jan 19

Flipping Houses Flip Tip: Grout…Should Be Simple Right?

Yes, a whole blog post dedicated to grout!

But you wouldn’t believe how differing grout colors can change the look of your tile.

The simple key, find a color that matches as closely to the tile as possible.  Contrasting grout colors are not fashionable anymore.

If you make the grout disappear by matching it to your tile you will be left with a cleaner more updated modern look that will help you sell your property fast!

Of course this is not always the case, there are no absolutes in design, but at least a good general rule to follow.

If you have bought a property that actually has pretty decent tile already in, replace the grout.  This should run you $200-$400 to do and it will make the tile look like it is brand new leaving you more money to impress your buyer in other areas.

Get the grout right and make your tile pop.

dec 22

Flipping Houses Flip Tip: Avoid Your Deal Falling Through with a Bad Inspection

Buyers Inspection Sellers Response otherwise known as the BINSR is where the buyer will do their own inspection and then give a list of repairs to you (the seller) for you to fix prior to closing.

As a seller you are entitled to agree to all the repairs, none of the repairs or some of the repairs.  This is your call but typically I like to agree to everything that should and needs to be fixed as well as any items that I can do inexpensively.

If they are asking for a major repair that you do not feel is necessary, for example they want a new roof because the inspector thinks that it only has a few years left, or a new A/C unit for similar reasons (even though it is functioning fine at present), then I would suggest agreeing to everything else but the major repair.

Alternatively you can refuse to do anything but the major repair, depending on how strongly they feel about it.  One of the keys is to have a good experienced realtor on your team that can run interference with the buyers agent and come to an amicable agreement for both parties.

However, there are often times where an inspector goes above and beyond their calling and decides to point out every minute detail of the house that is not perfect and what you end up with is a list of about 120 items that need repairing that can really freak out the buyer.

Despite the fact that these 120 items are easily repairable, often a buyer will cancel the deal for fear that the house they’re buying just has too many problems.  A way to avoid this is to have a trusted contractor do a pre-inspection and fix all the obvious items that you are almost certainly going to end up fixing anyway.
This way when you are dealing with the BINSR it is likely that the buyer is going to get a relatively clean inspection (they always find something) and feel very good about the property they are buying, this in turn should lead to a smoother close and a lower rate of fall through on your contracts.

How do  you handle the BINSR? Leave your comments below!

dec 12

House Flipping: Why Flips Go Over Budget

I flipped my first property in Phoenix in 2003 and yes I went over my budget. Over 1,000 properties later, and yet again on a property I did last week, I went over my budget!

Now you may be thinking I am not learning my lessons very quickly, but in fact it has been just the opposite.

I would love to tell you I have the process of flipping a house down to an art form, and in many respects I do, but every single house that I flip I learn something new.

I have learnt a thousand lessons and will probably learn thousands more. But here is what I have learnt about budgets:


Almost everyone I have seen flipping real estate anywhere in the world thinks they can fix it up cheaper than they actually can. My opinion is that it is a matter of misguided pride.

I have admittedly been known to boast about the fact that I have fully renovated and remodeled homes for under $15,000.00, so I can easily see how others have the same influences.

However, it is not helpful, and if you buy the wrong property convinced of your ability to fix it up for $27.59 you are going to run into trouble.
I say take pride in the fact that you spend a lot of money, that you know how to set a realistic budget and the finished product is better because of it!

The World Of Residential Contractors

I had the pleasure of working in the commercial real estate world back in London from 1999-2003. Now of course you often get what you pay for and we weren’t cheap, but what we did do was sign a contract with the client saying how much the job would cost and how long it would take us to complete it.

That contract contained a penalty often as much as $2,000 per day for everyday the project ran over the completion deadline. Not only that, but if we had extra costs we couldn’t pass them on to the client, we had to eat them.

Compare that to the world of residential contractors in Phoenix…

Have you ever heard of a contractor that quoted one price for a job and then asked for more money at the end listing a whole host of reasons why he went over budget?
How about a contractor that took longer than he said to complete a project?

My guess is that you have…

…and if you have been around the world of contractors as much as I have you will have seen and heard about that on an almost weekly basis.
The truth is the level of professionalism here is exceptionally low. Letting a contractor get the best of you is a sure fire way to blow your budget!!

