USA.gov | Foreclosure Information | Avoid Foreclosure | Foreclosure Scams - USA.gov is an online guide to government resources and information. They provide detailed information on the foreclosure process and steps to take to control the effects.
HUD.gov | Foreclosure Resources | Avoiding Foreclosure - HUD is the US department of Housing and Urban Development. They have several resources on their site to direct you in the best direction depending on where you are in the foreclosure process.
Foreclosure Prevention Assistance | NY State Attorney General - This brochure discusses warning signs and first steps of action to take pertaining to foreclosure. They give you several contact references to contact to discuss your specific situation.
On the "flip" side, with lower priced homes, comes lower margins to profit. Your profit in the Syracuse market will all come down to your ability to find great deals in good local areas.
Before entering the Syracuse real estate market to flip a house. I suggest you begin to educate yourself on the process and the truth involved in flipping a property.
If this is your first flip or first few, your sole focus is to make a profit and learn. The CNY real estate market does offer lucrative opportunities. I want you to learn the correct process and some valuable tips that will help reduce your risk and cut down on the learning process.
Tips To Flip A House In Syracuse NY
1) Market Research / Property Criteria
It is important to understand your local market. Before you dive right into your first flip, you should be aware of the current state of your local market. If you have been living in Syracuse for some time, you will be more familiar with certain areas and what locations are more valuable than others.
I recommend that you choose a fairly targeted farm area initially. This will allow you to strictly focus on a specific area, test this area and expand if necessary.
A simple plan to understanding the current state of your local market is knowing a couple key terms and how to calculate them.
Real Estate Supply- How long it should take to sell all of the houses currently listed for sale given the current rate of sales in the area. In normal language, this will tell you if the Syracuse Real Estate Market is a buyer or seller's market.
Buyers Market- If the number of months of supply is large, you will have a market that has more sellers than buyers. (There will be more houses for buyers to choose from)
Sellers Market- if the number of months of supply is small, you will have a market that has more buyers than sellers ( There will be fewer houses for buyers to choose from)
The ideal situation is finding zip codes or neighborhoods that have a supply of fewer than 12 months.
How to Calculate The Supply in CNY
If you do not have access to the MLS, you can utilize sites like Zillow, Trulia, move to, realtor etc. Let's take Zillow for example.
1) go to www.zillow.com
2) We want to find out the total number of listings for a specific zip code.
3) Type the zip code in the search box, and click only listings for sale.
* Zip Code = 13088 | Total Houses for Sale 73*
4) Determine how many houses were sold in the past 30 days
*Change For Sale Listings to Recently Sold Listings*
* Click More - Move to Sold in last 30 Days*
* Zip Code = 13088 | 8 houses sold in last 30 days
5) Divide the total number of houses with active listings by number of houses sold in last 30 days
For Sale = 73
Sold Past 30 Days = 8
Month Supply = 9.125
Property Criteria in Syracuse Real Estate
I just want to touch on this very briefly. Your property criteria are going to be determined by what homes are selling in your area. You have to look ahead to the sale on your purchase. You do not
want to purchase a home that will not sell in your area. (unless.. you get an amazing deal and can rehab and sell under market value)
Your property criteria should look something like this:
Bedrooms : 3-5
Square Footage : 1200+
Location : 13088
Style : Ranch, Colonial, Cape, Split
ARV (After Repair Value | Full Market Value : $100,000 - $150,000
Level Of Rehab : Cosmetic - Advanced Cosmetic
If you are just starting out, you want to be as specific as possible and stick to your criteria. The more experience you gain, the more you will learn the market & know what you can make work and what you can't.
2) Marketing Plan / Strategy
I want you to understand that the success of any real estate investor will lie on his ability to get deeply discounted deals off-market. Now I am not saying that you will not be able to find a property to flip through a real estate agent on the MLS (foreclosure | REO's) but these avenues
are very saturated and deals are hard to come by. I am going to touch on several different marketing techniques, both that can give you an immediate deal and some that will take longer but will benefit your investment career for years to come.
1) Outbound Marketing - is the traditional form of marketing where a company initiates the conversation and sends its message out to an audience. This is the typical marketing you will learn about from other real estate investors.
Outbound marketing techniques consist of:
In my opinion, this form of marketing is becoming obsolete due to the cost and the consumer's ability to block these strategies out.
