Let’s call him John. A bright and hard worker just 
trading time for dollars at his regular job. His first
house flipping experience could have been a lot better.
John was watching “Property Ladder” on the A&E network one day and got the bright idea to flip a house himself. After all, those people were making money. A complimentary show “Flip This House” confirmed that money could be made, lots of money.
If you haven’t seen Property Ladder, it’s a television show that features first time home flippers. Usually in that show the inexperienced flipper, egged on by Kirsten Kemp, make almost a year’s salary or more by fixing up an old house and selling it. Kirsten Kemp is a veteran of flipping houses and is a bit too pretty to be mistaken for Bob Vila.
John figures that the people featured in these shows are not all that bright and certainly he could do as well. With a bit of nervousness John put a 10% down payment on a home that needed repairs and begin the repair process. Or did he?
The first thing John did was to ponder what really needed to be fixed and if he needed a contractor to do it. Two weeks went by.
After getting several bids, John chose a contractor to come in and totally renovate the property for $11,000. That included paint, carpet, appliances, and a new wall to turn an open area into another bedroom. Once it was agreed, the contactor was to start working. As luck would have it, the contractor had some unfinished jobs and couldn’t start for another two weeks. John was patient, after all it was going to be a great flip and he was going to make money. It was just another $800 for an extra month, no big deal.
Once the contractor started he stared with a bang. Just like on the show “Flip this House” a big yellow dumpster was deposited on the lawn and a crew started ripping out wall paper and junk from the house. That demolition lasted about two days.
The next thing this “go getter” contractor did was to disappear for another two weeks. The excuse: Men had quit and another job was pushing them behind.
To make a long story short, the contract took 8 months to get nearly complete, and then John pulled the plug and fired the contractor.
John paid others to come in a finish what was started. He had now 9 months of house payments into the project, 10% down, and construction costs.
After the house was ready, John listed it with an agent, and it sat another month. John lowered the price a bit with the prompting of the agent, but got cold feet after two weeks and wanted to raise it again. Too late! The house had a full price offer. Good news, sort of.
All said and done John made a little money and got a whole lot of experience. It was a flop, but at least he didn’t lose money.
Let’s review what John, now wiser, could have done differently on his first flip.
Firstly, putting 10% is ok, but not ideal. John should have used private money or have financed the property at 100%. That money could have been used for fix up rather than being tied up in the property.
Second. John waited too long to decide what he was going to do. He should have known before he bought the property what his plan was. This would have saved two weeks at least.
Third. While John got a referral for the contractor, he should have gotten more bids. A deadline for the completion of the job, with penalties, should have been written in the contract.
Fourth. John waited too long to fire the contractor once he knew there was a problem. He was afraid that he would still owe the full amount if he terminated the contractor before the work was done. A proper contract would have prevented that fear.
Sixth. John listed with a realtor too early. The property should have been for sale by owner from day one and John should have tried to market the property himself.
Seventh. The price was set, and then changed too quickly. Better marketing would have netted John with a nicer profit. John should have known the selling price even before buying the property.
A lot of mistakes were made, but John still made a slim profit. All is well that ends well, but you don’t need to make these same mistakes. Learn from John.
Scott Ames is publisher of BirdDogCity.com a website dedicated to those interested in flipping houses for profit, either retail or wholesale. You may visit the site at http://www.birddogcity.com
Article Source: http://EzineArticles.com/?expert=Scott_Ames
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What is pre-foreclosure, can they be found and how can one profit from these opportunities?
Pre-foreclosure is the time between after the lender has notified the home owner they are in default of their loan and up to the point the title of the property has been transferred to the lender.
Yes these pre-foreclosure opportunities can be found or located since many lenders make the information known early on in the foreclosure process. In fact, laws often times require lenders to make public foreclosures. Plus, lenders make their money selling loans, not properties, and therefore wish to avoid having loans default to the point of complete foreclosure.
This is where the opportunity for profiting on your part comes into the picture however; you will need to find these pre-foreclosures. And one of the first places would be by reading your local newspaper. Learn the day when ‘public notices’ get published and faithfully read that day’s paper.
There may also be county provided listings of foreclosures too. Make a phone call to the assessor’s office in surrounding counties; they will be able to tell you if this is the case. Another advantage to a list of this sort is getting the actual physical address to properties on foreclosure notice. This will enable you to make a drive past the property in order to decide whether or not you wish to negotiate buying from the homeowner.
Properties in foreclosure usually mean owners are motivated to sell in order to avoid further embarrassment in their situation. This is to your advantage and may be able to negotiate a lower buying price. As a house flipper this means higher margins when you find a buyer. Yes you can profit from pre-foreclosure.
However, you will need to do some extra work to find the properties. Some of that work is described above. It’s really a matter of doing your homework rather than any physical labor when finding pre-foreclosure situations. But there are some online databases, which might help you out too. These would require buying a membership in order to using the information available but this can be insignificant to the profit potential of house flipping.
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The world of real estate investment does not have to mean waiting years or even decades for the value of your property to increase. No, it seems that now you can easily income quickly using real estate wholesaling strategies. This means that you find a house below market value and you sell it to another investor for a price still below market value, but more than you bough it for, thus yielding a tidy little profit for yourself.
The one question is, where do you find foreclosures and how do I buy a house once I’ve found these foreclosures?
In recent months, the real estate industry has been taking heat because lenders have been giving mortgage loans to people who had no intentions of paying those loans back. What this does is leave a lot of people who are ready to foreclose, auction their house, and attempt to pay back the bank.
That’s where you come it. You want to get in there and contact that home owner before they sell that house. They will do whatever they can to unload this burden and you can be the one to help them do it. With one quick call you could be on your way to owning your very own “below market value” home.
It’s not as simple as this and this strategy of earning income using foreclosed homes takes time and experience to perfect, but it can be done and it will help you earn income. For many the most difficult aspect of this kind of house flipping is finding the perfect wholesale house. When looking for a tool to use it is recommended that you look at how many they foreclosures they have in their inventory. Also, make sure they offer a free trial so you can try their service before paying a monthly fee which you will surely be able to pay off.
One of my favorite house flipping tools can be found at: http://houseflipblog.com/freetrial
Please visit our free foreclosure tool page and take advantage of it.
http://houseflipblog.com/freetrial
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One of the most important tools you will need to find foreclosures in your area can be found at: http://houseflipblog.com/freetrial
Basically, when you are looking for a tool to search for foreclosures in your area, make sure they let you test the tool out. When I did my first search using the tool, I was able to find great pre foreclosure homes around the corner from my home. They also allowed me to find contact information for those people, so I was actually making deals and earning money while the tool was still free.
You also want a service that offers everything your searching for to help you close deals. Some tools do not offer you the home owners contact information and that is very important. Most tools give you contact info, but some don’t so don’t invest in any of those tools.
For more information about house flipping please view our youtube video: Click Here to View Our youtube video
Again, my favorite tool can be found at: http://houseflipblog.com/freetrial
This is a great preporclosure finding tool
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