The How To Buy Fix and Sell Manual by PA Deals


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The How To Buy Fix and Sell Manual by PA Deals

  1. 1. The How To’s ofBuying, Fixing, and Selling Written by: Ryan Colquhoun Brought to you by: PA Deals, LLC
  2. 2. IndexChapter 1 .................................... Property SelectionChapter 2 .................................... Due DiligenceChapter 3 .................................... The RehabChapter 4 .................................... PresentationChapter 5 .................................... Marketing
  3. 3. IntroductionThe focus of this material is to educate you with the how to’s of buy, fixing, andselling real estate. Buying, fixing, and selling or better known as “flipping” is amethod of real estate investing that has become widely known over the last fewyears. You have probably seen one or all of the television shows that focus on thistechnique, but WOW, how amazing it seems in 30 minutes of television. You seea property in terrible condition, be renovated to look amazing, and a one day openhouse and it’s sold. If it were this easy for everyone who attempted it, no onewould watch those shows, because there would be nothing amazing about whatthey are doing. But, here in reality, where you and I live we need to have soundprocesses at which we follow each and every time to maximize potential forsuccess.Throughout this material I will focus on a few key elements you need to know andimplement into your buying, fixing, and selling process. I will focus on, what typeof property you should buy, how you should rehab it, how it should be presented,and lastly how to market your finished product. Each of these facets are asimportant as the next, and it takes all of them to succeed. With the techniques youwill learn throughout this material you will see how with the right product,presented the right way, you can successfully buy, fix, and sell in any marketcondition.
  4. 4. Chapter 1So you have decided to buy, fix, and sell real estate. This is a great choice youhave made to begin to earn “quick cash profits”. The first and foremost item I amgoing to address is “Property Selection”. If you are not choosing the right propertyyou are starting off on the wrong path to successfully implementing this strategy. Iam going to break “Property Selection” down into three key areas: Location, PricePoint, and Features. Understanding the importance of each of these three key areaswill better arm you to make the right property selection.The first of the three is Location. Now, if you’ve heard it once, you have heard it amillion times, Location, Location, Location. Well, it is that important as you see itis the first item I am going to address. The number one item you need to belooking at here is that the area you are purchasing is in an area primarily dominatedwith owner occupants. This may not be as much of a concern if you are buying,fixing, and selling in the suburbs, but do not over look it when deciding whatproperty to purchase. If you are investing in an urban area you need to pay closeattention to what surrounds the property you intend on purchasing. If 75% of theblock is tenant occupied, this is not an area you want to be buying to use thisstrategy. It is not always the case, but, tenant occupied properties in a vastmajority are not kept in the condition of owner occupied properties, thus making itharder for you to sell this property to a end run or retail buyer. You will more thanlikely be able to tell if this is the case right away, but you want to be certain. Ifyou are not familiar with the area, take a little walk around the area, and ask a fewfolks “How long have you lived here? When did you buy this home?” Just feelthem out to see what percentage of owner occupied properties there really are inthe area. Is there an exact percentage to make you not want to buy on thisparticular block, absolutely not. A good rule of thumb is 50% is about the max Iwould even think about buy, fixing, and selling, and I say think about becausethere are other factors we will discuss next that may make this a great location.The next item you want to look at when determining if a location is a good fit forbuying, fixing, and selling is other revitalization projects. Are there other investorsin this area renovating properties? Are there other investment companies in the
  5. 5. area? Your parents have probably told you, or you have told your children do notbe a follower - be a leader, well in this case it does not hurt to follow otherdevelopment. This will greatly benefit you if there are other homes in the areabeing revitalized as this is adding to the appeal of the location. Not only otherhomes being renovated, but small business, entertainment, etc... this is a true signof positive growth in the area, thus appealing to end run buyers. You do not have,well maybe you do, enough funding to purchase a whole block and turn it around,so you need to be buying near where this is occurring and benefit from every one’sefforts, as they will benefit from yours.This element of determining a great location in some ways ties in with the last.What you need to look for are areas that have a high number of retail sales with alower number of days on market. The way this ties in with the last element, whichwas other revitalization, is that if all of the other properties being renovated in thearea have been on the market for 9-12 months, and they are as nice as what youplan to do, and priced where you want to price then this is not the right area to bein. What you want to be looking for is a majority of the homes in that area areselling for the markets average days on market. This means if in Harrisburg, PAthe average days on market is 64 days, and 60% of the homes in a given area areselling in 60-120 days, or less, this is a good location. You do not want themajority of the homes that are similar to what you are going to offer and pricedwhere you are going to price to be on the market more than double the marketaverage. So, in this example if 60% of the properties are on the market for morethan 128 days, this is not the best location to be buying, fixing, and selling. A twistto this location element is some areas do not have a high number of sales, becausethere is not a lot of turnover due to many factors, or there are no majorrevitalization projects. This means you then need to focus even more on the dayson market factor not just skip this location. There may have only been 10 sales inthe last year, but every one of them has sold in 50 days or less on market. Thisleads us into our next analysis criteria neighborhood rapport. The type of area Ijust described that has a low number of sales, but the sales that did occur were allunder 50 days would be a neighborhood with great rapport. Many factors can givea neighborhood great rapport. Low crime for sure will stand at the top of the list.When dealing in urban areas this needs to be evaluated. Other reasons a certain
