My Florida Home Builder

“Flipping” is an ordinary part of the real estate business that some may have misconceptions about regarding its legality, but is actually legal.

What is “flipping”? Flipping is when an investor buys a piece of property and sells it a short time later for a profit. In real estate, anytime you buy a piece of property and then sell it, whether soon after or years after, is flipping. However, it is a term more commonly used in wholesaling, which is really wonderful, hassle-free business in real estate where you don’t actually have to buy the property, but you can have control over it and sell it to someone else for a profit.

In wholesaling, when you have a property under contract, you will only need to find an interested buyer who will then finance the property. You do not have to acquire the house for you to sell it, you can simply put the property under contract, and you will have control over it. Once you find a buyer, the buyer can close with you so you will have the money to close on the contract with the seller. It is the buyer who will provide the funding for the property, and you will get your profit from your selling price to the buyer. That is flipping.

It is a perfectly normal real estate operation; however, there are investors out there who perform illegal practices while “flipping” properties. When investors try to mislead a buyer about the property’s condition or when the deal is not as it seems on the contract, which is fraud.

Loans are based on the facts stated in the requirements. If you falsify those requirements to get an unqualified buyer approved, that is illegal.

It is important to know that the loan is based on the facts that are stated on the documents, and misrepresenting them is fraud. There are investors who try to manipulate some of the requirements to get the low income buyers who are unqualified to make loans qualified, just to get that deal closed. Now the problem is that usually the end result would be loan defaults, thus, creating a bad name for other investors who are legally doing the business. That is how some people think flipping is illegal.

Hard Money can be a quick way to supply everything from residential homes, to industrial properties to new home building. I will not get into every aspect of hard money but I will offer you a general frame work that your mind can understand.

First of all a majority of hard money banks will allow you to finance up to 65% of the value of the house. If the loan is for rehab purposes, the lender will use the “after-repaired value” of the home as a frame of reference. I have seen occasions that went as high as 75% but 65% is the norm.

These loans are very situational and very flexible so there is a lot of space if the deal makes sense. It could be a set back if you are new to the game but fortunately that can usually be offset with sufficient reserves and a good plan of action.

Let’s look at an investor rehab loan to visualize how the numbers work.

Let’s say you came across a out dated and run down old house in a good neighborhood where homes sell for $100,000. The seller takes you through the home and you determine that it needs around $12,000 in work. You have gotten pre-qualified for a rehab loan and know you are wondering what is the maximum you should pay for the property.

To keep it simple for starters, you want to take $100k x 65% - loan costs - repair costs/holding costs = Purchase price. Loan costs, for hard money loans, run from 8-13% of the total loan amount. They are not cheap but it’s less money than you’ll disburse to a partner! For now we will assume costs of 10% and holding costs of $2,000. Given those numbers, you probably shouldn’t pay more than $45,000 for the home. If you decide to pay more, that just means more money out of your pocket to get the deal done.

Here are a few quick tips you can utilize to maximize the likelihood of being approved for hard money loans, in general:

1. The more equity in the home after the loan, the better, 2. The higher your credit score, the better 3. The more credit history you have, the better! 4. The more liquid assets you can show that you have personally or have guaranteed access to (lines of credit, partners, rich uncles. . .) the better 5. The more populated the area, the better 6. The faster the properties in that area sell, the better 7. The more solid the appraisal value, the better! A lot of hard money lenders like to use fire sale values as the basis point of the loan so don’t be shocked. This is definitely not the time to use stretched values.

All in all, this is a numbers game. Don’t get attached to a property if the numbers don’t make you money. Hard money lenders can be flexible but bring them a deal where the numbers don’t add up and it could cost you a crucial relationship for future investments. Credit doesn’t always matter but it does help, tremendously, if you can show good credit history.

Best-selling author and infomercial guru, Dean Graziozi has first hand experience of life on both sides of the money spectrum. Regularly taunted by his peers, he was brought up in a trailor park environment, wearing hand me down clothes whilst his mother, a single parent worked at two jobs just to make ends meet.

However, Dean put these early experiences to good use, and like several other self made people, he propelled himself forward at a young age and attained great personal achievements. He began by purchasing a motor car which needed restoring and after completing the work he sold the car, making a profit. This gave him the idea for his program “Motor Millions” which helped many people throughout America make money by restoring and selling vehicles.

