Chapter Summaries
Flipping Houses For Dummies
By Ralph R. Roberts with Joe Kraynak
Part I: Laying the Foundation for Successful Flipping
Chapter 1: Wrapping Your Brain Around the Idea of Property Flipping
This overview of house flipping steps you through the process—from discovering distressed properties to financing the purchase, negotiating a deal, renovating the property (or not), and selling (or renting) for a profit. Discover the difference between legal and illegal house flipping and find out how to flip houses the right way, to stay out of trouble.
Chapter 2: Do You Have the Right Stuff for Flipping?
Do you have the guts, gusto, and resources to flip houses? This chapter helps you answer that question by leading you on a journey of self-exploration to determine whether you have the right stuff—time, money, organizational skills, tenacity, decisiveness, management and communication skills, imagination, endurance, and a sense of humor.
Chapter 3: Devising an Effective Flipping Strategy
Before you even consider making an offer on a home, you need to know how you're going to profit from it. Are you going to buy it at a bargain and try to resell it immediately, do a quick makeup job and resell it, do some major renovations, or use the property as a rental? Don't buy a property before reading this chapter.
Chapter 4: Building Your Dream Team
At first glance, the flipping concept can seem daunting. You have to know how to find a house, finance it, fix it up, and then sell it all on schedule and typically within a tight budget. The good news is that you don't need to know much, as long as you know where and how to find good help. With a list of contacts, a phone, and some people skills, you can delegate your way to a successful flip. Discover the benefits of building a strong, professional team, and then start drafting your key players.
Part II: Fiddling with the Financials of Property Flipping
Chapter 5: Guesstimating Your Potential Profit
You make your money when you buy a property, and you only make money if you buy, renovate, and sell a house for significantly less than what you know you can sell it for. This chapter leads you through the process of estimating your profit before you buy, so you can be relatively certain that you’ll earn a profit when you sell.
Chapter 6: Securing the Funds to Fuel Your Flip
You need money to flip property--investment capital to finance the purchase of a home, perform renovations to make it marketable, cover the holding costs (monthly payments, insurance, property taxes, and utilities for the duration of the project), and then market and sell the home. Lining up financial resources well in advance gives you leverage in negotiations along with ready cash to complete a quick flip. This chapter shows you how to fill your coffers with the cash you need.
Chapter 7: Trudging Through Some Taxing Issues
Most people know that a good chunk of the capital gains they realize on the sale of their principle residence is tax-free, but if you start flipping homes on a regular basis, you can expect to pay capital gains. Even worse, if the income you receive from flipping is your sole income, the feds might consider it income rather than capital gains. This chapter explains the possible ramifications that your profits from flipping have on your tax return and shows you ways to legally retain more of your money.
Part III: House Hunting with an Eye for Flipping
Chapter 8: Scoping Out a Fertile Neighborhood
You can make money in any real estate market, but you have a better chance of profiting by investing in a solid neighborhood that's on the upswing. This chapter introduces some of the criteria you need to consider when selecting a neighbor to invest in and shows you how to dig around to find pertinent information about a target area.
Chapter 9: Hunting for Houses in Your Target Area
The key to making profits on house flips is discovering the neighborhood’s dontwanners—properties that the owners don’t want and are highly motivated to unload for significantly less than market value. This chapter takes you on a treasure hunt for trash-into-cash opportunities in your target neighborhood. I reveal several strategies for finding buried treasures, including scoping out the MLS, scanning the classifieds, looking for FSBO (For Sale By Owner) opportunities, and scouting for probate and government-owned properties.
Chapter 10: Inspecting the Property with an Eye for Rehab
You don't need a certified home inspector until after you make your offer, but you should be able to size up a house when you first walk through it and spot obvious problems, as well as areas packed with potential. This chapter shows you how to recognize a diamond in the rough that’s packed with profit potential.
Chapter 11: The Art of Haggling: Negotiating a Price and Terms
To obtain the property you want at the price and according to the terms that you desire, you have to be able to haggle in a way that gets you what you want without driving the seller into his shell. This chapter leads you through the process of negotiating from sowing the seeds for successful negotiations to presenting your offer, handling counteroffers, and eventually closing the deal and taking possession of the property.
Chapter 12: Closing In on Foreclosure Properties
Foreclosure is an unfortunate event (for the homeowners) that provides investors with opportunities to purchase properties below market value. This chapter brings you up to speed on the foreclosure process and shows you how to purchase properties directly from financially strapped homeowners prior to the auction and bid on properties that end up on the auction block. Many novice investors get burned at auctions by not knowing what they’re buying. The information in this chapter can steer you clear of making a common mistake that could cost you tens of thousands of dollars.
