TAO of Flipping and Investing in Real Estate
Author: Scott Hurst
Thank you for taking the first step in learning real estate! I will be discussing the things they DON’T tell you about in real estate flipping and investment books. I plan on laying it all out for you, show you the pitfalls, the pay-outs and the less that spectacular work involved. As this is my first blog entry on Real Estate Investing and Flipping Houses, it will signify the beginning of a long and descriptive series of blog entries discussing different aspects of real estate investing and flipping in easy to understand lingo, so you, the regular person can understand it AND apply it. This isn’t some pay course that only gives you a fraction of the information and makes you pay to see the rest blog. I will be giving away all the information you will need to flip or invest, you just have to apply it!
First off, let me tell you a little about myself and how I came to learn the field of real estate and what you might be able to learn from my experiences. I am 33 years old and have been doing real estate investing for more than 7 years. I started mysapro.com to market myself as a realtor, but have also been using it to disciminate free information about investing in real estate to clients and investors. During the course of its creation, I have been bombarded with questions about how to flip houses or how to buy them at a discount; this prompted me to start writing about the subject, and here we are! I have bought and sold millions in real estate and have learned that real estate investing is about calculated risk, healthy purchase advise and knowledge of funding opportunities. When I first took steps to learn how to become an investor, I spent almost 2 years of studying and research before making my first purchase. Even after that I have continued to develop and hone my love for knowledge so that I could better understand how to not only buy good deals, but to also fix them, market them and even SELL them! As you will learn about me, it is all about CALCULATED RISK!
Investing in real estate is a risk, just as buying stock is a risk! If you do not take time to understand what you are doing, you will fail; you will not be able to succeed without arming yourself with the knowledge of making calculated accessment of what your risk is and making your purchases based on that calculation. If I were to tell you that there was a nice 100,000 home in your neighborhood that you could get for 80,000, you might think that is a good deal. For some this may be, but for the true real estate investor, this does not constitute a great purchase. Many great writers and teachers will tell you that you make your profit when you buy it, not when you sell it. We are not prospectors, we are investors of the product of proven application of the real assessment of value. The product being the real estate assets you purchase from applying a calculated assessment of its real value.
Let me quickly address the difference between Flipping and Investing. Flipping a house is the purchase of a distressed and/or delapidated house that is repaired and sold quickly on the market for profit. Investing is the strategy of purchasing property to hold for long term to maximize income and profit. When buying a property specifically for holding as an investment (I will discuss Flipping later in the blog series), there are key elements that should be looked at before coming up with your purchase price. The reason im discussing this at this time is because I feel you need to know how to bake a cake before you get started, so you should have your ingredients to your cookie cutter real estate cake before you even start the oven. Without all of these ingredients, you will not be able to make a cake that taste just right.
Here are the things you need to ask yourself:
How much is this property worth if it were in perfect condition?
How much is the property taxes and insurance on this property?
How much to deduct for maintenance fees, rent loss, and management fees?
How much will it cost to repair the property to make it move-in ready?
How much would the property rent for after repairs?
and finally..
How much do I offer for the property?
This list that I gave you is the heart of what you will need to invest in or flip real estate. Over the course of my blog entries, we will dive deeper into why these are the basic elements you will need, how to apply them and why they work. Please check often for Chapter II of “The TAO of Flipping and Investing” AKA Free information on Flipping Houses and Investing in Real Estate!
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