Later came his real estate investing program “Think a Little Different”. This program was put together by Dean using his many years of experience of the real estate investor business which began when he was only eighteen years when he bought a run down apartment block in need of renovation. “Think a Little Different” has helped many people reach similar success with its unique, practised and proven strategies.

“Totally Fulfilled”, Dean’s first book was released in 2006 and it describes the strategies to use to reach fulfilment in life and be successful in what you do. This book was closely followed by his second, “Be a Real Estate Millionaire” during 2007. Dean also provides a consultancy service to top professionals throughout the country as well as writing his books and managing his companies.

Best-selling author and infomercial guru, Dean Graziozi has first hand experience of life on both sides of the money spectrum. Regularly taunted by his peers, he was brought up in a trailor park environment, wearing hand me down clothes whilst his mother, a single parent worked at two jobs just to make ends meet.

However, Dean put these early experiences to good use, and like several other self made people, he propelled himself forward at a young age and attained great personal achievements. He began by purchasing a motor car which needed restoring and after completing the work he sold the car, making a profit. This gave him the idea for his program “Motor Millions” which helped many people throughout America make money by restoring and selling vehicles.

Later came his real estate investing program “Think a Little Different”. This program was put together by Dean using his many years of experience of the real estate investor business which began when he was only eighteen years when he bought a run down apartment block in need of renovation. “Think a Little Different” has helped many people reach similar success with its unique, practised and proven strategies.

“Totally Fulfilled”, Dean’s first book was released in 2006 and it describes the strategies to use to reach fulfilment in life and be successful in what you do. This book was closely followed by his second, “Be a Real Estate Millionaire” during 2007. Dean also provides a consultancy service to top professionals throughout the country as well as writing his books and managing his companies.

Best selling author and real estate investing expert, speaker and television personality Dean Graziosi, started his investing career at the age of 16. He purchased a car, renovated it, and sold it for a profit. Shortly after this early success, Graziosi set his sights on residential real estate. Still a teenager, he purchased a run-down apartment building that he renovated and turned into a profitable venture. This purchase was a forerunner to Dean’s future and he went on to earn millions of dollars through real estate investing.

Not content to keep the secrets to his success hidden, Dean was driven to teach others the techniques that worked so well for him. He wrote and produced his first infomercial in 1998. His program, “Motor Millions”, shared with viewers how to buy and sell cars for profit and helped people across America make money with cars. This program was wildly successful, and Graziosi later created his real estate investing infomercial, “Think a Little Different”. This program is filled with practical investing advice based on his 20 years of real estate investing experience and is still seen nationwide.

His first book,”Totally Fulfilled”, which came out in 2006 was soon to feature in the best sellers list and detailed his strategies for being successful and achieving fulfillment in life. His second book, entitled “Be a Real Estate Millionaire” released during 2007 is currently selling thousands of copies on a weekly basis and is looking like another best seller. As well as managing his own investment programs, Dean provides a consultancy service to many top professionals and creates successful infomercials for his clients.

Why is Dean Graziosi so famed in the world of real estate investment? It is because he has reached millions across the country and the world with his books, audio and video courses and seminars. He has taken the knowledge that helped him to become a successful investor and shared that knowledge with others who dream of gaining wealth in the real estate investment market. A frequent guest on nationally televised programs, Dean has been seen and heard by viewers numbering in the millions.

The story of Dean’s career is both inspiring and unusual, because unlike many well known figures in the investment community, he had very little formal training or education. In fact, he has managed to generate revenues approaching $100 million dollars with no more than a basic high school education and a lifetime of real world experience as a hands-on investor and observer of American real estate markets.

The connections between people are what drive the market - and Dean understands this. The real estate market is more than buildings, lots and numbers; there are people behind these transactions. By knowing how people think and relate to one another, a leg up can be gained in the investment field. Dean has a unique perspective on how real estate investing works, and is a born educator who can get his ideas across to others effectively.

The public is clearly responding to his message, as shown by the overwhelming popularity of his books and videos and the standing room only crowds who flock to his seminars and workshops on real estate investment. The millions upon millions who have listened to what Dean has to say are taking his lessons and applying them in their lives to become financially secure, even wealthy through investing in real estate.

