Are you a Flipper or a Holder ?

         There are two schools of thought when it comes to being a Real Estate Investor in today's Market.  Should I Flip it or Should I Hold it?  In today's real estate environment, lots of experienced Real Estate Investors are saying to actually do Both to maximize your profits.  

What is a Flipper?

     A Flipper is an investor who buys a property and is looking for a short term profit.  It can be that they buy it and then immediately sell for a profit to another investor.  Or, they do the rehab on the property and then sell it on the market to a Buyer looking for a nice home.

     The advantages to Flipping are quicker profits for the investor.  Cash flow is the main goal and the property is owned for a short period of time. 

     Having the most current sold comparables and a good understanding of rehab costs are key to keep the profit margin high.

     More recently, with the flood of bank foreclosures and other distress sale properties driving the appraised value of homes lower, Flips harder to accomplish.  When selling, the appraisal is the key and when appraisers use the bank foreclosures as comparables, the property might not appraise as high as originally estimated.  Being conservative choices with good resale values, and a little extra wiggle room just in case, is the key to Flipping in today's market.

What is a Holder?

     A Holder is a Real Estate Investor who buys with the intention of holding it for a long term.  Usually a minimum of a year and most investors much longer.  The property may be a rehab project or just carpet and paint touchup.  All of the bells and whistles to attract Buyers are not a big requirement for Renters.  When a Buyer puts the money into buying a home it's Theirs.  But with Renters, it's You property.  Competitive rent along with being functional and neat & clean are generally more important to renters. 

     Rental properties are generally more lower to mid price ranged to maximize the best cash flow monthly.  On a higher priced house, it's actually harder to get a good cash flow because of property taxes and competition.  It's cheaper to buy than to rent in today's market which affects the higher priced home rental market.

     Previously, multi family properties were good choices for Real Estate Investors, but today savvy investors are keeping their excellent cash flow and waiting for the real estate market to improve to make more money before selling.  There are multi family properties on the market but generally they are overpriced and don't cash flow or have not been maintained and need a ton of work making them not the optimum choice right now.

     Experienced Real Estate Investors are now focusing on single family homes, townhomes or condos in the low to mid price ranges to maximize positive cash flow and wait out the real estate market recovery.

So why are Experienced Real Estate Investors both Flipping and Holding?

     Here's an example:  Townhome is on the market with low monthly association fee.  It needs a little work, carpet and paint mainly, and priced low because of the softer real estate market.  You pick this property up for $150,000 versus the other townhomes which sold for $225,000 a couple of years ago.  You put in $15,000 in rehab costs and rent the property for $1,600 monthly.  Now compare your purchase to the homeowners who purchased two years ago.

    Other homeowners purchased for $225,000 with a $200,000 mortgage.  So they have to wait to sell for $200,000 , to not put money out of pocket.  Or, wait for the market to come back up to $225,000 to break even.   

    Versus  You  ...

     You purchased at $150,000, plus $15,000 rehab, so you have $165,000 into the property.   Your collecting rent every month that is paying the mortgage and other expenses and your collecting $350 positive cash flow.  You decide to sell when the market value is $200,000.  You cash out $35,000 !!!!!  Yes, there are costs to buy and also costs to sell, but you are collecting positive cash flow too.

     This is why Real Estate Investors today are using both the Flip and Hold Strategies in today's market.  Hold for a couple of years waiting for the market to rebound totally makes sense today.   And, some experts are saying the market has bottomed and started to rebound already with low interest rates continuing for Buyers.

     So savvy Real Estate Investors have a multiple strategy to maximize profits, Flip ones that will make a nice profit now for immediately income and Hold ones that will make a nice profit in a couple of years when the market rebounds to where you want to sell.

     The Best of Both Worlds.  But, be sure to Always have a Multiple Strategy today of being sure any property you buy will Produce a Positive Cash Flow if you must rent it for any reason.  Then you win either way and may have to hold a little longer than you expected, but are making money in the meantime while you are holding onto it.

     Hope this helps. 

Top Three Things Home Sellers Must Do in Today's Market

Top Three Things Home Sellers Must Do in Today's Market

Today's market is heating up.  Keeping your property at the top of the viewing list for buyers is the best way to sell your property quickly and for more money.

1)  Know the comparable properties to price yours right from the start.  Check current  market competition and properties sold within the last 3 to 6 months.  This helps you price your property right the first time.  If you overprice your property, buyers will avoid looking at it and move on to properties priced properly and you will sit on the market longer.  The longer a property sits on the market, the more buyers are wondering "what's wrong with it" which is not good.  Be strongly priced but not over priced is the trick to pricing.

     Comparable properties are ones that are similar in size (square footage), style (row, twin, single, condo etc), and amenities (bedrooms, baths, extra rooms, finished basement etc).  Getting comparable homes as close as possible  and in similar condition to yours give you a real understanding of how much you can ask for yours.

