get in the flippin game flipping homes presentation - joleen halloran keller williams

Get in the “Flippin” Game!

Presented by: Joleen Halloran, Keller Williams Platinum Partners

Sponsored by: Midwest LendingThe Bug ManChicago Title

Are you a flipper?

• What is your motivation?

• What is your skill level?

• What do you want to get from this experience?

• What is your patience level?


Benefits of Flipping

• Profits

• Creative License

• Manage the job your way

• Fun!


Risks of Flipping

• Financial Loss

• Stress

• Physical Injury


Mitigation of Risks of Flipping

• Financial Loss

(research properties, sound investment decisions based on facts, good marketing, cost analysis, contingency planning)

• Stress

(planning and scheduling, contacts and networks, time off, good support system)

• Physical Injury

(contractors, insurance, take care of yourself!)


Main Components of Flipping

• Financial

• Property (Buying and Research)

• Execution of Reconstruction

• Selling


Financial Component

• Cash

• Loans (Construction and Hard Money)

• Home Equity

• Investors


Property Component

• Finding the right home

Find a realtor that understands your needs

Understand your limitations on re-hab skills or costs

Location, Location, Location

• Knowing your market areaBe comfortable and confident with your target area

Utilize realtor provided comps to verify your plan

• Determining the offer and selling price

Estimate your costs and your desired profits

*** Don’t forget to include your quiet costs (holding costs, cost of money, cost to sell)


Check Out TheseLocal Opportunities

• Great Buy 130K - HUD

• Great Buy 88K – Fannie Mae

• Great Buy 68K – Great Flip MLS # 16443211 1003

SW Lea $68,000 3 bd/2ba



Bridges Company -- Offer Calculator Finished Price 9 NW Noel 119000

Materials Cost 22800Dumpster 600

Garage Doors Replacement 500Carpet (Approx 2.25 sp ft X 400) 800Tile (1.29 x 1000 sq ft downstair) *Includes grout and underlayment Includes Kitchen, 2 bathrooms) 1500Wood Floor in Living Rooms (spprox 2.79 sq ft X 350) 500Deck 400Exterior Repair 500Guttering 0Plumbing 1300Electrical 1900Knock Down Ceiling Application 400Kitchen Cabinets and Hardware 1800Equipment Rental/Finish Existing Floors 200Doors (1 French@299 + 2 or 3 replacement) 600Concrete Work 2500Paint 1500Lumber (misc updates) 1000Misc Hardware (vents, knobs, ect) 250Drywall and supplies 2500Counter Tops 700Hot Water Heater 0Furnace 0Window Glass Repair 1800Roof 0Permits/Inspection 0Utility Bills 3@100 0Air Conditioning Unit 0Lighting 350Appliances 1200 Total Rehab Cost (inc. labor) 30100

Total Holding 3400Labor Cost 10 weeks @ 700 7000 Total Profit 25000

Landscaping (Fencing, Flowers, Seed, Misc) 300Realtor Fee 0 Blue indicates areas for improvement in profits. Mortgage Payment 4 pmnts @ 550 2200Contingency costs 0Closing Costs 1200Profit 25000

Offer Price -60500Actual Offer Price 61000

Difference to make up in budget 500

(+ = amount that needs to be taken out of budget)(- = amount that can be added into budget)

Finish time 10 weeksMarket Time 14 weeks

Execution Component

• Make your plan

Define your flow and understand contingencies and constraints

Determine task schedule (don’t over commit)

Plan your supply purchases

• Understand your money flowBe aware of constraints for draws to pay contractors or purchase supplies.

Always keep an eye on your budgets

• Adjusting your plan

Adapt your plan for budget or schedule to keep on target


Execution ComponentExpense Tracking Worksheet


6/20/2010 Joleen Halloran -- 9 NW Noel Lee's Summit, MO 64081 Loan # Beginning Balance 35600

Date Actuals Sales Tax @ .0766 Actual Cost Category Description Purchased At

10/20/2009 $1.41 0.11 $1.52 Plumbing Plumbing Supplies Home Depot

10/16/2009 $20.78 1.58 $22.36 Lumber Misc. Rough In Supplies Home Depot


10/16/2009 $325.00 0 $325.00 Trash-Clean Up Dumpster Sunshine Disposal


11/5/2009 $279.00 0 $279.00 Labor Labor Costs Paul Cotton

11/5/2009 $3.99 0.3 $4.29 Lumber Misc. Rough In Supplies Owens Lumber

10/27/2009 $258.03 0 $258.03 Lumber Misc. Rough In Supplies Home Depot



10/22/2009 $350.00 0 $350.00 Labor Labor Costs Jon Renfro

10/22/2009 $474.00 0 $474.00 Labor Labor Costs Paul Cotton

10/22/2009 $200.00 0 $200.00 Labor Labor Costs Greg Belcher

Execution ComponentSummary Budget


CONSTRUCTION COST BREAKDOWN

Owner___Joleen Halloran___________ Job Location:___9 NW Noel Lee's Summit, MO 64063

Contractor:___Greg Belcher_____________ Contractor Phone:____816-305-4397________________

Labor and Materials Estimate Suppliers and Contractors Actuals Variance Amount (+/-)

1

Plans and Specificiations 0 0

2Permits and Survey 0 0 0

3

Excavating-Backfill Grading 0 0

4

Piers Footings Foundation 0 0

5Waterproofing 0 0

6Steal and Iron 0 0

7Lumber 1000 1716.88 -716.88

8Carpentry Labor 0 0

9Trash-Clean Up 600 461.47 138.53

10Roofing 0 0 0

11

Brickwork, Block or Stone 0 0

12Guttering 0 0 0

13Cement Slab and Walks 2500 0 2500

14Plumbing 1300 2194.13 -894.13

Execution ComponentFinancial Analysis


Joleen Halloran - Loan #87241

9 NW Noel, Lee's Summit, Missouri

Title Budget AmountLoan Closing - Funds

Available (9/30/09) Draw #1 (10/5/09) Draw #2 Interest Payment #1 Interest Payment #2 Draw #3 (12/11/09)