Part IV: Fixing Up Your Fixer-Upper (2 pgs)
Chapter 13: Prioritizing and Planning Your Renovations
When renovating a property, time is money. The longer you hold the property, the more it is going to cost you in monthly bills, so having a plan in place and a schedule for repairs and renovations is essential. This chapter shows you how to draw up an efficient, cost-effective plan and cautions you not to make the common mistake of over-improving a property.
Chapter 14: Giving Your Property a Quick Makeover
In this chapter, I show you how to do a quick flip, a cosmetic job, or a makeup job, as seasoned house flippers like to call it. Here you discover how to quickly transform an ill-kempt home into a crowd pleaser for the cost of a few thousand dollars and several lost weekends. You can then quickly place the property back on the market and sell it for several thousands more than you invested in it . . . assuming, of course, that you purchased it at the right price.
Chapter 15: Perking Up the Curb Appeal
First impressions are often lasting impressions. If the property doesn't seem inviting, then few people will want to look inside. This chapter reveals improvements to the outside of a home that add to its curbside appeal.
Chapter 16: Dazzling the Crowds with Updated Kitchens and Baths
Kitchen and bath remodels offer the most bang for the buck. These are the rooms in which homeowners spend the most quality time and that generate the strongest sense of emotional attachment. This chapter shows how to transform run-down kitchens and baths into showcases that will dazzle potential buyers.
Chapter 17: Sweating Through Some Moderate Interior Makeovers
A home typically sells for a bargain-basement price because the homeowners have seriously neglected the property. The walls are dripping with dirt and grime, the carpets are threadbare, the flooring is aged and worn, and the original windows are ugly or don’t even open and close. This chapter covers medium-sized makeovers, including replacing windows, replacing doors, tearing out carpet, installing new carpet, laying floors, and re-siding a home.
Chapter 18: Reconfiguring Spaces and Other Structural Overhauls
Some properties require some major structural work to make them marketable. In other cases, you can increase the market value of a home by adding a feature that the house doesn’t have, such as a third bedroom, a second bathroom, or air conditioning in a house that doesn’t have it. In this chapter, I guide you through the process of deciding whether you really want to monkey around with the floor plan. I reveal some techniques for identifying load-bearing walls, and I offer some suggestions on restructuring and building projects that can add real value to a property.
Part V: Sold! Selling Your Rehabbed Home
Chapter 19: Marketing Your Home
You can increase your bottom line by marketing and selling your rehabbed home yourself or with a little help from your friends. This chapter shows you how to sell your home without paying the standard 6% or 7% listing fee to a real estate agent or by negotiating for a lower rate and doing much of the marketing and showing of the home yourself.
Chapter 20: Staging a Successful Showing
When your renovations are complete, you may think your house is ready to show, but now's the time to focus on the little things that attract buyers. This chapter provides tips on how to increase the value of your home by removing turn-offs and enhancing turn-ons. Discover staging tricks that can help you sell your house in half the time for 7-10% more.
Chapter 21: Negotiating the Sale to Maximize Your Profit
Once you've learned how to negotiate the purchase price of the house, you know many of the tactics the buyer will use to get the most house for the least amount of money. Now, you need to be wary of those tactics while you try to get as close to your asking price as possible without making any more seller concessions than necessary.
Part VI: The Part of Tens
Chapter 22: Ten Signs of a Great House Flipping Opportunity
Successful house flipping demands that you execute a series of successful steps, but the most important step is the first one—locating a property at a price that’s low enough for you to fix it up and sell it at a profit. If you trip when taking that first step, you’re doomed. In this chapter, I point out the top ten signs of a great house-flipping opportunity to help you over that first hurdle.
Chapter 23: Ten Renovation Cost Cutting Strategies
When renovating a property, many new flippers get a little carried away. They hire top-of-the-scale contractors and insist on the highest-quality building materials from the nearest supplier. This chapter reveals ten secrets that can slash your cash outlays and boost your bottom line.
Chapter 24: Ten Common House Flipping Blunders
Many eager, ill-informed investors become overenthusiastic about the big picture and lose sight of the critical details that can make or break a deal. They pay too much for a property, underestimate the cost of repairs and renovations, fail to inspect a property or research the title, or sign contracts that they don’t fully understand. You shouldn’t overanalyze to the point of paralysis, but you do need to stay on top of the details from beginning to end. In this chapter, I present ten common house flipping blunders to help you avoid costly mistakes and maximize your profits from the very start.
Chapter 25: Ten Strategies for Surviving a Slow Market
When flipping properties, you need to keep track of movements in the housing market and adjust your strategy to ride the waves. In this chapter, I reveal ten ways to adjust your strategy in a declining market. Remember, you can earn a profit in any market, as long as you adjust your strategy accordingly.
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