Rookie mistakes when flipping a home.

With mortgage rates still at all-time lows and lots of homes available at prices below market, many people are turning to real estate investment for the first time.  In order to be safe, new investors often start out with flipping homes instead of holding a property for its rental value.  Here are some of the top mistakes rookies make in home flipping and how to avoid them.

Not Allowing Enough for Repair Work

This is usually the biggest mistake made by new investors.  People who have never renovated a home often underprice the repairs needed to make the home attractive enough to sell.  This is why seasoned investors recommend that new investors talk to a contractor BEFORE placing a bid on a home.  Getting a good price upfront will help determine if the house is worth the purchase. It is also wise to add a bit of cushion for Murphy's Law for things that just go wrong for no reason.

Allowing Emotion to Let You Pay Too Much

Some investors find the “perfect” home and go full steam ahead with the purchase.  They find a home with a discount in a hot area and they just KNOW that they can sell it for a quick profit.  This is where cold, hard facts should take the lead, not emotion.

An investor should never, ever buy a home for anything more than 70% of the home's repaired value.  This is a rule of thumb that has been used by many investors for years and it has served them well.  Paying more than the 70% will lead to smaller profits or even a loss.

Trying to Do Too Much

Many new investors envision themselves remodeling the bathroom, adding new paint and then finishing up the front lawn in a few weeks and then, voila, the home will sell.  However, it is best to let the pro's handle the tough work.  Repairing or remodeling a home can require some or all of the basic contracting skills such as carpentry, plumbing, masonry, painting and electrical.  It is simply too much of a daunting task to try and do all of this on your own unless you have considerable experience in these areas.  Even if you can do it all, wouldn't it be better to hire someone to do this type of hourly work while you search for the next deal?

Taking Too Long for the Repairs

Each month that you own a property is another month of expenses for items like utility bills, insurance and property taxes.  This can eat in to your future profits and may even cause yourself a loss.  Before buying the property sit down with your contractor and discuss the estimated time needed to repair the home.  If necessary, ask the contractor to break the job down into rooms and develop a timeline.  This will help you and the contractor stay on pace to finish the work and get it back on the market.

Your goal as a home flipper is to find a home at the right price that you can turn around and sell for a profit.  Don't fall in to the trap of these mistakes and don't get too attached to any home.  Always be ready to simply walk away from a potential deal and look for a new one.

Simple Ways to Get Your Home Ready to Sell

For those homeowners that have waited to sell their home, heed the advice of Nike: “Just Do It.”  Interest rates are still really low and the upcoming changes in mortgage lending may disqualify some buyers.  Now is the time to sell your home.  In order to help your home sell quickly follow the timely advice offered below.

Spend a Little Now to Get More Later

With so many homes available many buyers are seeking out a property that is move-in ready.  This means that small repairs and maintenance items will possibly turn off some buyers.  Take a walk through the home and pick out the small things that need to be fixed.  Leaking faucets, a chipped tile, a flaky bit of paint and other similar items can negatively impact the appearance of your home.

You should also consider spending a little money to get the carpets thoroughly cleaned and ask a local heating/air conditioning company to service your unit.

Put Yourself in the Shoes of the Buyer

If you are looking for a new home, what items are important to you?  The majority of people want to live in a clean home that smells nice with lots of room in the closets, cabinets and other storage areas.  Therefore, you should put a lot of time in to making your home look clean, neat and organized. Start with the cabinets and closets.  Remove as much clutter as possible and even add some shelves if it helps improve the look.  Go through all the rooms and put everything away in a nice, orderly fashion.  Finally, get a few aroma dispensers and put them throughout the house.

Make People Interested in Coming Inside

So many homeowners spend time, money and a lot of effort improving the inside of the home that they ignore the outside appearance.  It is important to have an inviting appearance.  Homeowners should trim all the bushes, clean out the gutters, make sure the driveway and walkway are clear and clean the windows.  For people that have siding, consider power washing the siding as well.  It is really important that the front door and the surrounding entrance area look clean and homey.