Rehab Costs $ 30,100.00 $ 6,500.00 $ 6,500.00 $ - $ - $ 6,500.00

Interest Carry $ 5,500.00 $ - $ 302.03 $ 303.25

Contingent/Other $ -

Total: $ 35,600.00 $ 37,564.62 $ 6,500.00 $ 6,500.00 $ 302.03 $ 303.25 $ 6,500.00

Remaining Funds: $ 37,564.62 $ 31,064.62 $ 24,564.62 $ 24,262.59 $ 23,959.34 $ 17,459.34

Loan Balance: $ 40,724.38 $ 47,224.38 $ 53,724.38 $ 54,026.41 $ 54,329.66 $ 60,829.66

* Loan can be advanced up by $78,289 per loan commitment.

* Draw #1 was for $7,000 which included $500 reimbursement of down payment and $6,500 for rehab.

Selling Component

• Begin your marketing early

Stick our sign and flyers in the yard as soon as you can

Staging

Emphasize your “Wow” factors

Place the time and effort to create curb appeal

• Don’t wait – call your realtorDetermine your timing to get house on the market


•


Ready to Start? Checklist

Do your homework (money, properties, products, techniques, suppliers, contractors)

Before you begin – research and feel comfortable with your resources and methods.



• Make your plan and set your limits – set objective goals

• Obtain your financing• Get a realtor (hint hint – I am a realtor)• Look and procure your property• Put your budget and schedule together• Execute your flip project



• Start your marketing• Sell your home• Celebrate and start planning your next

project!!


General Tips and need to know facts

• Be Prepared to work hard• Don’t forget that the money is made when

you buy the property – not when you sell it.

• Include your “Wow” factors into your budget and your plan

• Re-hab appropriately to your price point!!



• Develop a strong network of contractors, suppliers and support services

• Add value to your property any time you can (additional bath, open up dated floor plans)

• Look for easy updates that add value and beauty - (fireplaces, cabinet facing, knobs and pulls)



• Expect to run into unknown issues• Keep your cool• Don’t forget the importance of curb appeal

(flowers and shrubs are cheap and the payback is big)


Distressed Property

Rules: Traditional vs. Distressed

• They’re different!– Price– Speed– Decision-Making– Communication– Negotiation

Knowing these differences will give you clear

expectations—and help you get what you want!

Rules – Price

Traditional

• Seller motivation and emotion play a big part

REO• Priced to sell by

institutions with no emotional stake

Short Sale• Priced by listing agent

and owner; bank must agree to this price

Rules – Speed

Traditional

• Normally proceed with all due haste

REO• Offers get quick reply• Last-minute closing

delays common

Short Sale• Slow offer response • Acceptance brings fast

close

Rules – Decision-Making

Traditional

• Homeowner/seller decides

REO• Bank or lender decides

Short Sale• Seller decides what

offer to accept; lender must approve

Rules – Communication

Traditional

• Good communication expected but not always practiced

REO and Short Sale

• Banks, listing agents pressured by volume—hard to reach

• Buyers must insist on—and provide—great communication

Rules – Negotiation

Traditional

• Negotiation common on price, condition, and terms

REO and Short Sale

• Some negotiation possible with Fannie Mae REOs

• Short sale negotiation rare—properties sold “as is”

Seize the Opportunity

Six Realities Define Your Opportunity1. Buyer’s market—capture value now!

2. Mortgage rates are great, but for how long?

3. Affordability—home buyer dollars going further

4. Number of foreclosures remains high

5. Foreclosure inventory nearing peak

6. All parties motivated to sell

Percentage of buyers who bought distressed property tripled from 2008 to 2009.

Opportunity: 203k Loan

FHA-backed Home Purchase and Renovation Program

– Purchase price and documented repair/rehab costs bundled in one loan

– One set of closing costs– 3.5% down; can be gifted– Eased qualification standards– Loan limit range $271k-$730k– Possible energy-efficiency add on

Foreclosure Trends – Moving Up!

What’s Stopping You?

What have you heard that concerns you about buying?

Ignore the Myths

1. Myth: Foreclosures are mostly low-end, in poor condition, and in bad areas.

2. Myth: Foreclosures have lots of title problems including liens.

Ignore the Myths

3. Myth: The best foreclosures get soldin bidding wars.

4. Myth: Loans are hard to get for foreclosures.

Ignore the Myths

5. Myth: Foreclosures take along time to close and aren’t worth the wait.

6. Myth: The best opportunities havealready been snapped up.

Be Ready to Go

1. Motivation

+

2. Preapproval

+

3. Expert Advice

= Success

Be Ready to Go

1. Strong Motivation

Know your “Big Why”

Have criteria set and be prepared tomake decisions.

Be ready to communicate clearly at all times.

Be Ready to Go

2. Preapproved Wallet

Whether all cash or financed, solid buyers are the winners in this market.

Be Ready to Go

3. Expert Distressed Property Agent on Your Team

In this market, more than ever, you need great representation!

Quality advice counts.

Let’s Get Started—Now Is the Time

What Questions Can I Answer?

Name:

Phone:

Email:

get in the flippin game flipping homes presentation - joleen halloran keller williams

Real Estate

supplies home depot1152009

supplies owens lumber

purchase supplies

cost analysis

cost ofmoney

quiet costs

total rehab cost

total holding3400 labor