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Old 02-25-2013, 04:25 AM   #13
David557
 
Join Date: Feb 2013
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You can lower the realtor fees by listing with a flat fee MLS service for $200. I would offer a 4% commission on the house to attract realtors (instead of offering the standard 3%).

I also highly recommend advertising an open house house in your local paper. On a nice sunny saturday or sunday you'll have 5 or 6 people drop by, one or two of which may be serious & interested buyers.

I would also list the property a little below market value.
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Old 02-25-2013, 04:32 AM   #14
David557
 
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Flipping houses is a TON of work, ESPECIALLY on your first few houses, even if you have a contractor doing the repairs for you. Expect 80-90 hour work weeks.

Implementing efficient systems is key. Otherwise it's blood, sweat and tears.

I'd be attending your local REIA if you aren't already.
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Old 02-25-2013, 04:38 AM   #15
David557
 
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As for unexpected repair expenses, I suggest:

You spend 5 hours or so going through the house, room by room. In each room, write down everything that will need to be purchased and installed to bring the room to pristine condition.

Then do the same thing in the yard and for the exterior of the house and any sheds.

then go to home depot, and find the SKU #s and prices of everything that on your list.

Then add up all your material costs. Multiply by 2 to find what you'd have to pay to have a contractor do the job. (contractor labor should run about the cost of materials)..
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Old 02-25-2013, 04:44 AM   #16
David557
 
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> what expense(s) am I forgetting to account for?

6 months of taxes
utilities (lower in spring and fall, higher in summer and winter)
insurance

I don't add a 20% cushion to my repair estimate once I have the house under contract and I have hours and hours to inspect it.

But I do add 20% when I use a quick estimating sheet that allows us to estimate repairs using forumulas and rules of thumb.

Since I buy at 65% of after repaired value minus repairs, it's hard for me to lose money on unexpected repairs.
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Old 02-25-2013, 04:48 AM   #17
David557
 
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If you want to avoid paying taxes on your short term capital gains, the way to do it is to open a self directed IRA with Equity Trust (they're the biggest and most respected player), put $500 into it, then have a check written from your IRA to pay for the down payment.

Or you and your partner can both open your own IRAs and both have checks written to split the down payment.

Then your capital gains all go right back into your IRAs tax free.

Take advantage of this while you can. Something tells me with all the nonsense going on in washington, flipping houses tax free in IRAs won't be around in 5 years.
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Old 02-25-2013, 04:53 AM   #18
David557
 
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I'd also start looking into using hard money and private money lenders to fund your deals. Don't pay more than 14% interest to fund your flips, though. Although it's better to partner 50-50 with the guy financing you than to let a deal go because you don't have the money.

I'll happily pay 12% all day long.

Once you've got the business figured out, the bottleneck becomes funding your deals. Initially the bottleneck with be finding deals.

Banks are slow, stupid, and unreliable. Having money ready to go at the drop of a hat gives you a lot of confidence talking to sellers.
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