Rehabbing Houses: What they don't show on TV
Posted by Charles P. Rehberg
on Feb 3, 2013
At the January 28th meeting, Nick Aalerud spoke to the club about "flipping" houses. Nick talked to the group about how he finds houses to fix-up. He said that foreclosure auctions are usually postponed, and those that are not are usually "won" by the Bank holding a security interest higher than anyone was willing to bid. He said that good deals "never" make it to the MLS listings. Therefore, he relies on word-of-mouth and advertising.
Nick went over three examples of house "flips" emphasizing the pros and cons of the business. Unlike the "no money down, two week fix-up" programs advertised on TV, the reality of flipping a house is that it takes a large down payment and at least 3-6 weeks for cosmetic renovations. If walls need to be opened, add another 3 weeks, and if an addition needs to be put on the house, add 3 more weeks at a minimum.
In evaluating a "deal", Nick emphasized that you need to determine a resale price and then back-off a realtor commission, points and acquisition fees, legal expenses, holding costs as well as income tax on any profit. He said that good deals are hard to find and there are no more zero-down projects. For those interested in house flips, Nick has a website which chronicles rehabs: www.aarementor.com.
In evaluating a "deal", Nick emphasized that you need to determine a resale price and then back-off a realtor commission, points and acquisition fees, legal expenses, holding costs as well as income tax on any profit. He said that good deals are hard to find and there are no more zero-down projects. For those interested in house flips, Nick has a website which chronicles rehabs: www.aarementor.com.