tax + utility bills + maintenance cost) ~ $100/day
PURCHASE: Secure financing before you go house hunting.
REHAB: Jot down a list of improvements you want to make to the property when you first see the house, and schedule the work BEFORE you close on the purchase.
SALE: As soon as you know your closing day, determine the date on which you want to put the house back on the market.

Making Money in Any Market

Total investment = purchase price, closing costs, renovation costs, holding costs, selling costs
Market Total investment/Estimated resale value
Increasing < 80%
Flat <70-75%
Decreasing <60-65%

Maximum Purchase Price:

Estimated Sale Price: $______________
Closing Cost: -$______________
Renovation Cost: -$______________
Holding Cost: -$______________
Costs to Sell: -$______________
Maximum Purchase Price: = $______________

Tacking underlying problems first

1. Repair or erect the underlying structure
2. Install new ductwork. If needed, for heating and central air
3. Replace any water pipes or sewage lines
4. Run new electrical lines
5. Drywall or plaster the walls and ceilings, install flooring and cabinets, and perform any other final renovations.