Two Important Rooms: Bathrooms and Kitchens

The bathroom and kitchen will usually have more influence over selling a home than any other part of the house.  It is a good idea to go through these rooms and spend extra time, and even money, to make sure they look attractive and modern.

Many types of cabinets can be painted with a little bit of planning and work.  All bathroom plumbing should be in good working order.  Make sure there is plenty of light with good looking fixtures and that the ventilation to both the kitchen and bathroom is more than adequate.  Also, make sure the counters are clean and devoid of clutter.

It may seem like a crazy idea to spend money on a home that you are planning to sell.  However, spending money in the right areas can greatly improve your chances of selling the home faster and may yield a good return on the investment.

Why list your home with Rock Realty?? Rock Realty Marketing Outline

Recent Testimonials: Rock Realty Client Testimonials

Estimating house repairs accurately for an investment/flip.

Very few people ever buy a car and then find out the amount of the monthly payments and insurance.  Most people sit down with pen and paper, or a computer, and crunch some numbers to make sure they can handle the purchase.   The same thing should be done before buying an investment property.  However, buying a home with the purpose of flipping takes a bit more knowledge and calculation in order to earn a profit when it comes time to sell.

Understand the Difference between Structural Problems and Cosmetic Needs

Even a brand new novice can recognize the need for some paint or fresh carpet.  People that have purchased a home before could possibly spot an older front door or some outdated windows.  However, being able to see and recognize a problem with the structure of a home takes a bit more knowledge and practice.  Pay close attention to these areas and possible problems:

• Areas damaged by water; evidence could be water stains, rippled paint, musty odors or flaking of paint
• Problems with water lines; water supplies that drip or don't run, leaks around toilets, pipes, and water valves
• Presence of pests, especially termites
• Dry and rotten wood

Beyond these trouble spots, it is also important to understand that a home 20+ years old will most likely need some kind of other normal repair such as an updated HVAC system, new roof, or new water heater.

The Right Compromise Makes Everyone Happy

Keep in mind that your goal is to FLIP the home.  That means that you can purchase the home well enough below the market value that you can quickly sell it to someone else for a profit.  If you try to repair too many things, then the price will need to be increased and you could scare off a few investors.

Here is a simple formula that will help you when looking at potential properties.

1. Determine the value of the home after repairs have been made
2. Deduct the money needed to make said repairs.
3. Take this new amount and multiply it by 70%.  This figure is top dollar offer.

Here is a simple example.  You are looking at a home that should be worth $180,000 once it has been repaired.  The money needed to fix it up is $15,000.

In this particular example, if you could purchase the home for $109,000 and sell it for $114,000 you would make a quick $5,000 without lifting a finger.  To make this better, the investor that buys the home from you has enough room to buy the home, make the repairs and sell for a profit.

How to Get Better at Estimating Repair Costs

• Habit of looking at homes – You will need to inspect quite a few homes in order to learn how to recognize particular problems. Seeing the same kind of problem multiple times will teach you what to search for in a home.
• Get acquainted with a contractor – If you are not a contractor yourself then it is a good idea to strike up a friendship with a contractor.  They will be able to give you estimates on your potential properties.  You can also refer work to him to keep him busy.
• Take good notes – When you are looking at a home with a contractor take notes about the problems that he points out and the price for the repair.
• Study material prices – Get accustomed to visiting the local hardware stores to get prices on materials. Knowing when prices are going up, or going down, or certain items will help you make more accurate estimates.

• Top Mistakes Rookies Make in Home Flipping (13.1) Rookie mistakes when flipping a home. With mortgage rates still...
• Tips for Selling a Home during a Slow Market (7.3) Successful Real Estate Agents Reveal Tips for Selling a Home...
• Understanding Requirements of Appraisal for FHA Loans in WI (7.2) Understanding Specific Requirements of Appraisal for FHA Loans in Wisconsin...
• Tips for your first Home Inspection (6.6) Considering the cost of purchasing a home it would make...
• Preparing to Purchase that First Rental Home (6.5) Advice About Purchasing Your First Rental Home/Property (Investment Properties: Part...

