Quote:
Originally Posted by H'ton
I am looking for a recommendation on a book, or books, that I can read that outline how to successfully purchase, renovate, and sell a house for profit.
Background:
-Looking for houses in Texas, specifically the Houston area.
-Architect that is currently finishing up an MBA program. I loaded up the back end of my program on real estate development but I am now looking for specific guidelines for flipping houses.
Thanks
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Here's what I have learned over the years of doing homes:
*Know your market better than your real estate agent, lender, appraiser etc.
*Form a very good relationship with a set of contractors that will stick with you and visit homes with you. Buy their kid a birthday present so they remember you.
*Call up local brokerages and tell them you want a young, new agent, preferably male, to help you in your search. This will be the only agent that will return your calls to look at dumpy homes when you call them at 8am on a Saturday and want to see them at 10.
*Befriend a couple lenders. Explain to them
exactly what it is you're planning on doing so they can help. Don't think you're doing them any favors by not being upfront with them.
*Don't work on a home before you close.
*Outline all your expenses on a spread sheet. This will help you budget your next project.
*Budget the property as though everything is getting replaced, even if it is a relative small job. HVAC units die even though they look healthy.
*Before you submit an offer, knock on a couple neighbor doors and ask them about the neighborhood and the history of the home. In my experience, most are overwhelmingly ready to talk about this 'eye sore' and how they want it fixed up. This is also when you learn if the neighbors are crazy or not.
*Don't expect sympathy when you speculate on a neighborhood and things don't work out as planned.
*When you're new, don't rely on a gut feeling. Do some financial modelling and see if they project even makes sense.
*Know what you're going to do with the home when finished. Flipping, short term hold, short term hold with leasing, long term hold with leasing, etc. You need a game plan before you start as it affects the house you buy and what you pay.
*Don't get caught up buying every expensive item that you would put in your ideal house. There is no quicker way to crush margins than by spending $10/ft on tile when $1/ ft will be fine or $4000 in countertops when laminate is fine. You're trying to sell this property and come out with some cash in your pocket. I would rather sell a simple home to a buyer excited to see a dishwasher than a very expensive and ornate home that has a tiny pool of buyers.
*Don't use that same rookie agent to sell it. It will take much longer to sell than with a pro.
*Have a plan b, c, d and e if things go awry. Literally sit down before you go under contract and outline every contingency you can think of and what you'll do in that situation. What happens if an appliance breaks, if I get a stop work notice, if I hold the property for longer than I expected etc etc.
*Unless you are a highly experience construction manager or foreman, don't oversee your own project. And even if you are, don't oversee your own project unless you have several months off. This is also where I recomend hiring contractors to do the work. I've yet to meet one "developer" that hasn't overestimated their construction expertise, myself included, which causes major delays and setbacks.
There's more, but part of the fun is learning it on your own.
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