However, I do recommend that you mix these techniques into your marketing plan/strategy to test and see what works in the Syracuse real estate market.
2) Inbound Marketing - is about using marketing to bring potential customers to you, rather than having your marketing efforts fight for their attention. You will be educating your consumer on your services and allowing them to learn and opt in when they are ready. This strategy is a bit more complicated but if done right, will allow you to dominate your local market.
Some inbound marketing topics to familiarize yourself with:
Creating websites/ having a website (educational hub)
Social Media Marketing
Paid Facebook Advertising
Signing up for online business directories
We are currently seeing a shift from outbound marketing strategies to inbound marketing strategies. If you are looking to build a real estate investment business then you need to study inbound marketing and learn how to implement these techniques. This strategy will take you anywhere from 3-6 months to gain traction but remember you are building an asset for your business that will last forever.
Also with more and more people using laptops and mobile devices, having an online presence has never been so important.
The great thing about inbound marketing is if you are a small business owner trying to dominate a local market, it is not that difficult. Your barrier to entering is much lower and will allow you to dominate your competition.
Analyze Marketing Efforts
Now that you understand finding great deals through your marketing is the most important aspect of your real estate investment business, we have to test and analyze what marketing channels are working for us and double down on those areas. You need to track what channels your leads are coming from. You can do this a couple ways. You can either create an excel sheet
or several excel sheets for each channel and document the leads or you can use a CRM
(Customer Relationship Management Software) to keep track of your leads. I suggest using a free software such as Podio to allocate your marketing efforts. You want to keep track of how much money you have spent on that specific channel, how many leads came through that channel and how many leads you converted through this channel. This will help you identify which channels are working for you and which channels are not.
For your inbound marketing efforts, you need to set up a google analytic's account to begin tracking your website traffic. Google analytics is a very powerful tool. It supplies you with specific information on who is visiting your site (age, gender, location - demographics), which inbound channels these visitors are coming from (social media, organic SEO, PPC ads) and also which keywords they are using to find you in google. This information will allow you to alter and test your inbound efforts to increase your traffic and conversions and decrease your bounce rate.
3) Know The Formula's To Flip A House in Syracuse NY
You discovered what area you want to invest in and have put together a marketing plan to bring leads into your funnel. Now it is time to evaluate these leads and know if these leads you are getting are discounted enough for you to rehab and sell them for a profit. If you have a basic
understanding of simple math, you will have no problem with these formulas. Initially, I want to touch on some basic terminology to analyze these deals:
1) ARV (After Repair Value) : The most important number of any real estate formula you do, will be the ARV of your investment property. The ARV is the full market value of the home after the necessary repairs are done to the home.
2) Repair Costs : How much it will cost you to rehab the property.
3) Holding Costs: How much it is going to cost you to hold on to the property while you flip the home. These costs consist of taxes, insurance, utilities and we include real estate commissions.
4) Profit : How much money you want to make on this specific project. Most people like to make at least 15% of the total ARV. Me personally, I like to make $25,000 - $35,000 per flip. (get great deals and you can too)
The 70% rule
This is a basic formula you run to evaluate your leads. This will give you a good idea if this lead is profitable and worth taking a look into. You want to try and evaluate as many properties as you can initially. This will help you get a better understanding of what properties are selling for in your area.
ARV (After Repair Value) x .70 - Repair Costs = Purchase Price
Here is a quick example. You run a quick CMA (comparable market analysis) to find out what this lead will sell for after your rehab is finished. You find out the house will sell for 150,000. You spoke to the seller and he described the condition of the home for you and what repairs he thinks are needed and how much he thinks needs to be put into the house to sell the home. (add at least 10% to that number). You decide on a repair budget of 35,000. For math will look like this:
150,000 x .70 = 105,000
105,000 - 35,000 = 70,000
Remember that this formula is just a quick estimate to see if this is a property you should evaluate further. Using this formula, the maximum price you can offer this seller would be $70,000.
This formula is a little more detailed and will give you a better maximum offer price. It takes into consideration what it is going to cost you to hold the property and lets you determine the profit you will make on this specific home.
ARV (After Repair Value) - Repair Costs - Holding Costs - Profit = Maximum Purchase Price
Looking to earn some extra money? Get involved in Real Estate? Or maybe you just want to flip a house because you have seen the TV shows.
