5 Tips To Flip A House in Syracuse NY - The Ultimate Guide

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. 

Rehab Costs

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. 

Holding Costs

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:

• Taxes

• Utilities

• Insurance

• 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?

• General Contactor

• Sub Contractors

• Real Estate Agents

• Real Estate Attorneys

• Wholesalers

• Real Estate Accountant

• Mortgage Broker/ Banker

• Insurance Agent

• Inspector

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. 

Contractors

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.