$60,000 opening bid!    Previously valued at $210,600!

Property Highlights

• Large Wooded Lot
• 2 Car Garage
• Walk Out Basement
• Five Bedrooms
• Three & 1/2 Baths
• 2 Fireplaces
• Basement Bar
• Deck
• House Vacuum

Features

Just Sold! 1817 Anhalt Dr, Madison Wisconsin 53704

We are happy to announce a sale for another Madison Wisconsin Rock Realty home seller!

This home was the perfect little tri-level on Madison's East Side. The buyers got a great price on this bank accepted short sale. Congratulations to the buyers and our sellers on this successful Madison short sale transaction!

If you are thinking of selling or buying a home in Wisconsin, our home buyer specialists would be happy to assist you. Give Rock Realty a call at 877-774-7625. We are a full service real estate brokerage.

OTHER ARTICLES

• Getting Pre-Approved for a Mortgage Before Looking for a Home
• First Time Buyers: How To Wade Through Real Estate Lingo
• What’s Just as Important As Location When Choosing a Home?
• 10 Things that are Good to Know Before Buying a Home
• Tips for your first Home Inspection
• Tips for Purchasing a Foreclosure
• Tips for Picking the Right Wisconsin Home

Rock Realty Client Testimonials

"Mike was wonderful to work with. He was always there to answer questions but never pushed me to make a decision. My entire home buying process went smoothly thanks to Mike. I would gladly recommend him and would be happy to use him again the next time I move!"

Laura S. (Middleton, WI 53562)
Rock Realty Buyer Client

Thanks for the compliments, and Congratulations on your closing Laura!

Are you considering purchasing property in Dane or Rock County Wisconsin? Click below to start your home search!

Dane County Properties

Rock County Properties

1916 Clover Ln, Janesville WI 53545
Contact info:
Michael Collins | Rock Realty | 608-921-8536

4 Bedroom Janesville Ranch for Sale

1916 Clover Ln, Janesville, WI 53545

$110,000

KEY FEATURES
Year Built: 1975
Sq Footage: 1260 sqft.
Bedrooms: 4 Beds
Bathrooms: 1 Bath
Parking: 2 Garage
Laundry: In Unit
Lot Size: 10019 Square Feet
Property Type: Single Family House

DESCRIPTION

Wonderful 4 bedroom east side ranch with 2 car garage. Finished basement with bedroom and extra office. Wood burning fireplace in living room. Fenced yard with large deck. Short Sale

ADDITIONAL LINKS

• Website: 1916 Clover Lane, Janesville, WI 53545
• Virtual Tour: 1916cloverln.bestpricedhouse.com

Contact info: 
Michael Collins
Rock Realty
608-921-8536

Brodhead, WI Homes for Sale

Should You Compare Quotes from Various Agents for Home Insurance?

Don’t be fooled by funny commercials and catchy slogans; insurance is quite complicated.  Varying levels of coverage, locations and other factors make insurance policies very different from one provider to the next.  That is why it is so important to compare various quotes from different insurance agents.

Wild Changes for Multiple Locations

Check out these findings from Bankrate for multiple quotes for various locations

Bankrate used the websites of popular insurance providers to get quotes for various cities.  The parameters for the quotes were as follows:

• Single family home
• Full replacement policy
• Value of home $250,000
• Liability policy of $300,000
• A deductible of $500
• Medical coverage of $1,000 for each person

As you can see from the chart in Racine, WI the 3 quotes for the same property varied by 37%.  For higher priced areas such as Chicago, IL the quotes differed by as much as 121%.

What Causes the Differences?

Every year the insurance department from each state will approve a set of rates which is based upon the actual losses in the state from prior years as well as anticipated claims for the upcoming year.  Each insurance company uses a team of actuaries to look at historical data to come up with a reasonable expectation of insurance claims for the upcoming year and compares that with the company’s financial ability to pay the claims.