If you are looking to do your first flip or you have done several, you understand that the home prices in Syracuse NY are very affordable.
This can be both a good thing and a bad thing. With lower full market value prices, it may be easier to get in the game and get started.
5 Tips To Flip A House in Syracuse NY - The Ultimate Guide
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Here is a quick example for this formula. You get your first phone call from a motivated seller. He tell's you all about the repairs and says he's willing to sell his property for 45,000. From the information he gives you, you determine a 40,000 budget is a good number for the repair costs. Once again, you run a quick CMA to see what comparable homes are selling for in this area. You decide that after you fix this property up, you will be able to sell for 135,000.
135,000 - 40,000 - 11,475 (ARV x .085) - 30,000 = 53,525.
Using this formula, with this example, you now know that the highest price you can offer this seller is 53,525 to make a profit of 30,000. Since the seller told you he is willing to sell for 45,000, you call him right back and set an appointment up to put his home under contract.
The toughest part of getting an accurate estimate of what you can offer your leads is being able to estimate rehab costs. This is a fairly complicated process and if you are just starting out, I suggest you find a good General Contractor to walk through these properties with you. Using the formula's we spoke about, the rehab costs are really the only true unknowns. Your General Contractor will be able to walk through a property and give you an estimate of what it will cost him to perform all the work included in the properties scope. To compensate for unknown expenses during a project add 10 - 20% as a contingency / buffer. You will not get a truly accurate rehab cost number until you put the property under contract and put together a thorough scope of work with your General Contractor. Estimating rehab costs is not a topic that we are going to touch on in detail in this article.
These are often costs that people forget about when evaluating their properties. If you neglect to include these costs in your evaluation, you will be sure to earn less on your investment. As stated previously, these are any additional costs that accumulate over the course of a job. These costs start when you purchase the property and end when you go to the closing table. These costs will include:
Real Estate Commissions
You can get a good true estimate on these costs before you take on the project. Our Onondaga county assessor website will allow us to know what the taxes were on this specific property were over the past year. The utility costs are fairly basic. You will be paying the electric and water bills over the course of the rehab. You can ask the seller what he has been paying for these bills in the past 6 months. For the insurance, you can call around and get estimates from insurance companies to see what they will charge you for them to carry insurance on your investment property. Real estate commissions in our area are 7% (if you plan on using a real estate agent). A good way to estimate this portion of your costs is to multiply your ARV by .085 (or 8.5%). This will give you a good number to work your formulas with.
4) Assemble Your Team
One of the best parts of having a real estate investment firm in Syracuse NY is that you can delegate a lot of the work to experts without having them on your payroll. However, assembling a great team is very difficult and can take some time. If you have a good team working around
you, your life as a real estate investor will be much easier.
So who do we need on our team?
Real Estate Agents
Real Estate Attorneys
Real Estate Accountant
Mortgage Broker/ Banker
Without the help of a great real estate investing team, your odds of success are limited. I want you to understand that this is not going to just happen over night. You are going to have some bad runs with contractors, deal with agents who don't know what there talking about, interview mortgage brokers, attorneys and accountants but I promise you, once you find a qualified team who is used to working with investors, your life will be much easier.
I can tell you first hand that the best way to find a good contractor is not by trial and error. It is possible to find good contractors this way, but is not the best way to find some good ones fast.
Doing some research will hopefully help you avoid losing money on your first couple jobs. Although this is no guarantee.
Get referrals from other investors in your area: Hopefully through your networking you can get a local experienced investor to give you a name or two to call.
Ask family, friends or co-workers for references: Its possible that somebody you are close to has had a lot of work done on there house and they have found a contractor that does good work, is trustworthy and performs in a timely manner.
Real estate agents: Ask your real estate agent if they have come across any good contractors in their time working with properties.
A recommendation doesn't mean you work with him
Just because you received a good recommendation from a relative, agent or investor does not mean that that should be the contractor that you use for your rehabs. You can choose to work with this recommendation for a project and see how he performs. This will be your trial and error process but off of a recommendation. If none of these options work, begin calling general contractors in your area and interviewing them. Ask if they have worked with investors in the past, ask for referrals and to see their work.
Real Estate Agents
As the saying goes 20% of the realtors do 80 % of the business.
