Flipping Houses and More

Aren’t you amazed at all of the real estate shows on TV nowadays, such as Flip This House, Property Ladder, The Real Deal and others? I am especially intrigued by the fact that almost all real estate investing techniques being espoused on TV are those that focus on flipping or quick turning of properties. This strategy focuses primarily on locating properties at a steep discount, often because of either a distressed seller or distressed property, then fixing it up, modernizing the property, thus increasing the equity position and then selling to an end user for a profit. This has traditionally been a mainstay technique for real estate investors and in a sellers market, is a great way to make a big profit fast. But there are some things I’d like to discuss before encouraging a brand new investor to start with this technique, or even promoting this as a primary strategy for today’s seasoned investor.

The first thing I want to draw attention to is the main issue associated with any quick turn or quick profit transaction. Let’s suppose that a savvy investor was able to acquire a $200,000 home for $130,000 (that’s 65% of the Fair Market Value). This leaves a nice $70,000 for project costs and profit. So let’s discuss costs. There are fixed costs and variable costs. Fixed costs will be the same regardless of how quickly you sell this property and variable costs depend on factors such as actual sale price, time for rehab and time on market, etc.

Let’s say that this property cost $15,000 to rehab over a period of 3 weeks, approximately $5,000 for buy and sell costs – excluding realtor fees, and let’s say $5,000 in holding costs if the property can sell within 90 days. So far, that takes our profit pool down to $45,000 – that is pretty exciting.

Now, there are a few decisions to be made. Should you use a real estate agent or not? Should you price your home at the Fair Market Value or less? Let’s say that the speed at which you sell the property depends on whether you have it listed with an agent. So, each month that goes by will cost you around $1,500-2,000 per month for this property, once you figure PITI, utilities, landscaping, cleaning, etc. In today’s buyers market, not only are the investors looking for a bargain, but so are the home-buyers, so you should be around 3-5% below the FMV for a faster sale. So if you list with an agent and price your home right to sell, then you are looking at another $15,000 off the profit, leaving $30,000 in the pot. If you choose to work to sell the home yourself, and the home stays on the market for 6 months, you will still pay at least another $5,000-6,000 in additional holding costs, and would be motivated to take an offer of $5,000-10,000 off the fair market value. You’d be in the same position as with an agent, but over a longer time.

Finally, out of your $30,000 profit, which always looks great on TV and when you leave the closing table, don’t forget that you will have to pay taxes on that sale, and for all sales made in less than 12 months, will be taxed at the maximum capital gains rate that is close to 40%, another $12,000 expense off the profit. So for all that work and roughly 3 months of work, you have a net profit of $18,000, if nothing goes wrong, the rehab stays in budget and on schedule, your retail buyer can get financing and you get a reasonable offer within 90 days or less.

Let me just throw in a mediocre scenario to open your eyes a bit. Let’s say that it takes you 6 months to sell your property instead of 3, increasing your holding costs another $5,000-6,000. Let’s say that your rehab schedule drags out from 3 weeks to 6 weeks, adding another $5,000 in expenses. Let’s say that your only contract offer is $185,000 instead of your target of $190,000-$195,000. You will look at a profit of $10,000 or less after taxes. Does that sound as sexy as the TV shows make it look?

Now I have not even gotten into worst case scenarios, nor do I want to scare you in any way. I only want you to look realistically at the current market. Currently, everyone is looking for bargains, homeowners want a 5-15% discount, and investors want 30-50% discounts. And let me one who lets you know that you will not make money on every deal you do. Plan to be okay financially with losing money on 1 out of 10 deals and breaking even on 1 or 2 deals out of every 10 you do as an investor. This way you will not be devastated when that happens.

So stay tuned to the next group of articles as I discuss wholesaling, options strategies, lease-purchases, multi-family deals, land development, setting up your power team, tax strategies, asset protection, marketing your business and more.

Happy Investing – Charles Dudley – http://www.reimostwantedsecrets.com/

PS – Feel free to join me every Monday at Noon eastern for a study in true prosperity – call details are at http://www.trueprosperity.com/

PSS – Remember to join our free “fire my boss” training this Monday night at 9 pm eastern by registering at www.reimostwantedsecrets.com/firemyboss/call

Finally - Don't miss out on my Teleseminar Secrets VIP Coaching series that begins in 1 week - sign up at www.reimostwantedsecrets.com/35kin30days

And get in on the last day for our How To Stop Foreclosure eBooksale at www.reimostwantedsecrets.com/product/stopforeclosure

Secrets to Hidden Cash in Real Estate Markets

Ever wanted to know how some real estate investors make money only once in a transaction and how others make money literally 5 to over 10 ways on a single real estate deal? Well, this Saturday, I will be revealing one of the most powerful profit streams on real estate transactions today. In fact, I will be showing newbie investors and seasoned investors alike how to create an infinite ROI. That means I will be describing just one of the handful of techniques that I use to generate income with no cash in a deal and using none of my credit. And it gets better.

What if I could show you a way to create a profit without completing a real estate purchase or sale? This is one of the hidden secrets to creating profit streams within the real estate market, without having to even negotiate a real estate contract, take any risk, yet create a powerful profit for yourself and your customer.