Each insurance company has their own standards and guidelines for assigning rates.  One company may place a higher weight on the costs to build in a particular neighborhood while a second insurance company would place more emphasis on the rate of crime and possibility for a natural disaster.  This is one reason why it is so important to thoroughly investigate a new neighborhood and understand the area’s history before buying a home.

Rash of Disasters Take Their Toll

The disasters from that past few years all over the country have resulted in higher insurance in multiple areas.  Tornadoes in Missouri, flooding in Tennessee and hurricanes along the northeast have left a wake of millions of dollars of damaged buildings, automobiles and personal belongings.

All of these events, and many similar disasters, have driven up the cost of homeowner’s insurance. Along with these natural problems there is also the issue of higher costs to build a home after it is totaled and the decreased investment returns that insurance companies have experienced with the sluggish economy.

Before getting a policy with an insurance agent make sure all of your bases are covered.  You will obviously need a policy that will take care of your home and your mortgage loan if the property is completely destroyed.  You also need to take an inventory of your belongings to make sure they are protected in the case of burglary, fire or other event.  Some people have collections of valuable items such as art, jewelry and firearms.  Losing these items can be disastrous, especially if the insurance policy is not adequate for the loss.

Verona, Wisconsin Homes for Sale

Hello - Thank-you already to this community, as I recently fell apon your site, and this will be my first blog post here !

You can see my entire blog through my portal here !

Having been though this mess several times beginning n the late 2007's, it was pretty clear that we were in for the long hall. 

Now, why is it that most agents steer away from "short Sales"? And even still - How come the perception for the consumer is not there.....at least not in my area. 

My first Short Sale closing happened in 2008, with a property in Southbury, one town south of our home base of Woodbury, CT.

At that time, I must admit, I was not too up on what and how this thing was getting done. But knew the concept behind it all.

So as I leap forward to today with confidence to rally the consumer, and rally our fellow Realtor - to take advantage of this opportunity to help those that need it. 

It is truly amazing, how even today, if a consumer walks into a bank or home, for either a loan or to apply for a rental - and they don't meet there criteria - its ends there. 9 times out of 10. Our local bankers doing there job? Or should we look at each and every consumer and look to do what would be best for them. We can! And I do. As a Licensed NMLS Originator & Branch Manager, it is our duty to do so. 

Short Sale attempt day one - I head up to the home, spend a few hours cleaning and get picture and show ready. Look at the comps, and make an attempt to see just how and what Flag-star will require. So with some help from this community already, I have my Flagstar "guns a blazing" & ready to "get er done".

The Wisconsin housing statistics are in for March of 2014. Here is an excerpt from what the Wisconsin Realtors® Association (WRA) had to say:

Home sales dropped for the third straight month in Wisconsin as the frigid temperatures and hefty snowfall continued into March, according to the latest analysis of housing market activity released by the Wisconsin REALTORS® Association (WRA). Compared to March 2013, home sales declined 11.3 percent in March 2014, which contributed to a weak first quarter. First-quarter sales fell 8.5 percent compared to the first quarter of 2013. However, the median price of existing homes rose a modest 1.9 percent to $136,500 over the period between March 2013 and March 2014. Median prices were up 4.2 percent for the first quarter relative to the same quarter last year.

“Even with spring officially arriving in the middle of March, the spring selling season has been slow to gather steam,” said Steve Lane, chairman of the WRA board of directors. “We are hopeful that the spring thaw will jump-start the selling season that traditionally gains momentum in the second quarter,” Lane said. Still, Lane noted that the first quarter sales remain above their levels of two years ago — a year that had a relatively mild winter by comparison.