One of the most important individuals on your team will be your agent. Your agent will play an integral part in either finding you properties or selling your properties. The search for the perfect agent that will fit your needs, timetables and expectations can be daunting and exhausting. Here are some tips on finding an agent that will work for your specific situation.
1) References - Ask family and friends if they have had success with any realtors in the area. You want to create a list of 3-5 potential candidates that you are going to consider. Try to obtain as much background information as possible on these specific candidates.
2) Licensing- Make sure that the agent is licensed by the state and that working as a real estate agent is their full-time job.
3) Interview Prospects- Now that you have your list and have verified that each are licensed, you now want to interview each of these prospects. As with anything you want to shop around a little and see what each agent has to offer and if they are going to be able fit your needs. Here are a couple questions that you want to address in your interviews:
What areas do you do the majority of your work?
How long have you been in the business?
Do you have any references?
If selling, what will be the commissions for the sale of my property?
How many sellers are your representing now?
At what price do you think my home will sell in the current market & why?
What is your advertising and marketing plan for my home?
How often do you plan to communicate with me?
What is your average listing time?
4) Select an agent with the right credentials
CRS (Certified Residential Specialist): Completed additional training in handling the residential real estate.
ABR (Accredited Buyer's Representative): Completed additional education in representing buyers in a transaction.
SRES (Seniors Real Estate Specialist): Completed training aimed at helping buyers and sellers in the 50-plus age range.
If the agent calls himself a Realtor with a capital "R," that means he's a member of NAR. By hiring a Realtor, "the most important thing you get is an agent who formally pledges to support the code of ethics."
5) Look at their current listings - Verify that the agent is selling in the area that you are looking or has directed clients to buy in areas you want to buy.
6) Connection- Make sure the realtor you choose is somebody you connect and communicate well with. You will be connected for the next 6-12 months so be sure this individual is somebody who you are compatible with
7) Hire your Agent- After you went through all the proceeding steps you will now sign a contract with the selected agent. Here you will let the agent know how long you want them to represent you and they will tell you the commission price they will require (negotiable)
Real Estate Attorneys
Your real estate attorney has an important role for your business. They will be in charge of protecting your investment. Here is a brief breakdown of several areas your real estate attorney will assist you with:
1) Real Estate Contracts - This is a very important document and will contain all of the terms of the deal. If you have any questions pertaining to the contract you or your agent has created for you to purchase properties, be sure to consult your attorney
2) Title Search - The title search is run prior to going to the closing table. This ensures that the seller of the property has clear title to the property, that there are no liens/judgments on the property as well as other information that is important to the closing.
3) Title Insurance - This is a deeper look into the title search. Title insurance insures against any hazards that may not have been seen during the title search. A title insurance policy will typically protect you against any defects in the title.
4) Closing - Your attorney will prepare all necessary documentation that is needed to bring to the closing table. They will schedule the closing, explain all necessary documents and ensure both parties are aware of the process.
Real Estate Accountant
Early on in your investment business, setting up a specific business structure may not be necessary. Once you begin to build a portolio or flip a couple houses you will have to consider hiring a professional real estate accountant. Your real estate accountant will help you establish the best business entity for tax purposes. They will be able to give you detailed information to help you with tax savings.
I suggest that even before you begin your real estate investing career you consult with a professional real estate accountant in Syracuse NY. Discuss with them the strategy you intend to use and what type of documentation they will expect come tax season. You do not want to complete a couple flips in Syracuse NY and not be organized to do your taxes.
As you progress with your career your real estate attorney will also be able to help you leverage your investments. The most successful real estate investors use leverage to build wealth and they will be able to offer valuable insight on how to best do this.
Real Estate Broker/ Bank
If you are going to use traditional financing to fund your flips in Syracuse NY, then you will need to connect and build a relationship with a local bank. Even if you are going to be using your own cash, private investors or hard money investors, initially I recommend that you reach out to local banks to begin building a relationship. As you begin to do more flips in Syracuse NY, your lender will begin to have a more important role on your team. They will begin to be more comfortable with you as a risk, possibly offer you a credit line and give you better terms the more times you pay them back.