  6. 6. area may have a great neighborhood rapport may be historic district, businessdistrict, etc...So, to recap what type of location lends itself best to buying, fixing, and selling.You want to look at owner occupancy rate, other revitalization projects, retail saleperformance, and neighborhood rapport. I am not saying that all criteria must bemet to the highest degree, but for sure the more the better. When performing yourdue diligence you will see that other revitalization projects and neighborhoodrapport lead to the meeting of your other criteria of retail performance. This is alittle training exercise you can perform. Look at retail sale performance of a givenarea, and educate yourself first hand on the characteristics of that area and howthey fit owner occupancy rate, revitalization, and neighborhood rapport. You mustlook at both sides of the spectrum. Visit any area with great retail performance andthen look at any area with poor retail performance, and make note of whatcharacteristics stand out in both areas. You have just created a checklist of whatyou are looking for when it comes to the location of your first or next successfulbuy, fix, and sell investment.The next characteristic you want to be aware of when determining what property topurchase for this technique is “Price Point”. We are going to look at this from twodifferent angles, one being the retail side and the other being your financial side.Looking at the retail side first, the actual value will vary by market, but what youwant to look for is what is affordable housing in your market. An example of thisbeing Harrisburg, PA where affordable housing is $80K - $150K. In your marketthis may be $40K-$90K, or $150K-$225K, but the key is selecting affordablehousing, which is typically first time home buyer price points. Having a propertythat is fitting for the first time home buyer will outperform any other type of buy,fix, and sell on a consistent basis. Can you find a million dollar homes to flip andbe successful, yeah probably, but as consistently as affordable housing, absolutelynot. There are a lot of benefits in dealing with affordable housing and the first timehome buyer. First and foremost typically the only contingency they will need is afinancing contingency when entering into a purchase contract with you. Where inhigher price points or “move up” homes, you may be waiting for the buyer to selltheir existing home, ugh. Another great characteristic of this affordable housing isthe number of individuals that qualify. You are offering a product that millions ofindividual can realistically purchase. Do you think you would have better results if
  7. 7. millions can buy what you are selling or only thousands? More than that, whichcould you do on a more consistent basis with positive results? If you look back atthe terrible collapse of the housing market in 2008, what properties continued tosell? That’s right “affordable” homes. Who received the most benefits from theFederal Government to get out there and buy during and following the collapse,“First Time Home Buyers”. When you look to stabilize something, you start withwhat is always stable and build on that, thus the reason affordable/first time homebuyer type real estate was where the focus turned when looking to stabilize themarket. I now want to look at the other side of the price point, your financial side.When buying, fixing, and selling or investing in anything you want to make aninvestment that you can financially handle. Affordable housing in every markethas a range as we discussed earlier, Harrisburg, PA for example is $80K- $150K.Depending on your financial reserves will determine which side of the range youwant to be on. Not to say if you have the reserves to handle investing in the $150Kthat you have to, absolutely not, but on the other hand if your financial reserveslend themselves to the $80K do you want to invest in the $150K, absolutely not.You want to make sure you have adequate funding to rehab the property to the bestquality. You do not want to have to cut corners just because you do not haveenough money. It does not make sense to invest in the $150K property and only beable to renovate it to less than perfect condition, because you are not able to handlethe holding costs of the property. You would be much better off to have investedin the $80K property, easily handling the holding costs and rehab. Recapping thissection of property selection affordable housing lends itself more to stability insuccessful retail sales, so think affordable housing. On your financial side thinkaffordable investment, but do not be so cautious you never get off the sideline!The last characteristic of a great buy, fix, and sell property we are going to look atare the features of the property. There are some items here that will vary frommarket to market and location to location, but I will discuss those as we gothrough. If you are investing in certain markets or historical districts with stringentregulations some of these features may not be able to be accomplished, but neitheryou nor the competition will have them, making it a null point. A large majority ofthe buy, fix, and selling you will do will involve an aged property. So, you need tolook at this property and think modernize. The first and most noticeable featureyou will need is an open floor plan. What I typically find is in older properties
  8. 8. they have so many walls creating a ton of small rooms. Looking at this propertyyou want to make sure you have the ability to remove some of those walls thusproviding a large feeling open floor plan. This does not mean all interior wallsmust be removed, but a line of site from the front door to the rear of the propertygoes a long way. Tying in with the open floor plan is a functional layout. What Imean by functional layout is it is not functional if you enter into the kitchen, andmust walk through the bathroom to get to the rear bedroom. Yes this functionalitycan be changed during rehab, but that we will discuss at the end of this section. Inregard to number of bedrooms I have found 3 or more to be best. A lot of the timewhen rehabbing an older home you will want to select a property with 4 or 5bedrooms this gives you the ability to have a finished product that has 3 bedrooms,and modern functionality by utilizing those other bedrooms for things such aslaundry, additional bathrooms, larger bedrooms, etc... The next items you need tolook for are the mechanicals of the property. These can make or break any realestate investment. Having sound electrical, HVAC, and plumbing are an absolutenecessity, so when reviewing to determine if this is a great property you want tomake sure you make what condition these systems are in, or to what degree repairis needed. The feature that is going to be most beneficial is having enough squarefootage to make the needed modernizations to the property to appeal to an end runbuyer.To conclude on property selection you more than likely will not find a propertythat fits all criteria exactly, but as I stated before the more of these characteristicsyou find the better chance at success you have. So, Location, Location, Location,the right price point “Affordable”, and Features keep these three key characteristicson your mind when choosing your first or next property you plan to buy, fix, andsell.
