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
  Vacant
  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

Tips
  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.