Below are the number of Home Sales and Median House Prices for the state of Wisconsin, Rock County, and Dane County. These stats include Janesville and Madison. Feel free to contact me if you have any questions pertaining to these figures. As you probably have heard, home sales & prices have been increasing over the past few years. This month again showed a decrease of home sales statewide, but an increase in home prices. Dane County's prices increased around 4% in March, year over year, while Rock County's median home price stayed nearly the same. Rock County did show an increase in home sales though, in contrast with the rest of the state.

Thinking of purchasing a home before prices or rates rise any further?! I'd be happy to show you any homes currently listed for sale. Feel free to visit Home Listings in Rock County to search for current Rock County properties or visit Home Listings in Dane County for homes in Dane County Wisconsin.

Now might be the right time to sell your Wisconsin home. Feel free to take a look at our cutting edge Rock Realty Marketing Plan! If you would like some insight into how much your home is currently worth, I would be happy to provide you with a free comparative market analysis. This is a report that gives a close estimate to what your home might sell for in your current local Wisconsin real estate market. Click below:

What's My Wisconsin Home Worth?

Has your home value fallen below what you currently owe? Have you experienced a hardship like divorce or job loss? A short sale may be right for your situation. Visit our page on Wisconsin Short Sales for more information.

These home renovations tend to not pay back your investment.

Home investors have to walk a very thin line in their prospecting and repairing.  They want to find a home that others have ignored due to necessary repairs and updating.  However, they don’t want to waste money on improvements that simply look nice but fail to increase the home’s overall price.  Here are the top renovations that do not add much value to the home.

Grandiose Landscaping

Potential buyers will appreciate a well-kept lawn and may be somewhat attracted to a nice flower bed by the front door, but elaborate landscaping will not add to the home’s price.  Even worse, if the prospective buyer has no inclination to spend hours in the yard weeding, fertilizing and replanting then you may actually scare off a few buyers.  A simple lawn with low maintenance bushes are the best bet for most homes.

Pool

A new pool is extremely expensive and you may not recover even half of your investment when the property sells.  The average home buyer looks at the pool as a major expense and a potential problem in the form of injury or a lawsuit.  Some contracts in recent years have actually been structured to include filling in the pool with dirt and sod just to avoid potential problems.

Carpet throughout the Whole Home

It can be rather expensive to replace the carpet in an entire home.  Additionally, styles and preferences change over the course of time and homeowners may wish to have a more updated look in the home.  The need to replace a large amount of carpet sometime in the next 3-5 years would likely be daunting for most homeowners.  A better bet is to have hardwood and tile in the home.  They are easier to clean and most people appreciate the simple upkeep. Although the initial investment in hardwood or tile is more expensive, you are more likely to get a greater amount back when you sell the home.

More Home than the Rest of the Neighborhood

One of the fundamental basics of flipping homes is to search for a property that conforms to the neighborhood.  Never buy the absolute biggest home or the smallest home in the neighborhood.  They will be harder to sell.  Along the same thought process, never add more to a home that will make it vastly different from the neighborhood.  If all the properties on the street are single story homes then it makes no sense to tack on a double story addition.  Stick with the norm for the neighborhood in order to be able to move the property quickly.

Expensive Cosmetic Features

Some people like to brag about the Italian tile in the kitchen or the gold chandelier in the dining room when they are working on a remodel.  However, these expensive items add little to the value of the home.  It is better to make sure the home has plenty of lighting, has ample space and that the closets and cabinets are well organized.  Those expensive add-ons can be purchased by the next owner.

Basically, the best improvements you can make to an investment home are the ones that add function and space.  Anything else will simply be for show and potentially cost you too much in the long run.

Has anyone had the situation where the short sale bank cancels the home owner's home insurance policy?

I have never had this happen... Please help.

4136 N River Rd, Janesville, WI 53545 - $190,000

2500 Square Foot Home on Waterfront Acreage

Well maintained riverfront property. With 2500 s/f and over an acre lot, this will not last long! Call Michael Collins at 608-921-8536 to schedule your showing! Click any image below to see additional details. Previously sold for $278,000 back in 2003!

