Dave Clabeaux – What Are Lenders Looking For?

One of the hard money lenders we know of frequently asks that we send them  deals.

They are looking to work with people who are doing lots of deals currently or looking to start rehabbing houses.

he lend to projects ranging from $20,000 up to $1,000,000. There is no minimum score required when it comes to your credit.

Because the deal you bring them is more important than your credit, they use a checklist to help determine whether you’ve found a great potential property to flip.

Here is the checklist they use: – Property must be a single family residential home.

(They also lend if you’re flipping a rental property with 1-4 units).  – Not owner occupied, meaning it is not a house that you personally live in.

– Not located in a flood plain.  – Not have any major environmental issues.

– Not located a high crime area. – Preferably located in or near a large city, in a stable or growing neighborhood.

– Priced within the median price range for the neighborhood.  (In other words, the house should not be priced way above other houses in the same neighborhood.)

Having a hard money lender use a checklist to evaluate your deal is a hidden benefit of using hard money.

It’s another set of eyeballs checking out the property for you.

This can help you spot something you may have overlooked on a property.  Or, it gives you the confirmation you need to move forward on a project.

This lender likes to see a down payment of at least 8%, but is open to other arrangements if you are short on the down payment.

For example, you can “cross-collateralize” another property that you own for the down payment or have the seller carry-back the mortgage.

They also have a program where they lend 100% of the deal for a share in the profits.

The 100% lending program can work if you have experience rehabbing homes or are partnered up with someone with experience.

 

 

 

Dave Clabeaux – Does House Flipping Work Near You?

One of the most common questions I get via email goes something like this:

“Coach Dave, that’s great that you live in Florida, where the real estate market is booming.  But I live in Nowheresville, Nebraska. Are there any good deals near me?”

I can’t tell you how many times I have heard someone say something like this.

For some reason, there is a false belief that in order to make money in real estate, you must live in either Texas, Florida, or California.

But that couldn’t be farther from the truth. The fact is, there are opportunities to flip houses in every city and town in the US.

I’m sure your friends and family are among the naysayers telling you that you don’t live in the “right market” to flip houses.

The fact is, while I get emails from people who seem to be stuck on believing that there are no deals near them, I also get emails from people who are completing amazing deals and sharing their success story with me.

Just this past weekend alone, I received at least a half-dozen emails from people landing deals and selling houses netting  anywhere from $19,000 to $120,000  in profit.

In fact, 2 different people emailed with questions this weekend about how to legally tax shelter $90,000 and $110,000 from the sale of their recent flips.

These are not real estate gurus.  These are common folks just like you and me. They simply found a good deal near them, made an offer, rehabbed it, and sold it for an honest profit.

Does this excite you?  I hope it does. My goal in writing this email was to give you that “nudge” you need to get out there and flip your first house.

I want to let you know that if other people can do it, so can you.  Common folks all across America are successfully flipping houses every day.

 

Dave Clabeaux – I Hope This Inspires You

Some people are easily discouraged when they get into flipping houses.

They see the price of houses on the market and think…

“I can’t buy a house for that price and
still make a profit. All the houses around me
are just too expensive.”

Here is the mistake they are making:

They look at a seller’s ASKING price. Many sellers will accept far less than asking price.

Case in point:

Last week a lady came to us looking to sell her house. She needed to sell quick because she owed back taxes, and the county was
about to foreclose on her house and take everything. (This is what happens when you refuse to pay property taxes for 5 years
straight).

Her asking price was $159,000. We offered $90,000.

She accepted.

We get a deal with a huge equity spread and the home owner gets cash out of a house she would have lost to foreclosure.

It’s a win-win.

Question for you:
Do you know of a house right now that’s perfect for a rehab but the owner is asking too much?

Make an offer that works for you. It might be 50%, 40%, or even 30% of asking price.

You never know what somebody will accept for a house until you make an offer.

Here’s the big takeaway:

Don’t be afraid to make low ball offers. You may get a dozen “no’s” for one “yes” that leads to a $50,000 deal.

What is it Like to Flip Houses?

Have you ever wondered what it is like to flip houses full time?

Here is a snapshot of a typical day in the life of a rehabber:

Morning: This is usually your “deal hunting” time.

Fortunately you can do most of your research online.

New properties hit the market daily.  Make sure you’re one of the first to know.

Websites you will use include Zillow, Realtor.com,

MLS (if you’re an agent), HUDhomestore.com, Homepath.com, and Hubzu, for example.

Don’t worry if you do not have access to MLS: every house listed on the MLS appears on Realtor.com within minutes.

Identify 2-3 properties that you would like to see in person.

Afternoon: This is when you go out and look

at the properties you identified in the morning. For each house, a good walk-through should take you about 20-30 minutes.  Some will take much less, particularly if they look much worse than the pictures.

Remember, the purpose of a walk-through is to get a general idea as to whether you should pursue a particular deal.

If you like a house, your contractor and home inspector will help you identify problems and things requiring repair.

During the afternoon you will also be checking on the progress of houses that are currently in the renovation process.

I recommend you stop by an existing rehab at least 3 times a week, on Monday, Wednesday and Friday.

Late Afternoon: I like to use the late afternoon to return phone calls and handle office work.

Of course some things can’t wait and you have to take emergency calls when they happen.

For everything else I prefer to handle calls while sitting at my desk.  This way I am not distracted and am able to focus on the task at hand.

Tasks include: reviewing inspection reports, talking to real estate agents, budgeting costs/calculating profit on potential deals, etc.

Evenings/Weekends: Do what you like. Do what you enjoy.

In addition, I like to take a half day off during the week to spend time with my wife and 4-year-old son.

That is what I love about real estate.  It provides you with tremendous flexibilty.

I have to be honest: it is a great feeling to be riding the roller coasters at King’s Island on a random Tuesday afternoon ; )

Don’t get me wrong: flipping houses is not a do-nothing business.  There is time and work involved.

However, the upside is that your schedule is flexible.

If you can see yourself flipping houses on a part-time or even full-time basis, make sure you are prepared.