  9. 9. Chapter 2In this chapter I am going to discuss additional due diligence you need to performwhen determining if a property lends itself to a great buy, fix, and sell deal. I willlater in this chapter provide you with a sample analysis sheet that you can use torate a potential deal.Now, that you have found a property that meets your location criteria it is nowtime to look at how to determine the “After Repair Value” or ARV. You wantyour ARV to be realistic and precise it is the most important factor in the dealanalysis other than your rehab budget.The first step is standard, and that is to look at sold comps in the area. You want tofind comparable properties that are similar in square footage, room numbers,parking, number of bathrooms, style (attached, semi-detached, detached, condo,etc...),and condition. You may need to make adjustments if you cannot find compssimilar to the one you are analyzing. For example, if all sold comps have 4bedrooms and 1.5 baths, and the property you are reviewing is 3 bedrooms and 1bath, you need to account for this and make deductions from the comps to arrive ata value. Contacting a local appraiser that is friendly, they are not all, and ask themwhat adjustments they are typically making for room numbers, square footage,bathrooms, etc... The next item to look at is that these comps need to be sold withinthe last 6 months if possible, and within .3 mile. This should be held to if you areinvesting in urban areas. If you are investing in suburban areas you may need togo 12 months, but do not exceed 12 months. In regard to distance depending onyour market you may need to go 1 – 2 miles to find sold comps, and this isacceptable in suburban and rural areas. A key factor you want to look at whenspreading out 1-2 miles is that the property is in same school district and/ormunicipality this can weigh heavily on value. I recommend using no less thanthree sold comps to arrive at a value.The next item I want you to take into account when determining an ARV mostinvestor over look, and do not know to even look at to begin with until they are
  10. 10. ready to list, and that is active comps. If you through analyzing sold comps findthe value to be $150K, but there are eight properties identical to yours on themarket for $119K you chance of success with the higher value may be slim. So,what I want you to do is once you have determined value through sold comps isfind at least 5 listings in the area of the property you are looking at and schedule anappointment to view them. This is your competition. This is what stands betweenyou and your check at settlement. Walk these properties and look at whatcondition they are in. If they are rehabbed properties make note of the finishquality they have used. Do they have ceramic tile in the kitchen and bathroom?Do they have air conditioning? Do they have new windows? Do they have solidsurface countertops? These are the types of items you need to be looking at. Youneed have what your competition has, and I recommend more.Once you have viewed the five active properties and have your value through yoursold comps you now need to compound this information. Using the sold compsformulate an ARV. Now, review your active listings and you easily see what youneed to do to this property to achieve that ARV, or you may need to makeadjustments. One thing I do not recommend doing is being unrealistic, and thiscan happen by over rehabbing the property. Do not think you can get an extremelyhigher value. What you want to do is rehab the property exactly like the otheractive listings, except for a few key “WOW” factors that put yours over the top.This can be accomplished through upgraded lighting, ceramic tile, solid surfacecounter tops, wood flooring, etc... Do not look at these items to get you an extra20%, but look to them to get you a quicker sale. That is the name of the game.This is why pricing your property is so important. It does not matter what themarket condition are if you have a property that is better than the competition andis priced right it will sell, and it will sell in acceptable time.Looking at both active and sold comps will give you a fuller picture of the ARV ofa given property. Do not find yourself comparing yourself to the competition afteryou have rehabbed the property and find they are all better than yours and pricedless. This is why the active comps are so important, and also a great negotiatingtool when acquiring the property. Most sellers will want to focus on whatproperties have sold for in their area to boost their value. If you find active listingslower than that value you want to address that. Yes Mr. or Mrs. Seller homes havesold for that in the area, but right now today there are four properties that are in
  11. 11. great condition on the market for less than that, making it nearly impossible for meto recognize that high value. Just a quick acquisition tip, which I discuss in ourAcquisition Manual, but back to due diligence on determining a great buy, fix andsell property.Over the next few pages I am going review the analysis sheet below. You shouldbe using an analysis sheet similar to this to determine the viability of a deal. All ofthe key factors you need to be looking at are addressed on this form. These first few items are very simple, and you have found this information during your property review when determining ARV.