Falling for your Flip

If you have flipped houses before you will know all about falling in love with your flip. I just fell in love with yet another one I did 2 weeks ago…

It is such a beautiful home and I put in so much time effort and energy into it that I put it on the market for $20,000.00 more than I originally intended!
Sound familiar?

Falling in love with your remodel has many implications (most of them bad). But as far as budgeting goes one of the classic mistakes I see is people over improving their flips.

They do this because they think a particular tile, or cabinet, or light fixture will go so well with the house that it is worth the extra expense.
This can be okay in very isolated doses, but one over improvement often leads to another and that is where things get dangerous!!

Putting Your Head In The Sand

This is the most common reason for going over budget.

When you start feeling that you are spending too much money the sensible thing is to immediately add up your expenses and evaluate exactly where you are.
However, that emotional side of you finds that you just don’t want to know…

…and so you blindly continue paying …

…and paying for the remodel with an increasing sense of dread in the pit of your stomach and clinging on to the belief that you couldn’t have spent that much….
You will be amazed at how often people fall into this trap and trust me it rarely turns out well.

Being Reactive Not Proactive

I drove around with 2 of my clients this week giving them some input on their flips and their main issue was going over budget (surprise, surprise).

After speaking to them for a few minutes I quickly realized that they only had a very vague idea of what their finished product was going to look like.
They were therefore remodeling in stages and then assessing what to do next.

Whilst this doesn’t sound like a bad idea it can be disastrous. When you are remodeling a home there is a very definite order in which to do things.
If for example you decide to replace the kitchen cabinets after you have laid your floor tile, you are stuck with the choice of trying to match a pre-existing kitchen design probably from 1970 or ripping up a bunch of floor tiles.

If you want to stay on budget you need to know exactly what you are going to do to the house before you start and you should know what materials you are going to use and how much they cost.

I am sure there are many other reasons for going over budget. For me, I set myself incredibly tight budgets and try to stick to them, so when I go over it is no big deal, but for those people who are newer to the flipping arena, beware the dangers, give yourself a realistic budget with some wiggle room then stick to it!!!!!!

Share your tips for staying on budget by leaving your comments below!

jun 25

The Basics of House Flipping Part 1

How do you make tons of money in this day and age?  Real Estate!  We’re sure you have heard about myriads of people making fortunes in the real estate market.  The truth of the matter is that even people without real estate experience or knowledge can make money in the real estate market by following these simple rules.  Flipping houses is one good way to get started!   What is house flipping? Can you actually learn to flip houses?

Here is a quick guide how to make good money real estate. It is easy to follow and you can verify each step if you spend additional time to research it and to verify it for accuracy. Let’s assume you live in an apartment or your own house and your income allows carrying an additional mortgage payment for a few months. Keep in mind – you do not plan on keeping the objects you deal with forever. 5-year mortgage terms or ARM’s with 1-3 year terms will work for our advantage.

A good way to start is to buy so-called HUD houses. These houses are sold or auctioned off by a mortgage lender. The HUD houses usually require some fix up work, but the sales price is way below normal market values for comparable houses that are in excellent shape. HUD houses can often be bought with no or just a little money down – of course depending on your personal credit history. Once the HUD object has been purchased you start fixing the problems on the house and to bring it into a condition where it looks well maintained.

If you are good in doing stuff yourself – perfect. If not you need to look for the low-cost repair people in your area. Choose the sole proprietors that often advertise with flyers or low cost classified ads. Work out a deal with them and promise them more business if they work with you. The next step is important. Depending on market conditions you will sell the house yourself and that way save money that you usually would have to spend on the real estate agent. If you act carefully enough you should be able to produce a 20%-40% profit from the overall transaction of buying and selling the HUD object.

apr 04

Re-Investing Cash Back Into Your Property

This is the time of year when if you are a homeowner and you get your tax return, it would be a great time to consider re-investing the cash back into your property. I’ve included the improvements that bring the highest return on your investment for your home.

If you don’t currently own, prices are on the rise and so are interest rates….if you aren’t feeling that the market is improving or on the mend, then that is exactly why buying right now is a good idea. We pound the pavement every day and have a great feeling of the heath and well being of the San Diego market. It’s the exact thinking that got people to buy into the peak: herd mentality.

If you own, pay down your mortgage aggressively while improving your home and investment, and if you rent right now, the window of opportunity for this generation is wide open and ready to be capitalized upon….let us know if we can help