Posts

Tips For Flipping A House For The First Time

Flipping a house for the first time can seem a little intimidating. However, if you follow these tips, it should be smooth sailing.

Know and Analyze the Local Estate Market

It’s important to know the neighborhoods you want to invest in like the back of your hand. You need to familiarize yourself with the sales prices for different types of homes, schools, neighborhoods and demographics. Real estate sites like Trulia and Zillow can give you some data on current home selling prices. And you get the rest of the information from other local realtors. Once you get this information together, go ahead and analyze it. By analyzing the data, you’ll know how much local buyers are willing to pay and you’ll know the types of properties that buyers are interested in buying. Knowing this information will allow you to avoid winding up with a home that sits on the market for a while versus one that flips quickly.

Get a Team

Building yourself with a skilled team is critical for a successful flip. You’ll need a team of general contractors, realtors, lenders, accountants and real estate attorneys. You get a team together through referrals and networking. Start to go to meetings of local real estate investment organizations, join some business networking groups and become a member of the chamber of commerce. Realtors can give you access to properties that are currently on the Multiple Listing Service. You should speak to as many realtors as you can. This includes both selling and buying agents. Having a team is essential for a profitable flip.

Find a Flippable Property

Once you’ve identified what types of homes sell best, focus on those ones. For example, if four-bedroom houses are selling well, rehabbing one of these is likely your best bet. In addition, you need to know who your likely buyers are. It may be empty nesters, seniors or singles. Know what their needs are. A family with young kids may need a four-bedroom home with two bathrooms.

Keep an open mind, too. Your leads may wind up coming from a variety of sources, such as friends, banks, realtors, family members or trustee sales. Another good source for flappable properties is foreclosures. Just keep in mind that you’ll probably need a cashier’s check or cash to pick up a foreclosure. You also may not be able to view the foreclose. So, you may have to deal with squatters or hidden liens on the title.

Structuring the Deal

Once you’ve established the value of the property, you then need to calculate the after repair value. This will tell you if it’s a good deal for you. When you inspect the property, work with a good general contractor and review the budget repair sheet. You need to know all the repair costs in order to determine the after repair value. Follow the 70 percent rule. Only take on projects when the after repair value is less than 70 percent of the final selling price. Once you make the sale, use an experienced real estate lawyer to write up the contract.

Manage the Rehab Process

Keep yourself in the loop and work closely with a general contractor. This will keep you on track with the renovations and within budget. Obtain estimates from contractors and keep track of their progress on your project. Make a written timeline and make sure everything goes according to plan in a timely manner. This will help avoid carrying costs.

Hard Money Loans in California

Homeownership in California falls about 10 percent lower than the national average at just 54 percent. With the high cost of homes and the challenges financing through traditional mortgages can bring, many homeowners, especially in southern California, turn to less traditional types of financing to get the home they want. Although hard money loans are generally offered to investors who flip homes or purchase them to rent out to others, they can also be used to finance a mortgage to buy a home you intend to live in. This allows individuals to use their home as collateral and to get approved for the loan much faster than going through traditional banks. It also means less paperwork that needs to be filled out and understood.

Foreclosure Laws

For California homeowners who are facing foreclosure, the process is usually handled outside of court through a non-judicial process. Typically only cases that involve state-owned property or property in probate court require the courts to get involved.

Property Redemption

While some states give homeowners the opportunity to buy their homes back, even after the completion of a foreclosure sale, this isn’t the case in California. Once a home is sold on the auction block, homeowners are unable to buy it back.

Deficiency Judgments

Another issue homeowners may experience in some states is the ability for the bank to go after the homeowner for any deficiencies once the foreclosure process is completed. This allows the bank to recover any money owed beyond what the sale of the home brings in. Fortunately, this isn’t allowed in California.

Deed in Lieu of Foreclosure

When it becomes clear a home will go into foreclosure due to a homeowner’s inability to pay, they can often go through a process known as deed in lieu of foreclosure. This means they voluntarily turn the property over to the bank and move out of their own accord without waiting for the foreclosure process. This avoids going to court and sometimes even allows the homeowner to leave the property with a little money for the effort because if saves the bank the cost of foreclosing. This money can help individuals with the costs of moving, including putting a down payment on an apartment or other rental property.

Grace Period Notice

California is one of just a few states that has a grace period built into their foreclosure process. Lenders are required by law to personally contact, or at least attempt to contact, the homeowner to discuss their options to avoid the foreclosure process. This must be done 30 days prior to the foreclosure notice period. The notice of default is sent to the homeowner with a three-month notice filed with the county recorder’s office within 10 days. At the end of this three-month period, the lender then files a notice of sale and sends it to the homeowner at least 20 days prior to the date of sale. This means the sale date cannot take place sooner than three months and 20 days after the foreclosure process begins. The notice of sale must also be publicly posted, often in the local newspaper, as well as on the property in question.