5) The Rehab Process
As we spoke about briefly before, we will not be getting into how to the details of how to estimate rehab costs in this article but I do want touch on the process and what is involved. The actual rehab process is where the most risk is in a flip. It is very difficult to go through a whole rehab and not go over budget. However there are ways to mitigate your risk and eliminate the uncertainty that goes into your project. Our whole goal here is to be as prepared as possible, have as many details on the project as we can and have a detailed plan to execute. This part of the process is the most time consuming, but the more systems you put in place, the easier your rehab process will become. Here are some of the details that go in to a flip in Syracuse NY:
1) Scope of Work - A scope of work is a in depth description of what each division of your project will entail. It is basically a "to do" list of each phase of the project. This is the document that all of your contractors (subs) will work off of.
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Once you sign the contract, you will have about 7-10 days to do as much research as you want in the home. (just make sure your contract is contingent on an inspection). During these 7-10 days, you will work with your contractors and subs to put together a detailed scope of work for the specific job you are working on. This is all depending on the specific home you purchase and the homeowner. Some homeowners are more lenient and will allow you to come back and forth with your contractors to walk the property, others may be more strict with this.
By creating a detailed scope of work, you will be able to obtain better estimates from your subcontractors. Each sub will now be bidding on the same scope and there will be no confusion between the two of you. As I touched on earlier, it is very important to build a good relationship with a General Contractor to help you with this aspect of the process.
2) Material List - This is a part of the rehab process that I often overlooked early on in my flipping career. Once I began to implement material lists, my jobs began to run much more efficient.
A material list is a list of all the material that you will need for your specific project.
You will gain the majority of your material list through the creation of your scope of work which will lay out the tasks that your GC & subs will be performing on the job. So from this scope of work you are going to gain a basis for what materials you will need to have on the site.
So now you have a basis for what your material list will be on this specific project. You have a pretty good idea of what material you will need for each of the tasks for your contractors to complete. Now, I am going to give you guys the basis for how I set up my material lists for my projects so they are very repeatable (scalable) to shorten this process.
Create a binder- Project Material Lists
Create tabs for this binder for each piece of material you use on your projects (examples)
doors, interior lights, exterior lights, interior wall paint, interior bathroom paint, bathroom flooring, kitchen flooring, carpet, hardwood flooring, kitchen cabinets, kitchen countertops, toilets etc..
Figure out 3-4 different items that you want to use on EVERYONE of your houses you will rehab.
Print out Product data for each of the items you choose and plug them into your binder, under appropriate tabs.
Your Material System is underway
You have just created a system for this specific task of work for your projects. Now for every project, you start you will know exactly what products you will be using. This will make it much easier for you and your contractors to finish your projects on schedule and on budget
3) Schedule - Creating a detailed scope of work along with a material list will help your projects stay on schedule and on the budget. However, a schedule is necessary to implement to hold your subs accountable and to have a set finish date for the future. When you create your schedule, you will want to sit down with your general contractor and your subs that you have hired and discuss the order of operations they will be using for the project. This will allow you to put together a detailed weekly schedule of how your project will run. This will help eliminate any "dead days" and give your contractors a document to work off of.
Here are some good resources for you to help educate you further on the rehab process and estimating construction costs:
The Book On Estimating Rehab Costs - The Investor's Guide to Defining Your Renovation Plan, Building Your Budget, and Knowing Exactly How Much It All Costs - By J Scott
- If you would like a free digital copy of this book - email me and I will send it to you
How to Accurately Estimate Costs For A Rehab Deal
How to Estimate Rehab Costs Like A Pro - With No Construction Background
These articles and books should be a good starting point for you to begin educating yourself on the process of estimating rehab costs
I hope that we gave you some valuable information to begin your house flipping journey. I want you to understand that building a profitable house flipping business does take time but it is very achievable. The best advice I can offer is to begin learning about the process every day. Once you feel that you have built a good foundation and are reasonably comfortable, begin to take action. You will go through periods when you want to quit or give up, please don't. Keep grinding, keep learning and keep taking action. Once you begin to gain some traction, you will create a snowball effect where business continues to get better. I promise you, there will never be a point in time when you are 100% comfortable. " Get Comfortable, being Uncomfortable" and watch how your business grows.
If you guys have any questions about the flipping process in Syracuse NY, you can either leave a comment below, email me at email@example.com or give me a call at (315) 516-8023. We would also love to hear about any success stories you may have had flipping homes in the Syracuse area.