# Entrepreneur of the Week Post number 6 Buy-Renovation-Sale Deals Hello to all forum members. In this post a…
# Initiated week Post number 6
Buy-Renewal-Sale Transactions
Hello to all forum members. In this post I will talk about buy-renovate-sell transactions or in the more popular sense "flips".
Unlike previous posts, where I could share tips on how to succeed, today I will share with you tips on how not to fail - as our company has experience in both failures and successes.
First and foremost - choose the sales agent with whom you will work throughout the project. The agent will need to confirm the location of the property, the finish specification, the color scheme selection and, in addition, the price you think you will receive for the property upon completion of the works. From here, my first advice to you is to choose an agent with relevant sales history in terms of price ranges, region and type of assets similar to the region and type of conference you are targeting. As always, it is better to hear as many agents as possible and to cross their opinions. In my experience, agents like to talk and share opinions at the beginning of the engagement. Therefore, take this opportunity to draw as much knowledge as possible. Of course, agents have a clear tendency to endorse everything they want in order to gain exclusivity. Take this into account when considering their promises.
We locate a property that is usually located in an area that already shows sales at prices that are 100% or higher than the prices of properties for rent. And here's the second piece of advice - never buy a "flip" property based on an assessment or an attempt to predict the future. Messages like Comming area, developing area and the like are the messages that I would highly recommend staying away from when you come to the Flip deal exam. The successful flip deals that were in our company were actually "late blooms" meaning we bought properties in a neighborhood that already shows sales at high prices, renovated according to the level of finish used in the neighborhood (very easy to see this from the photos of properties sold in the area) and sold at a nice profit margin. How beautiful? I would say between 20-30% profit. If you have seen a deal that offers more, in our experience this is an area that is not yet ripe for such transactions or a property in a really unhealthy condition for such a deal.
The next step, after purchasing the property, is to issue plans for renovation by an architect. Such plans will show a "before and after" snapshot of the property in question. The cost of such a plan ranges from $ 2000-4000 and here is my next advice to you, never skip these plans they are a solid basis for getting an objective and realistic quote from a contractor. There is almost no room for misunderstanding when going through such plans.
After we put out renovation plans, my next offer to you, contact a qualified appraiser for appraisals before the renovation begins. The appraiser will evaluate the final property price considering all the changes, enhancements and upgrades you would like to make to the property. Most of the time, flip deals are sold to customers who purchase a home through bank financing and as such depend on an appraiser's estimate. Therefore, the appraiser you bring at the beginning of the road can outline the boundaries of the sector.
After we receive an appraiser's estimate of the value of the property, we determine our expectations for the profit from this transaction. Here, it is very important to be realistic and realistic. For those looking for a high 40% and above, expect a straightforward way.
Once we have determined what our expectations are, and we have a detailed renovation plan, we will turn to a contractors tender. Here's my next advice to you, let the contractors lead the price. Match expectations regarding the final specification, show and clarify that the renovation plan and the final specification are the guidelines for the execution of the works. Any attempt to adjust the contractor's price to your expectations will usually end in you finding out in retrospect how the contractor "spared you" or "rounded corners". From our experience I can tell you about 2 interesting facts that most investors are often unaware of. First, the contractors want to work. But no less, to earn. Therefore they will give an offer that will include a profit component that they can sleep with quietly. A contractor who does not sleep quietly at night will not work well during the day. Second, the contractors know what the final price you are expecting to receive in exchange for the renovated property will be and will adjust their bid accordingly. If you have not received an offer from the contractor that meets your expectations for profit, keep looking for other contractors. Do not try to shrink the bid because to do so, the contractor will shrink the scope and quality of the work.
The contractor says he finished the job? Mazel Tov! Order a home inspection company to inspect the home. Do not be ashamed to stipulate a final payment for finishing work in such a review. If the contractor sees a reservation, I highly recommend you - have reservations from the contractor. The end customer who pays such a high price for a home will not save $ 400 on making a comprehensive home inspection. In addition, often the body financing the deal for it will require such a report. Therefore, in order not to find yourself in the situation you are in or a list of disqualifications in the report and a contractor who has already received the full consideration, give at least 10% of the renovation cost in passing an audit Such.
Have we been audited? Did we release the contractor? Concerned about staging? Allow yourself a trial period without staging. True, there are statistics about properties being sold at a higher price when they went through staging. At the same time, there are quite a few customers who will not connect to the design taste of the staging company and therefore decide not to proceed with the purchase of the property. Professional images of empty spaces will leave a lot of room for the imagination that exists in your customers.
Want to raise a sale ad? Take a deep breath and think carefully about your pricing strategy. Too low a price can lead to a quick sale and a missed feeling but too high a price can lead to many documented price downloads and high shelf time. From experience, the first option is better.
Have a success in your next flip deal and see you in the next post!
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Thanks! Are you serious. Highlights not to make shortcuts nor to search for unrealistic profits.
Before and after the middle is missing. How much was invested in the renovation…