href="#fb3_img_img_79f166aa-e275-5d25-91aa-ec5d43f30da1.png" alt="Bullet"/> Acquiring sound financial advice
No one can whistle a symphony. It takes a whole orchestra to play it.
—H.E. LUCCOCK
Most people who talk themselves out of investing in real estate are defeated by a false assumption — that they have to do it alone. The truth is that you don’t have to do it alone. In fact, attempting to fly solo is one of the most common and serious blunders you can make when you’re getting started. Investors who excel at flipping houses are team builders, capable of selecting talented players, coordinating their efforts, and harnessing their skills.
By surrounding yourself with a team of experienced and talented people, all you really need to succeed is a smartphone, some people skills, and a long list of qualified individuals with diverse talents. You don’t know what a house is truly worth? Consult a qualified real estate agent. You’re not good with money? Hire an accountant. Can’t hammer a nail? Call a carpenter.
Sure, hiring these additional people costs extra, but as long as you can accurately estimate the total costs, calculate them into your budget, and still profit from the flip, you win. (See Chapter 11 for details on calculating costs.)
I don’t have all the essential qualities to successfully flip houses. What I do have is the ability to admit that I lack certain qualities and a knack for finding people who complement my skills. In this chapter, I show you how to build your own house flipping dream team.
Teaming Up with a Quality Real Estate Agent
Real estate agents (or house hunters) who know the ropes and have the right contacts can assist you in managing the two transactions that are critical to your success — purchasing a house at less than market value and selling the rehabbed house quickly at a profit. In the following sections, I explain the beneficial services that agents can provide and give you guidance on finding the best agents for your flipping needs.
Recognizing the value of an agent
A good real estate agent is more than just a clerk who pushes paperwork through the system and juggles numbers. The right agent is more like the concierge at an upscale hotel — dedicated to serving your (real estate) needs, whatever they may be. Sure, a qualified real estate agent costs money — typically, a 6 to 8 percent commission — but when you consider the amount of money you’re investing, a single mistake can cost you tens of thousands more. A real estate agent who has plenty of experience working with investors can assist you with these tasks:
Helping you track down investors and other sources of cash. (See Chapter 4 for more about financing your flips.)
Finding houses that meet your search criteria, even when those houses aren’t actively advertised as being on the market. (See Part 2 of this book for more about finding properties to flip.)
Assisting in evaluating properties that you may want to purchase to avoid overpaying for a property. (See Chapters 9 and 10 for tips on evaluating specific properties for purchase.)
Ensuring that your offer has appropriate conditions in place to protect you. For example, you may want to make your offer contingent on the sale of another property you own, the property’s passing inspection, and the title company’s assurance that the title work is in order. (See Chapter 12 for details on offers and negotiations for buying a home.)
Negotiating price, financing, terms, date of possession, and other sticky areas of a purchase agreement.
Expediting the closings (whenever you buy or sell a property) to ensure that nothing goes wrong at the last minute — and offering solutions when everything goes wrong at the last minute.
Helping you estimate the cost of repairs and renovations or putting you in touch with someone who can.
Referring you to reputable contractors, subcontractors, and other professionals (see “Calling In Your Rehab Team,” later in this chapter).
Broadcasting your rehabbed home to every real estate agent in the neighborhood via the Multiple Listing Service (MLS) — a listing of homes for sale that goes out to all the real estate agents in your area — and helping you sell it in half the time (on average) it would take you to sell it yourself. (See Chapter 21 for more about marketing your rehabbed home.)
Evaluating offers on the rehabbed home in a way that doesn’t compromise your position in the market. Some offers, for example, can tie up your home and leave you little compensation if the buyer backs out. (See Chapter 22 for info on negotiating and closing the sale of your rehabbed home.)
Advising you on how much rent you can charge for a property if you want to hold on to it for a while and you need some cash flow.
REAL ESTATE AGENT OR REALTOR: WHAT’S THE DIFFERENCE?
A real estate agent is anyone who has a state license to negotiate the sale or purchase of a property and works for a real estate broker or brokerage company. A Realtor is a real estate agent who’s also a member of the National Association of Realtors (NAR). The United States has more than 2 million real estate agents, but only 1.5 million are Realtors.
What’s the difference? Because the qualifications for obtaining a real estate license vary from state to state, the quality of real estate agents varies much more than the quality of Realtors.