  12. 12. It is very important to properly analyze your profits and deal viabilitythat you get accurate tax bills. You do not want to find out after you have purchased the property the taxes are $3,000 higher then you expected. That will really put a damper on your return. Now it is time to begin to analyze the numbers. If you are using a form like this or a sheet of paper you as want to start at the top of it with your REALISTIC and PRECISE ARV. This being the starting point for the analysis if you are not accurate here your analysis does not hold much weight. One rule I recommend is to be conservative with this number. Receiving more then you expected is not a bad problem to have.
  13. 13. Now the subtraction begins, ugh there goes my profit.Step #1 – Purchase Price: What are yougoing to pay for the property? Subtract that amount from the ARV.Step #2 – Closing Costs: What are your closing costs going to be to purchase? Are you paying cash and they will be low standard closing costs or are you using private financing or hard $ inwhich you may have points and interest to pay? Subtract this amount next. Step #3 – Insurance: Unless you are crazy you will need to have hazardinsurance and unfortunately that costs money. Subtract that amount next.
  14. 14. The next item you need to subtract from you total is your rehab budget. I will bediscussing the rehab later in this material, but be as accurate as possible with this number.Other than the ARV this numbercan make you sink or swim. As you see I like to account for “What If’s” or a contingency. Industry standard is 5-10%.
  15. 15. The next set of deductions is going to come by way of yourholding costs. This section mayvary a little, because it is going to be based off of time. If youhold the property for 3 monthsobviously your costs will not be as high as if you held if 9 months. Look at your market,and your comps and determine this length of time. Industry standard is 6 months. Step #1 – Utility Costs: Be realistic, for example if you are renovating in the winter of the Northeast you are going tospend more than $20/month onheat. Determine a monthly costand multiply it by the number of months you plan to hold and subtract.Step #2 – Property Taxes: Takeyour annual taxes divide themby 12 and then multiply by thenumber of months you plan to hold and subtract.
  16. 16. This next deduction does not apply if you paid cash for the property, because unless youare paying yourself a mortgagepayment you do not have one. You may not be able to know you exact monthly mortgagepayment, but you can estimateand the multiply by the number of months you anticipate holding the property and subtract.
  17. 17. The last set of deduction is going to come from those associated with you selling costs.Step #1 – Realtor Commission: If you plan to use a realtor to sell your property take their commission percentage times the ARV and subtract. Step #2 – Closing Costs: Depending on your market this number will vary based on transfer tax and closing agent fees. Industry average is 1.5- 4%. If you have questionscontact a local title agent or real estate attorney to determine this number and then subtract.
  18. 18. At this point you have subtracted all the cost that are associated with buy, fixing,and selling real estate. Leaving any of these costs out and you would not have atrue representation of your return. If you find that the Net Profit is not what youwant to earn the only number I recommend changing if you have been accurate onall other is the Purchase Price. For example if the purchase price is $50K and yournet is $12.5K and you want it to be $20K, well simple enough you cannot paymore than $42.5K. You do not want to second guess your rehab or holding timeand cut yourself short. If you were not happy with the $12.5K, cutting those shortcould quickly make that $2.5K. This portion of the due diligence is critical to yoursuccess. You must account for all costs when determining the viability of a deal.How accurate is ARV – Purchase Price – Minus Rehab = Net Profit? I will tellyou, just in case you do not know, not very accurate. If that is all you are puttinginto the analysis of the deal, I would not expect much out of it. Yes, sometimeseveryone gets lucky, but wouldn’t you rather be consistent and accurate that is howyou build a future not on luck.Industry standard net profit is 10-15% of the ARV if using financing, and 15-20%if using cash. If using financing you should be expecting a return on yourinvestment between 75-115% in 6 – 9 months depending on your market. Theseare the types of numbers you need to be looking for when you are analyzing apotential buy, fix, and sell deal. Anything less than these margins does not leavemuch room for unforeseen repair costs, additional hold times, etc...To review what due diligence you need to be performing it all begins withdetermining a realistic and precise After Repair Value that is found by taken bothsold and active comps into consideration. The next step is performing an accurateand thorough analysis accounting for all costs. This due diligence phase of thebuy, fix, and sell strategy should never be overlooked, or taken lightly. Just likefinding a great location to use this strategy, you need to make sure the financialside of the deal is going to work out to our liking and is viable before you evenplace your offer to purchase.