His book “Be A Real Estate Millionaire: Secret Strategies for Lifetime Wealth Today” is exemplary how to put Dean’s system into action. His investment techniques have been refined over the course of the last two decades, and the result is this book with his winning investment strategies laid out in a clear, easy to follow manner. Going a step further than most investment experts, Dean makes himself available to readers through his seminars, where those interested can learn more of his investment strategies.

He is known throughout the world as one of America’s most prominent real estate investment coaches, and Dean maintains a lively schedule of personal appearances, traveling often from his southwestern home to explore real estate investment opportunities all over the country. Each time he learns a new method or gains a fresh insight into the ever-evolving market, he transfers that knowledge to other mediums - such as Web blogs, books, and DVD courses - so that he can disseminate it to others.

Dean knows firsthand that anyone who has the drive to succeed can grow wealthy through real estate investments. For over a decade, he has been sharing his knowledge and handing the keys to success to anyone who is willing to learn about the world of real estate and build financial security for themselves.

You have heard all of the hype surrounding real estate investing, and you’re ready to get started. You know that there is money to be made - you’ve seen the late night infomercials, and you even know some people who are investing in real estate successfully.

But how do you find deals that will make you money? One of the best areas to make money in real estate is through fixer-upper or rehab properties. One of the best ways to find these types of deals is through a real estate agent. You know them. You have seen their billboards with their smiling faces and catchy slogans! But how do you find the right real estate agent?

First there are two types of real estate agents: Buyer’s agents and listing agents. The buyer’s agents are the ones that represent the buyer’s and make offers on listed properties. Listing agents are the agents that list properties and represent the seller of a property. The seller can be a private individual, a bank, the Department of Housing and Urban Development (HUD) or any other person or entity that has decided to sell a property. Some agents represent both buyer’s and sellers, while some agents are only on one side of the business.

There are many courses and gurus that will tell you to find a real estate agent and you will make so much money you won’t be able to stand it. But the key is to find the right agent. If you are to be successful in real estate investing or any endeavor at all, you must find the right people to do business with. You must find the right buyer’s agent to work with you on finding properties. The buyer’s agent that you work with must meet the following criteria:

1. Experience with working with investors 2. Ability to think “outside of the box” 3. Friendly 4. Aggressive

Experience working with investors.

You wouldn’t go to Burger King and ask for a bucket of chicken, would you? Yet many investors will attempt to work with an agent that is used to working with first time home owners and expect to have success. You must have someone in your corner that knows the territory and knows what to expect. The market for real estate investors is very different than that of a homeowner looking for a house in which to live. The real estate agent must understand not only the value of comparable sales and how needed repairs affect a sales price, but a myriad of other real estate investing specific criteria. You also want an agent that is used to Bank Owned (REO) properties, Government owned properties (HUDs), etc.

Ability to think outside of the box

All profitable investors must be creative and go against conventional wisdom at times. You must have an agent that thinks like you and is not offended if you are making a creative offer or attempting to put together a creative transaction.

Friendly

This rule should apply to anyone you are going to do business with on a consistent basis. Real estate investing should lead to freedom and security and if you have to deal with someone who is not a joy to be around takes away from your freedom. Your agent should not only be friendly, but should genuinely appreciate your business. Friendly agents get better results; they develop a better rapport with sellers and seller’s agents which will result in more closings. This will result in more money in your pocket.

Aggressive

Many times your buyer’s agent must call the listing agent of a property several times in order to get a response. Your buyer’s agent may also have to make several offers before one gets accepted. Your agent must be able to press and not get frustrated.

Once you have found an agent that fits this criteria, you want to grow and develop a long term relationship with them. You want to do your best to close on time once you have a property under contract with them. Once you have closed several deals with them you also should send them birthday cards, Christmas cards, take them out to dinner etc. to show them that you value their business.

A good real estate agent can make you a lot of money. Find a good one and grow your relationship with them and you will be well on your way to building your real estate empire!

We wish you much success!

Kimberly and Charles Petty

For further information on Real Estate Investing products and services offered by Kim and Charles Petty call 1-800-559-9702 right away.