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House Flipping Formula

House Flipping Formula
1. Get a Good Team of Lawyers, Accountants, Contractors And Real Estate Agents etc..
2. Find Locations that are flip ready (Not All real estate locations are flip ready), some are rental locations or Destitute (Meaning it’s hard to even collect rent due to economic circumstances and other factors)
3. Buy right to make money before you purchase basically (Before you purchase determine if you can make a profit on the property and determine if it’s even worth the time and money)
4. Fix (For Competitiveness and For Resell Value or Bare Minimum if you are renting the house out)
5. Sale (For Maximize Profits and Quick Sale in mind)

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5 Types Of Neighborhoods

F Neighborhoods– High Crime, And Unemployment a lot Of Run Down Properties Extremely Difficult to Fix And Flip and Difficult to collect rental payments

D Neighborhoods – Moderate Crime and Unemployment, moderately difficult to to Fix and Flip and collect rent payments and there are some run down properties

C Neighborhoods – Marginal Crime and Unemployment rates slightly difficult to Fix and Flip and collect rental payments has some abandoned properties but not that many

B Neighborhoods – Low Crime Rate and Unemployment rate, minor difficulty to Fix and Flip and collect rental payments, and very few abandoned properties and investment costs tend be higher

A Neighborhoods– Extremely low crime and unemployment, properties tend to sell very quickly and rental payments are easier to collect typically and investment costs are extremely higher than other neighborhoods

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The 1.5 Rule Mortgage Rule

The 1.5 Rule

The 1.5 Rule states that your Home purchase should not go over 1.5 Times your yearly salary. I created this idea to help people with affordability questions. Because alot of times people end up being what is called house poor? Meaning they are spending over 50% of their income on their housing costs.

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Property Grade Structure Types

F Grade – Structure is in Very poor condition in need of complete reconstruction or Tear down, House is also needs to be completely gutted to bear studs. Reconstruction costs maybe more than the value of the property (Usually Fire damaged, Heavy black mold, Termite damage, damaged house structuring or etc.), House may have been uninhabited for 3-5 years

Repair costs -$30k $50k+
D Grade-Structure is in poor condition reconstruction is needed to completely restore house to be habitable and up to code, House also needs to be completely gutted to bear studs, Reconstruction costs can exceed more than the value of the property (Usually Fire damaged, Heavy black mold, Termite damage, damaged house structuring or etc.), House may have been uninhabited for 1-3 years

Repair costs -$20k $30k+
C Grade– Structure is in Fair condition house may need major or minor rehabbing to restore house to be habitable and up to code, a major cleanout may be needed before rehabbing. The median costs for rehab should net a decent profit for investor or equity for buyer, (Typically may need New Drywall, Kitchen, bathroom, Flooring, Fixtures, Painting, Appliances and may need rehab on Exterior ie. Roof, Siding, Masonry, and Tuck pointing for Brick structures) House may have been uninhabited for 0.9-1 years

Repair costs -$10k $20k+
B Grade– Structure is in decent condition minor rehabbing may be needed to get property habitable and up to code, No major defects might need some cleanout. Depending on what the investment costs and location of property this type of property maybe the best deal for all parties involved due to condition of property and the comps in the area. (Typically may need Painting, Flooring, Fixtures, Appliances and may need minor rehab on Exterior ie. Roof, Siding, Masonry, and Tuck pointing for Brick structures) House may have been uninhabited for 6-9 Months

Repair costs -$10k $5k+
A Grade– Structure is in good condition minor cleaning may be needed No major defects might need some cleanout. The investment costs are typically higher depending on the location of property, this type of property maybe the best deal for all parties involved due to condition of property and the comps in the area. (Typically may need Painting, Flooring, Fixtures, Appliances) House may have been uninhabited for 0-6 Months
Repair costs -$0k $5k+