You see, in business as in life, you get paid in direct proportion to the problems you solve. That is one of the key tenants of being a real estate dominator. You ability and capacity to solve problems. Solve the right kind of problems for your customer and you will ultimately solve your own problems. And of course, as you learn more of these secrets to hidden cash and profits within each real estate deal, and learn how to leverage multiple profit centers in each deal, you will maximize your time and income. It’s time to work smart, not just hard.

I don’t care if you’ve never done a deal, or have completed hundreds, you need to spend some time with me this weekend. I have prepared several amazing training calls for you and the Real Estate Investing’s Most Wanted Secrets! community, and those elite few within the Real Estate Dominator Dream Team.

Consider this a mini-conference for your edification and learning.

Call #1 is on Saturday with banking and mortgage specialist, Tony Lee. He will be teaching how you can become the “go to” person and generate additional profit streams out of deals, even one that you don’t complete. This is a powerful, business altering call you won’t want to miss. Be on time, at 12 Noon Eastern, by registering at www.reimostwantedsecrets.com/debtfreelife/call

Special eBook – Ever wanted to understand the mystery and confusion of foreclosures, without having to go to real estate school, or getting a Ph. D. in Finance? We are offing one of the best, most concise books written for folks facing foreclosure, pre-foreclosure, or investors interested in breaking into the profitable foreclosure and pre-foreclosure niche. Get the insider secrets of Foreclosure and How To Avoid Foreclosure with this eBook, which we’ve drastically marked down for this weekend only. www.reimostwantedsecrets.com/product/stopforeclosure

Call #2 will be this Sunday at 8 PM EST with several panelist and a mystery guest (or 2), so just be sure to make your calendar currently and watch your email or this blog later Saturday for registration specifics. This call will be limited to invitation only guests. Be watching for your invitation.

Call #3 will be this Monday. My next guest on the latest REI Most Wanted Secrets! Tele-training series is going to rock your socks off! I am so excited about this guest – but I want you to be as eager to hear about them as I am to share them with you. Go ahead and mark your training calendar for Monday night at 9 PM EST – details about this will be following in Saturday’s posting and email.

I want you to know that I am committed to helping you obtain your personal freedom through real estate investing and internet marketing, so that you too can become a real estate dominator. Do not miss out on all the quality training we are providing and the best continuing education materials that are available.

Also, remember that I am available for live mentoring and coaching, with scalable programs and free consultations as my schedule allows. I believe in you and appreciate you big time!

Now go get in for Saturdays call and the special eBook offer before they are gone and I will see you then.

God bless!

Charles Dudley
http://www.reidominator.com/

PS - Remember, Call # 1 this Saturday at Noon EST - Hidden Profit Centers in Real Estate Investing Deals www.reimostwantedsecrets.com/debtfreelife/call

And the How To Stop Foreclosure eBook special offer is at www.reimostwantedsecrets.com/product/stopforeclosure - (hint: it is steeply discounted just for our members)

Real Estate Is Dead

Have you heard the latest headlines? Foreclosures are at an all time high. The secondary financial markets are sunk. Banks are now requiring crystal clean credit and 10-20% downpayments for mortgages. And what about investors? Home flippers and rehabbers are getting stuck with properties longer than ever now, holding properties that once could be sold in 30-60 days are now taking 180 or more days to sell. Otherwise they are having to sell at deep discounts, making a fraction of what they used to just a year or two ago. And isn't everyone trying to go after auctions and pre-foreclosure leads these days. Isn't the wholesaling market saturated? What should someone do if they want to try their hand at being successful in real estate investing in today's market? And the stock market doesn't offer much of an alternative today either. Is it truly make money investing in real estate today, quickly and with low risk?

Well, I have been studying various popular real estate investing strategies over the last 2 years and have discovered some things that are very eye-opening. Some disturbing and some refreshing. And as I see it today, the techniques of investors from yesteryear are going the way of the dinosaur. Yes, some basic real estate principles will always work and can help you make money, especially if you have good credit, some extra cash to invest up front, and are willing to allow time to realize significant profits from your investments. But, if you are like 95% of people interested in getting into real estate, or those who have been at it for a while, but have not been able to experience the big financial breakthrough yet; you need to be able to do deals without using your own cash or credit, without risking your life savings, 401K, or maxing out your credits cards.

What I want to do in this next series of articles is discuss some pros and cons of the various investing methods being promoted today. I also want to share with you why you must be online as an investor and how you need to do that. Why I believe that cookie-cutter or replicated websites do not typically best serve their clients - but more offer a false hope. I also will dispel the myths of the foreclosure investing gold rush, the wholesaling bubble, and what methods and strategies you really should be using to create quick and longer term wealth and profits as an investor. Finally, we'll even discuss how and why you should protect your assets and income, why you do want to use land trusts, LLCs and Corporations. I'll explain why you should establish corporate credit, and why you should invest in your continuing education, but what criteria you should use to evaluate what a good use of your training dollars should be and things to look out for.

In the end, I believe that anyone who is willing to plan their work and work their plan, who will take sound advice and not make excuses, keeping a positive attitude and not give up when things may look tough, that person will be a real estate dominator. A real estate dominator is someone who establishes a business system, utilizing quick cash methods and internet marketing, producing repeatable and predictable results and profits from their investing efforts. So watch for the next article when I review some of the latest strategies and what works and what doesn't. I will help get you over the hype and focus on what works. Until then, Control The Outcome! Charles Dudley www.reimostwantedsecrets.com