Service Member Mortgage Protection

Certain individuals who are members of the military are often protected under Servicemembers Civil Relief Act, which is a federal mandate. In addition to the military, California extends these benefits to National Guard members and those who are ordered into active state service by the governor. Reservists are also covered under this act, giving them peace of mind they won’t lose their homes while serving their country.

High-Risk Mortgage Protection

Abusive loan practices can create problems for individuals. This is why the state government has put protections in place to combat these practices. Judges have the power to order lenders to reform their practices to ensure equity. These protections don’t apply to mortgages through the secondary market, such as Freddie Mac, or those who don’t know the loan origination violations.

Other Statutes

There are other laws in California in reference to foreclosures that are important to learn about. For instance, the law caps interest rates for mortgages at no more than 12 percent for sales and seven percent for judgments. However, there are exceptions to these rules in certain situations. Many banks and similar institutions are exempt from these rules. Real estate brokers can also help individuals obtain a loan that falls outside these limitations.

Another way California protects homeowners is with their homesteading regulations This law protects the equity the homeowner already has and must be requested by the individual living on the property or a relative of that person. This automatic homestead exemption can stop a foreclosure if the lender is unable to prove the sale can produce the funds to repay any liens and the exemption amount. If the sale is sufficient to cover it, the sale proceeds and the homeowner receives the exemption amount to be used to establish a new residence.

Real Estate Trends in 2019

The real estate market has certainly seen its ups and downs over the past decade or so. Every year, new trends arise to the surface that can have a dramatic impact on how residents buy and sell their properties. As we approach the middle of the year, it’s important to take a good look at what the newest 2019 real estate trends are and how they can have an impact, whether you’re looking to sell your home in the near future or you’re on the hunt to find your ideal home, whether it’s your first or you’re looking for an upgrade or to downsize.

Home Prices on the Rise

After the housing market crashed and brought many homeowners underwater on their mortgages, many wondered how long it was going to take for the real estate market to recover. While some areas of the country aren’t quite there yet, the good news is home prices are on the rise. This is better news for those who are looking to sell their homes and not as great for buyers. However, it’s a clear sign the housing market is in good shape overall. With the largest jump last year at about 10 percent on average, home prices are still on the rise this year, although this has slowed down somewhat. Unfortunately, with the increase in prices, those who are looking to sell their homes are also seeing a decrease in the number of offers they receive. Rest assured, even if you don’t end up getting as many offers as you did before, there is still likely a buyer out there willing to pay the right price for your home. As long as sellers pay attention to the other homes on the market around them and price accordingly, as well as make their houses stand out, they should be able to find a buyer willing to pay the right price to still make a good profit. Buyers should also take their time when making a purchase and make sure they have enough money down (at least 10 percent) and don’t step outside their set budget for home buying.

Interest Rates Are Up

Although still nowhere near the peak it once was, mortgage interest rates are on the rise, which means buyers need to be careful about getting good rates on their loans. At the present, mortgage interest rates are predicted to rise to about five percent for 30-year mortgages and 4.4 percent for 15-year mortgages. This is the highest interest rates have been in seven years. While this may seem like bad news, it actually indicates the economy is doing well. The federal reserve raised their interest rates and the banking industry is only now following suit. Because of this, it’s best for buyers to opt for a 15-year mortgage if possible to help keep interest payments low. For sellers, high interest rates may seem as though they are irrelevant, but they can have an impact on how quickly you sell your home. This is because some buyers may be hesitant to buy with a higher interest rate or may hold out for a cheaper home in order to keep their payments within budget. The good news is your home is still likely to sell; it may take longer than it may have in years past, but you are still likely to find a buyer willing to pay what you ask or close to it.

Millennials Make Up a Large Portion of Buyers

Millennials have reached a time in their lives when they are most likely working stable jobs and at least thinking about starting their families, which means they’re among the biggest group of individuals to be looking for homes on the market to buy. In fact, they currently make up about 45 percent of the overall market. This is excellent news for the baby boomers and other older generations that are starting to think about retirement and downsizing their homes. In general, millennials are looking for homes that are affordable without sacrificing on the quality of the construction, have low maintenance needs and are located in areas with easily accessible larger cities for their convenience. With easy online shopping, it’s easier than ever to reach this generation of home buyers.