  19. 19. Chapter 3Now on to the best part of buying, fixing, and selling and that is the “REHAB”.Can’t live with it can’t live without it. I am going to discuss a few key items youneed to be doing in order to set yourself up for success. The days of just slappingsomething together, and 4 offers on the first day on market are long behind us.Depending on what market you are in and what price point you are looking tomarket at some items will vary but I am going to explain key elements that areneeded any and every where.The first of those being in a buy, fix, and sell property think “Crisp & Clean”.What I mean by this is your property must appear new. Starting with the flooring,unless the carpet was installed 2 months ago a steam cleaning will not cut it whenusing this exit strategy. Carpets must be unworn, seamed properly, and stretchedto perfection no waves it is your going to be some ones new home not the beach.Keeping with this new thought let’s talk appliances. No matter what appliancesyou are supplying from the refrigerator on down to the dishwasher they must benew. Be budgeting for new appliances when you are determining your rehabbudget, do not get to the end with a beautiful rehab and be stuck placing usedappliances.The next items I want to discuss are the sinks, facets, tubs, and toilets. These itemsas you have seen tend to not look, so great after use and potential buyers will beturned of immediately if these are not new or appear new. A simple must do isreplacing all of the switches, receptacles, and cover plates. These are veryinexpensive items that will add a great element of new. Following suit with thoseis the door hardware. The hinges, knobs, etc... need to be new. Just the last fewitems alone the switches, receptacles, cover plates, hinges, and knobs will make avery bold impression that you even cared about the small stuff. Nothing will turn apotential buyer off more than if the little things were not taken care of. Whatconfidence does that provide to them you would have handled the major items
  20. 20. properly. Do not allow that thought to enter this potential buyer’s mind. Lastly,focus on the exterior of the property, the “Curb Appeal”. Now, this you have hadto heard of. The potential buyer is not being beamed into the property, so what arethey going to see first the exterior. Common items that are not addressed byinvestors are cracks in sidewalks, landscaping, house number, and mailbox. Thisarea again is your first impression, how do you want it to go?This next area of focus I am going to discuss tops the charts when it comes torehabbing to buy, fix, and sell. Attention To Detail. It does not matter if you arerehabbing the property or have a contractor doing it for you it is an absolute mustthat pay attention to detail. Here is how I recommend you handle this. When youare nearing the end of your rehab play Mr. or Mrs. Potential Buyer and view yourown property as if you are going to buy it, or have someone else do this for you afriend, a real estate agent, etc. Drive up to the property. Are there any items younotice on the exterior of the property that do not appear perfect? As you walktoward the property does everything appear as it should gutters, downspouts, doorbell, everything. Once again even the small stuff is important be tough onyourself. Remember this individual is about to commit to potential 30 years ofpayments, not a one year lease.Here is the exercise I want you to perform on the interior of the property. Go toevery window in the property do they all open and close, lock and unlock, and tiltif equipped with this feature with ease? Also, look at all the windows is there paintor tape on them? Next, I want you to do the same thing with all the doors. Dothey open and close, lock and unlock properly and without requiring great force?While you are walking through performing all of these inspections test all thelights, ceiling fans, and ventilation. Something as simple as a light not workingcan turn a buyer off. Yes I know it sounds silly, but once again it is small stuff thatmakes them question the big stuff. Now, I want you to shift your focus to thekitchen and bathroom. Here I want you to make sure all faucets operate with hotand cold water and do not leak. Turn on the tub and shower check here for thesame thing hot and cold water and no leaks. Also fill the tub and sinks do theyhold water as they were designed? Flush the toilet three or four times is itoperating correctly? Do all the kitchen cabinets open and close with ease and alignproperly? Does the vanity and medicine cabinet do the same?
  21. 21. Now, there are only a few more items for you to check. I want you to test theHVAC. I potential buyer is going to turn it on and off and on and off. So, youneed to do the same. Turn the heat on and maneuver the thermostat back and forthabove and below the threshold to have it turn on and off. Make sure it does notsound like there is a large animal in the basement attempting to get out. If thesystem has air conditioning you need do the same for this. You do not want thatpotential buyer to turn and walk out of your property after the terrible noises theyheard. You need to be aware of this issue before they view the property andaddress it. Next, take a tour of the basement is it clean and dry?The last area you need to be inspecting is the remainder of the exterior. Do younotice any items that are not to their best quality? Does all of the exterior lightingwork? Does the garage door work as designed?Each property will have different features and amenities, but test and inspect themall. For sure when a potential buyer is in the property they are going to act like atwo year old and get in everything. Performing this walk through will allow you tobe the one to find the issues, not hearing about them on a feedback form after ashowing. It is definitely easier to critique your contractor’s work, then your own,so as I stated before have someone else do this for you if you have performed therehab yourself.On the next few pages I have provided you with a sample checklist for whoever isperforming this inspection to care with them and make notes on. Using adocument like this one will ensure that you do not forget to inspect certain items.Another great feature a document like this provides is a written list of items withdeficiency that you can check off as you complete them to ensure you are makingcorrections to all of the concerns noted. If you are not writing these types of thingsdown you will for sure forget to make the one simple repair that may have caused apotential buyer to not have interested in your product.
