The Complete Guide to Flipping Properties
[Pages:241]THE COMPLETE GUIDE TO FLIPPING PROPERTIES
THE COMPLETE GUIDE TO FLIPPING PROPERTIES
Steve Berges
John Wiley & Sons, Inc.
Copyright ? 2004 by Steve Berges. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
Berges, Steve, 1959? The complete guide to flipping properties / Steve Berges. p. cm. Includes index. ISBN 0-471-46331-0 ( pbk.) 1. Real estate business. I. Title.
HD1375.B429 2003 333.33--dc21
2003053493
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1
CONTENTS
Acknowledgments
ix
Chapter 1 Introduction
1
Background
2
Real Estate: A Sound Investment
4
Leverage: The OPM Principle
6
Economic Housing Outlook for the Next Decade
8
Chapter 2 Flipping Properties Defined
11
Three Primary Classes of Flippers
13
Scouts
13
Dealers
15
Retailers
17
Using Options To Flip Properties
19
Clearly Defined Objectives
20
Entry Strategy
22
Postentry Strategy
23
Exit Strategy
23
Chapter 3 The Value Play Strategy
25
Buy-and-Hold Strategy
26
The Value Play Strategy
29
The Value Play Selection Process
31
Property Location
33
Price Range
35
Physical Condition
35
Chapter 4 Ten Ways to Locate Properties
45
Real Estate Agents
45
Classified Advertising
49
Real Estate Publications
51
Local and National Web Sites
51
Real Estate Investment Clubs
54
Bank REOs
55
v
Contents
Marketing
56
For Sale by Owners (FSBOs)
60
Vacant Properties
61
Foreclosures
62
Chapter 5 Valuation Methodologies
65
How to Know How Much Is Too Much
66
Valuation Methodologies
66
Replacement Cost Approach
66
Income Capitalization Approach
68
Sales Comparison Approach
70
Chapter 6 Financial Analysis
73
The Texas Two-Step
73
Multiply Your Efforts by 22
82
From Residential to Commercial
93
Chapter 7 Seven Steps of Successful Negotiations
111
The Psychology of Negotiating
111
Comprehensive Knowledge of Market
114
Degree of Seller's Motivation
115
Backdoor Exits
119
Concessions
121
The Red Herring Technique
122
The Money-Talks Approach
123
Chapter 8 Financing and Closing Considerations
127
Conventional Mortgages
127
Mortgage Brokers
129
Local Banks
130
Lines of Credit
131
Owner Financing
133
Partnerships
135
Your Business Plan
136
What Every Borrower Should Know about Credit Scores 137
Underwriting Guidelines
140
The Closing Process
142
Chapter 9 Assemble a Winning Team of Professionals
149
Scouts and/or Dealers
150
Office Manager
151
Property Rehab Manager
152
Local Lender or Mortgage Broker
153
vi
Contents
Real Estate Attorney
153
Title Company
154
Real Estate Agents
155
Chapter 10 Three Keys to Maximizing Your Potential
157
Postentry Planning
157
Doing It Yourself versus Hiring It Out
159
Increasing Your Property's Marketability
163
Preplanning
163
Heightening Visibility through the MLS
164
Offering a Marketable Product
166
Competitive Pricing
167
Offering Incentives
167
Summary
168
Chapter 11 The Three Principles of Power
169
The Principle of Vision
172
The Principle of Passion
178
The Principle of Autonomy
180
Appendix A Property Inspection Checklist
183
Appendix B Owner and Subcontractor Agreement
195
Appendix C Sample Real Estate Forms
201
Appendix D Sample Personal Financial Statement
219
Appendix E
223
Appendix F symphony-
225
Index
227
vii
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