2)  Keep your personal feelings out of the sale.  Selling a house is a Business Decision and you should not take personally criticisms from potential buyers and agents.  Don't get upset when you get a Low Ball Offer, they are just being Cheap and it's not a reflection of your property.  They like it or they would not have offered at all.  Don't take it personal if agents don't show up with buyers when they are scheduled.  Of if they take forever to look at the house, the longer they are there the more likely you will get an offer.  Don't get upset if Buyers try to "Pick the Place Apart" with this is wrong or that is wrong.  Again, they are being Cheap, just stand your ground and  give them your bottom line and it's a "Take it or Leave it" and move on instead of feeding into the Drama. 

However, if you keep getting the same complaints from multiple Agents showing the property, then it is something you should definitely address.  Check with your agent and discuss the repeated complaint.  Some issues you can overcome and others are not fixable.  If you live on a busy street, you can't change it, but you purchased the house and someone else will like it too and buy it. 

3)  Pick the right agent to sell your house.  Not all agents are the same and some have a completely different perspective than you might on how they will market your home for sale.  Unfortunately, there are still agents who put a sign in the front lawn and a less than par description in the MLS and
"Hope".  These agents are also the ones that are constantly asking to "Drop the Price" to compensate for their lack of enthusiasm selling it.  You should ask the agent for a "Detailed Marketing Plan" that shows you Exactly How they Intend to Sell YOUR House.  You can choose how long a contract with an agent is to sell your house, it's not automatically 6 months or a year.  Having a "Meeting of the Minds" going into the Listing can help alleviate problems and heartache later. 

Also, be sure to check yourself on the Marketing of your property on Websites like Zillow or Trulia or Realtor.com.  If the agent is not putting all of their effort into Marketing YOUR property that you are expecting, then have a frank discussion and reference the Marketing Plan they described.  Remember this is a Business Transaction and it's not Personal.  The agent is getting paid to sell your house and you should be happy with their performance.

Hope This Helps.

Kathleen McKinney, Realtor
Real Estate Excel, Souderton, PA
Website:  www.kathymckinney.com
Facebook:  Montco Foreclosure Homes
Email:  reohomes@gmail.com

What is a Foreclosure Property ?

What is a Foreclosure Property?

     A foreclosure sale, or sheriff sale, is the final step in the legal process involving a default on real estate.  Most foreclosures are mortgage related and occur when the homeowner falls delinquent on their mortgage payments and cannot get back on track with the mortgage lender.   There are foreclosure sales that are brought as a result of delinquent taxes, municipal liens or even homeowners association dues, however, we will be focusing mostly on the mortgage lender foreclosed homes with this article.   

How does the Foreclosure Process Start?

     The foreclosure process starts when the mortgage lender files a lawsuit in the courthouse against the homeowners for non payment.  This is the first notice the homeowner receives that the property is being foreclosed upon.  The homeowner has all control over the property at this time and throughout the process until the actual sheriff sale takes place.  The homeowner can bring their payments current with the lender, work out payment arrangements with their lender, or consult an attorney for legal advice to stop the foreclosure process.  

What happens at the Sheriff Sale? 

     After the property has been through the pre-sheriff sale process and the homeowners have not worked out arrangements to postpone or stop the sheriff sale, the property is put up for auction by the Sheriff's Office.  The sheriff's office will read all properties up for sale just prior to the auction and the minimum amount required to purchase.  Each property will be auctioned and if no bidders sufficient enough to cover the minimum amount, it becomes the property of the lender who started the foreclosure proceedings.  If there is a successful bidder, immediately upon sale 10% is due in cash or certified check by the buyer and the balance is due within 10 days.  These are the terms in Montgomery County, PA. 

 What about the Debts of the Prior Owner?

     If a property is purchased at the Sheriff Sale directly, any debts that could be liened against the property may remain and be the responsibility of the new owner.  It is definitely advisable to research the debts you may be responsible to pay prior to bidding on any Sheriff Sale Auction.   Also, be aware that if the property is occupied by the former homeowner or renter, it is your responsibility as the new owner to evict them.

     If the property is returned back to the lender at the sheriff sale, they as the new owner are fully responsible to pay any remaining debts of the prior owner or to evict the prior homeowners.  When the lender puts the property up on the market, they can set whatever price they want to sell it. 

     When you as the new buyer purchase a bank foreclosed property, title insurance is imperative.  The title or abstract company will perform all of the research to be sure the bank has paid all of debts of the prior owner.  Through your payment of title insurance on the new purchase, the title company assumes the risk in case anything is missed and you are covered.

          Hope this Helps
          Kathleen McKinney, Realtor
          Real Estate Excel, Souderton
          Email - McKinney.Kathy@gmail.com
          Facebook - Montco Foreclosure Homes
          Website - www.kathymckinney.com