  22. 22. Check If No Repair IsExterior Notes - If Repair Is Required Needed Front Sidewalks Landscaping Gutters / Downspouts House Numbers / Mailbox Light Fixtures Porch Deck Balcony Chimney Storm Windows Exterior Doors Painting Structural Enhancements Basement Windows Vinyl Siding Other Side Sidewalks Landscaping Gutters / Downspouts Painting Structural Enhancements Basement Windows Vinyl Siding Other Rear Sidewalks Landscaping Gutters / Downspouts Light Fixtures Porch Deck Balcony
  23. 23. Storm Windows Exterior Doors Painting Structural Enhancements Basement Windows Vinyl Siding Other Exterior Walls Siding Brick Masonry Other Garage[s] RoofInterior Living Room / Foyer Flooring Drywall Paint Light Fixture Windows Doors Trim Other Dining Room Flooring Drywall Paint Light Fixture Windows Doors Trim Other Kitchen Cabinets Countertop Sink / Faucet Flooring Light / Fan Trim Pantry
  24. 24. Paint Interior Doors Windows Appliances Refrigerator Range Dishwasher Microwave Range Hood Electrical Other Half Bath # 1 Sink / Faucet Flooring Toilet Vanity Ventilation Mirror / MedicineCabinet Paint Trim Interior Door Windows Other Half Bath # 2 Sink / Faucet Flooring Toilet Vanity Ventilation Mirror / MedicineCabinet Paint Trim Interior Door Windows Other Basement Foundation Walls Floors Entry Door
  25. 25. Lighting Other ProjectedMechanicals / Systems Notes Cost Plumbing Electrical Heating Cooling Hot Water Heater Sewer Lines Main Water Line Sump Pump Water Filtration / Softener Other Full Bath # 1 Tub Tub Surround Vanity Sink / Faucet Flooring Toilet Ventilation Mirror / MedicineCabinet Paint Trim Windows Interior Door Other Full Bath # 2 Tub Tub Surround Vanity Sink / Faucet Flooring
  26. 26. Toilet Ventilation Mirror / MedicineCabinet Paint Trim Windows Interior Door Other Bedroom # 1 Flooring Drywall Paint Light Fixture Windows Doors Closet Trim Other Bedroom # 2 Flooring Drywall Paint Light Fixture Windows Doors Closet Trim Other Bedroom # 3 Flooring Drywall Paint Light Fixture Windows Doors Closet Trim Other
  27. 27. Bedroom # 4 Flooring Drywall Paint Light Fixture Windows Doors Closet Trim OtherBedroom # 5 Flooring Drywall Paint Light Fixture Windows Doors Closet Trim OtherLaundry Room Washer/Dryer Water Supply Windows DoorsOther Room Flooring Drywall Paint Light Fixture Windows Doors Trim Other
  28. 28. The last item I want to discuss in regard to rehabbing a buy, fix, and sell is do notgo bottom of the line. This does not mean overspend. You can buy middle gradeto high end finish items for great prices with a little research. The chain homeimprovement stores have clearance sales all the time. Who will know if you paid$0.79/each for ceramic tile or $3.99/each. Depending what price point you are atand what market you are in will play greatly on your decision making here, but nomatter what the market or what the price bottom baseline items are a no go. Themain items I am talking about here are your light fixtures, faucets, cabinets, etc...You want this property to have mass appeal and that comes through WOW factors.If a potential buyer walks into the bathroom and sees a baseline vanity with acheap looking faucet that’s not going to fly. You want them to walk into theproperty and say WOW that bathroom vanity and faucet are amazing, those kitchencabinets and counter top are beautiful, these are the comments that need to beflying as they walk the property. Have a few friends or agents walk the propertylisten to their comments as they walk through. How many times did they makecomments like I mentioned?How important is it for you to follow all of these rehab practices you ask? Well, itdoes not matter how great of a price you paid for the property when you bought itif you cannot sell it. You are buy, fixing, and selling to make a profit and thatcomes at the closing table when you selling. Set yourself up for success. Providea product that blows the mind of every potential buyer that walks through the frontdoor.