Property Highlights

• 2 Car Garage
• Lot is on the River
• Over an Acre lot
• Fireplace
• Central Air
• Great Location

Features

Rock Realty Client Testimonials

"Mike & Matt,

Thank you so much for helping us find our dream home! We love it! Thank you for the many hours spent in research, travel, phone calls, and emails. Thank you for being open & honest with us every step of the way! We felt we could trust you 100%. We really enjoyed working with you and highly recommend you to others.

Thanks!"

Kevin & Abby G. (Madison, WI)
Rock Realty Home Buyer Client

Thanks for the compliments, and Congratulations on your new home Kevin & Abby!

Looking to purchase a home in Wisconsin?? Contact Rock Realty! We would love to help!!

Rock Realty Client Testimonials

"Mike Collins was easy to talk to and very good at explaining in detail all aspects of the short sale of the property. With a lot of patience, he walked me through the process of a short sale. He was understanding of my plight and very sympathetic.
Mike was a pleasure to work with and he is a man of his word.
Thank you, Mike, and best of luck to you."

Tom D. (Oxford, WI)
Rock Realty Seller Client

Thanks for the compliments, and Congratulations on your closing Tom!

In my previous blog post, I estimated that in 2014, home prices were expected to rebound. 2012 however surprised all of us with sharp price increases. What is causing this price increase? A number of factors may play into it but one of the main variables is the lack of supply thus increasing demand and prices. It is a seller's market and will probably remain until the latter half of this year. However, I don't believe this will last.

Based off our research, there is a artificial lack of inventory meaning, home prices may very well halt its increase and decline for some time. Let's explore why short selling now would be in your best interest.

What will the status of the housing market be in the next couple of years? Only time can tell. What we can investigate are the factors that led to the volatile home prices.

We are seeing large hedgefund investors like blackstone and other cash investors, buy out most of the inventory. Concurrently, new legislation as seen in California, Oregon, Nevada, and Washington, are slowing down the foreclosure flow in those areas which according to Daren Blomquist, VP of RealtyTrac, will result in a backlash of foreclosure activity at the end of this year and into 2014. RealtyTrac is still expecting to see about 600,000 REO's enter the market in 2013. This indicates a hit on home prices to come.

At the same time, homeowners are vulnerable to a large tax liability at the end of this year. The mortgage forgiveness debt relief act is set to expire Dec. 31, 2013. For more information, please read our previous blog post.

A short sale is when you sell your home for less than what is owed. The remaining balance owed is negotiated so if home prices decrease, the difference between the sale price and the amount owed will only grow meaning you have a higher risk of owing more to your lender after you short sell your home.

Moral of the story, no one can fully time the housing market but the uncertainty should create urgency this 2013 year.

Hope this helps

Peter

 www.seattleshortsaleblog.com

Rarely Discussed Tips for Buying that First House

1. Tips on Buying Your First Wisconsin Home Tips on Buying Your First WI Home Getting that first...
2. Tips for Buying a Wisconsin Short Sale Tips for Buying Your First Short Sale A short sale...
3. Bad Choices People Make When Buying a Home Bad Choices People Make When They Buy a Home All...
4. Tips for Picking the Right Wisconsin Home Tips for Picking the Right Home Finding the home that...
5. Tips for Purchasing a Foreclosure Tips for Purchasing a Foreclosure The housing slump that has...

Columbus Ohio is one of the top 10 cities in the United States in which to buy a house, according to http://www.NerdWallet.com, a website designed to provide financial advice and data for young people. The site considered three criteria - availability of homes, cost of living and anticipated growth (measured by population & job growth). Columbus just made the cut at No. 10with these coments "Columbus is a great place to settle down and buy a home, with its low cost of living. This college town (it's home to The Ohio State University) has a laid-back Midwestern vibe." Topping the list was Fort Worth, Texas, followed by Charlotte, N.C. and San Antonio. Indianapolis, at No. 8, was the only other Midwestern city on the list.