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Use asset management when Flipping a Home
By Buyincomeproperties..com
Sep 22, 2005, 09:41
All reasonable people would love Investment Real Estate that earned us quick cold cash. Even the most sanctimonious humans could use profits gained from buying and then flipping a Real Estate sale back to a new buyer. The ultimate goal for a flipper is to double ones investment money with a quick buy and then resale.
Knowing how to use a mortgage calculator is vital for any buyer, but especially when turning a real estate investment into a flipper. Lining up your financing should not be left solely to the mortgage broker. You must know your assets.
My commercial real estate brokerage asks me so many questions because the want me to know the answers about how I will carry enough cash to the table at closing. They know that Donald W. Gomez Jr. of Tropical Paradise Realty (786-202-0203) is adept at flipping profits, often even before remodeling homes. Yet, the still ask and I still ask the important questions in all broker mortgage transactions.
Flipping your money by knowing and having better mortgage loan or hard cash financing than sellers is the key. You can follow a scenario that happened with me a few months ago to understand how “Flipping?and “financing home improvements?go hand in hand to bring windfall profits. -- That Thursday, two new agents needing real estate sales training met me, Donny. They wanted me in on a hot Real Estate home financing deal.
EXT.DAY-MIAMI BAYSIDE RESTAURANT
JIMMY “Yes, it needs a little home improvement.?
DONNY “What kind of home improvement??
JULIO “Bathroom home improvement, but this multiunit property is in the good part of Coral Gables.
DONNY “Is it debt free and how many units does it have??
JULIO “The second mortgage is going into foreclosure, (that is, the commercial real estate brokerage was going to sell because the owner wasn't making his home loan payments)
JIMMY “It’s a Fourplex wrap-around apartment building that is selling for only $197,000.?
DONNY “Do you have investment loans and a contract on the unit yet??
JULIO “We have a contract on it all ready and have the best mortgage rate to buy it, however we need you to help us get home improvement financing. We’d like to flip a sale now, within two weeks.?
I called Julio's countrywide mortgage broker, and the property’s foreclosure real estate lawyer, immediately after leaving that lunch. My questions where: DONNY “Could the investment property be sold outright to my two acquaintences before I offer to buy it from them? And, why were they rushing to have me contract to buy it from them before I could properly inspect it??
The real estate lawyer and countrywide mortgage broker were friends of mine from past flipping deals, so they let me know the facts. If Julio and Jimmy didn't sell the investment property or flip it to me, they might lose their earnest money. Yes, the money that they gave to the mlm lead, the seller as good faith, was in jeopardy of being lost. They didn't possess the money in the bank to close the deal.
Opportunely, I had the hard cash loan and the home improvement costs to buy the building. I paid only $217,000, so the two rookie agents earned $20,000. Next, I did the home remodeling and made the building a condo, investing $200,000 for the home improvement contracts. Soon, I sold the four units at an average value of $280,000 each.
Thus in all, I put out $417,000, and used asset management to flip the sale into $1,120,000 gross cash. That is over a $700,000.00 net return, Double, yes, almost Triple my investment dollars! Definitely, having a better knowledge of mortgage loan financing than your sellers is the key to enormous profits in the Real Estate Investment world.
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