  29. 29. Chapter 4In this chapter I am going to focus on presentation, and there is only one word youneed to know and that is “STAGE”. If you are not staging your property you aremissing a huge opportunity to maximize on your transaction. It is proven fact thatproperties that are stages sell faster and for a higher price. There are a lot ofstudies out there to look at but all of them put the numbers around 1/3 less time onmarket and 17% higher sale price. So, even if these numbers are off a little whywould you not be staging? When you go to the car dealership what do the cars inthe showroom look like? They have all kinds or accessories and options, they areclean and shiny. This is how your property should look. How many cars are theygoing sell if you walk into the showroom and the vehicles were dirty and plain?Staging does not have to be a strenuous process. Over the next few pages I willgive you some ideas of items you can place in certain rooms of the property tomake it stand out from the rest. If you are buy, fixing, and selling on a regularbasis you can use these items over and over, but if this is your first no worries theitems I am going to recommend are inexpensive and can be transported in a SUVor pickup truck.As you will see with the room by room lists that follows that we are not overcrowding the property. You want to place key items in key rooms to maximizeyour properties appeal.Kitchen & Dining Room- Display plate set $25- Soap Dispenser $10- Paper towel holder “with towels” $10- Flowers and vase (Table, Window Sill) $15
  30. 30. - Bottle of champagne with glasses $20- Dish towels $5- Small table with two chairs $50 - $250Bathroom- Shower curtain $15- Matching cups $5- Matching soap dish $5- Matching towels $15- Matching floor rug $15- Flowers and vase $20- Toilet paper on the holder $1General- Painting $50- Flowers $30- Silk trees $50- Clean area rugs $75- Mirrors at least (3) $150- Furnishings that compliment the property ????Exterior- Front and rear door mats $25
  31. 31. - Patio set if there is a place for it $75- Tiki lamps $2 - $10- Fire pit $65 or less- Hanging plants $15-$45- General landscaping and accents ???????As you can see none of these items are overly expensive or difficult to move. Thebest part is you can use them over and over again really getting a lot for yourinvestment. It is so important that you stage and present your best product. Thereis no reason why you would not want to give yourself the best chance of selling.Below are a few photos of before and after, and it is as simple as which one wouldyou buy first?
  32. 32. Chapter 5Wow! You are almost there! You have purchased the right property to buy, fix,and sell. Your due diligence was right on. You have rehabbed the property toperfect buy, fix, and sell standards. Staged and it looks great. Where is the buyer?You can do everything else right, but if you do not have a sound marketing plan foryour property you lose, because marketing is all about exposure and the one withthe most exposure WINS!What I am going to layout for you is a step by step marketing plan that you shouldbe implementing on every buy, fix, and sell deal you enter into. Knowing yourplan before you start is the right way to address this. If you do not have a plan or amap how do you ever expect to get there? Over the next page I will walk youthrough a plan that will work in any market.3 weeks from rehab completionAt this point you should have already purchased an address specific website if youdo not have one. These are will help make you advertising easier and moreefficient. An example of this type of domain is Thesecan be purchased from a number of different companies. Looking on google youwill find at least 50 to choose from. Look at them and see which is offering thebest deal at the time. They are always competing strongly against each other, and
  33. 33. that is to your benefit. See who is giving free items away like yard signs oradditional weeks of site hosting.Having letters describing the property, your list price, and if you are offering anyincentives to buyers should be distributed to neighbors. I would not get out ofcontrol with this, but 150-250 letters/flyers should be distributed. Depending onthe property or the location it is in will depend on how far from the property youmarket. An example would be in a residential single family area you would wantto hand these out to neighbors within a 4 block radius. Neighbors are yourteammate in selling your property. They care about who lives in theirneighborhood, and if they know someone looking you can for sure count on themletting them know and attempting to sell it for you.The next part of the 3 week out plan to begin is pulling a mail list of individuals inthe area renting that have a 620 credit score or better. These lists can be purchasedat a number of different websites. This list should not cost you more than $75-$100. You want to mail these individuals a pre-made flyer detailing your propertywith color photos and a great description that describes the changes and upgradesyou made during your renovation. For example new kitchen with granite countertops and ceramic tile flooring, new roof, new HVAC, etc...These flyers that you are mailing you want to have at your property at all times.You can purchase a $10-$25 information boxes online. This box can mount to apiece of wood or they even make info boxes on stakes. These are a must. This is24 hour marketing of your property. These flyers must have stunning color photos.A great detail description and your contact information.You will also at this time begin interview real estate agents if you do not have oneyou consistently work with. When interview the agent you need to be asking themwhat they will be doing for you, and for what percentage. Saving 1% is not worthit if they are not providing you great services. A great agent will be placingdirectional signs, online advertising, open houses, mailings, print advertising, havea great mortgage affiliation, and home warranty program.2 weeks from rehab completion
  34. 34. You will want to place large for sale signs at the property. Make them visible! Asign in the window of a property on a road with a 45 mph speed limit is not goingto be notice, and is useless to do. Drive your vehicle past the home from everydirection possible. You want to be able to see a for sale sign from every direction.This may take multiple signs.Directional signs are also a necessity. Place these at all major roadways near theproperty, and within a 3 block radius. If where the property is located is not on aheavily traveled roadway how do you expect potential buyers to find you if you arenot directing them from their normal route of travel?During the second we from rehab completion you will want to continue with theflyers in the information box. It is a must that this box never be empty. A trickthat I have found to work great is placing balloons on the information box makingit more noticeable. These can be picked up for a dollar or two. They will only lasta few days depending on weather condition. You can also purchase balloons thatare made out of the same material beach balls are made from that are on stiffplastic sticks and these will last for approximately a week, once again pendingweather conditions.Taking the notes you have made during your real estate agent interviews you wantto begin to evaluate. As I stated before the percentage of commission is second towhat they will provide. It will easily cost you more than 1% commission if youhave to hold the property for additional months. Remember the property with themost exposure wins.1 week from rehab completionIt is now time to begin online postings. You will want to write great ad copy thatdescribes all of the highlights of the property. Example of this being 2nd floorlaundry, new kitchen with granite counter tops, etc... Also you want to includegreat photos. Sites you want to be posting to
  35. 35. – Creating a short video tour of your property can be completedin a matter of minutes and uploaded to the site in a few more. This is a great wayto show your property. You can also embed the video or place the link in the otheronline posting you are doing.Place a very specific classified ad in your largest local publication.Renovated Downtown Home – 3 Bed, 1.5 Bath - Everything New – A Must See!This is the week you need to decide what real estate agent you are going to listwith. Over the years I have tried to sell a number of homes on my own, and a greatreal estate agent is worth every penny of commission you pay them. Do notattempt to do this on your own. All you need to do is choice the right agent.1 day before rehab completionAt this time you want to be signing a listing agreement with an agent. Discusswith your agent at this time any incentives you want to offer. I have foundappealing to the greed of other agents works great. Offer a sale agent bonus.Depending on your market and your list price will determine what is fitting, but Ihave found $1,000 is a good amount to offer. You also want to discuss if youwould like to advertise seller help offered with acceptable offer appealing topotential buyers.Now it is time for the good old MLS. This is the greatest selling tool you need tobe part of. When you agent is creating your MLS insertion you must make surethey take flattering photos. Ask your agent to provide you with copies of thephotos for your review prior to the listing going live. First impression mean a lotand you do not want to have to change you photos after a few days on the market,because you see them and they are terrible dark photos of the walls. Thousands of
  36. 36. individuals and agents view the MLS, so you need to being showing your besthere. Review your agent’s written description of the property and make sure itrepresents the property well. Make sure they are making note of the features theproperty has such as new HVAC, new windows, open floor plan, outdoor livingspace, etc... You may also decide to hire someone like “The Property Poet” whocan be found online to write you a great description for around $75-$100. Last, butfar from least is a virtual tour. All multi list systems are setup to allow for virtualtours, so why would you not use it. This is just another element of the MLS thatsome lazy agents do not use, and if the agent is too lazy to do that what else maythey not be doing for you.It is now time for you agent to take over the “for sale” yard signs and directionalsigns. Your agent should also have the ability to create an informational flyer toplace in an information box at the property. This document you also want toreview for accuracy and your liking before placing it at the property. Inform theagent that this box must be kept full at all times.Most agents have a door hanger and direct mail marketing campaign that they willimplement at this time as well. I recommend door hangers being hung in a fourblock radius of the property. The agent will be able to advise you as to what directmail lists they will be mailing and at what frequency they will be doing so.Your agent needs to be scheduling open houses. Different agencies and differentmarkets do this at different times on different days. Typically these are held onSundays, but I have seen some brokerages that do something like “Tuesday NightOut” where they will hold open houses at a number of their listings on a weeknight. Whatever night or day they hold them, I advise no less than 1 a month.There are specific online posting sites that are available to real estate agents andbrokers. You need to make sure your agent tells you what sites they will be listingyour property on, and send you the links to the listings once they are posted. Youwill want to check these sites at least once every 3 or 4 days to make sure that yourlisting are still live and that they are not at the bottom of the page out of theviewers line of site.Lastly, work with your agent to determine the ad they will be using when placingyour listing in the local classifieds. Most of the time larger brokerages will have
  37. 37. large display ads they purchase and your ad will be in that section. You agentneeds to be location specific. Also they need to describe the type of home andfeatures of the home.What I have discussed are minimums an agent should be providing to you. Stayinvolved with your agent, and make sure they are staying involved with yourlisting.