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Managing Money During a Flip
by Dallas Appraiser L.L.C. on 06/03/14
Managing Money During a Flip
Summary:
Money management during any real estate investment venture is an essential skill. If this is your first time flipping a property it is probably more important on the first flip than any other as you need to fully realize how much things cost and how quickly those expenses can up. It is so simple for the budget on a house flip to get completely out of control. For this reason you need to take control of the financial situation from the very beginning.
Keywords:
#DFW_Real_Estate_Bookkeeping, #DFW_House_Flipping, #property_investment,#pension, #Real_Estate_Bookkeeping, #Bookkeeping_DFW, #Bookkeeping, #DFW, #Dallas, #Appraisal, #Appraiser, #Texas, #Tarrant, #Mansfield, #Arlington, #Fort_Worth, #North_Texas, #Home_Appraisal, #Home_Appraiser, #Real_Estate, #De_Soto, #Euless, #Johnson, #Midlothian, #Burleson, #DFW_Real_Estate_Accounting, #Foreclosure, #REO, #Foreclosures, #DFW_Area_Real_Estate_Bookkeeping
Money management during any real estate investment venture is an essential skill. If this is your first time flipping a property it is probably more important on the first flip than any other as you need to fully realize how much things cost and how quickly those expenses can up. It is so simple for the budget on a house flip to get completely out of control. For this reason you need to take control of the financial situation from the very beginning.
Begin by establishing a realistic budget for the entire project. If you find yourself spending more money in one area than you had originally planned you need to either revisit the initial budget and plan for adding more money to the pot or you need to make cost lowering adjustments elsewhere along the way to recover the excess. You will need to have a firm idea of the projects you are going to tackle, big and small, as well as the costs involved in each project. Take a walk through a hardware store and get a firm grasp of today's prices on the hardware, equipment, and supplies you will need to complete the job.
Use contractors when necessary but sparingly. There are times when it will cost much less to use a contractor on a project than to muddle through on your own. There are also times when local laws require a contractor. You need to use contractors for these times but you need to avoid paying the princely labor costs contractors charge for things that you could easily do yourself. You never want to spend a penny on a flip that you don't need to spend and labor costs are a huge budget buster.
Get permits first and up front. Time is money when you are flipping a house and once you start the work that time is precious. Make sure you have all the permits you need and that they are paid for before you begin the project in order to save time and money after the project has commenced.
Then create a habit of accounting for every penny spent throughout the day at the end of every day. This becomes a good habit to have for your first and all subsequent flips. By doing this you will have a solid grasp of how much money you are spending as well as how quickly you are spending it. You will need money to spend on little things throughout the course of the project so if you are spending money too fast up front you may not have the money needed to take care of the small details that mean a lot when all is said and done.
One huge way to better manage your money during a house flip is to make a conscious decision and consistent effort to work according to your tastes. Chances are quite good, especially for a first flip that you will be working on a house for those who have less financial means than you may have. For this reason you need to keep your project within the budget of your buyers. This will save tons of money. In other words a lower income community cannot absorb the costs of granite, marble, and hardwoods in most situations so don't go to that expense.
In order to turn a solid profit when flipping a house or doing any type of real estate investment you absolutely must have a firm grip on your money, where it is going, and what your plans are for the money. The less money you spend the more money, in many cases you stand to bring home in profit. Spend the money you need to spend in order to improve the value of the home but avoid luxury expenditures that aren't necessary for the neighborhood or the home in question in order to maximize the potential profits you can bring home.
Types of Costs in Financial Bookkeeping
by Dallas Appraiser L.L.C. on 06/02/14
Types of Costs in Financial Bookkeeping
Keywords:
#DFW_Real_Estate_Bookkeeping, #DFW_House_Flipping, #property_investment,#pension, #Real_Estate_Bookkeeping, #Bookkeeping_DFW, #Bookkeeping, #DFW, #Dallas, #Appraisal, #Appraiser, #Texas, #Tarrant, #Mansfield, #Arlington, #Fort_Worth, #North_Texas, #Home_Appraisal, #Home_Appraiser, #Real_Estate, #De_Soto, #Euless, #Johnson, #Midlothian, #Burleson, #DFW_Real_Estate_Accounting, #Foreclosure, #REO, #Foreclosures, #DFW_Area_Real_Estate_Bookkeeping
Direct costs are those costs that can be directly attributed to a product or product line, or to one source of sales revenue, or one business unit or operation of the business. An example of a direct cost would be the cost of tires on a new automobile.
Indirect costs are very different and can't be attached to any specific product, unit or activity. The cost of labor or benefits for an auto manufacturer is certainly a cost, but it can't be attached to any one vehicle. Each business has to devise a method of allocating indirect costs to different products, sources of sales revenue, business units, etc. Most allocation methods are less than perfect, and generally end up being arbitrary to one degree or another. Business managers and accounts should always keep an eye on the allocation methods used for indirect costs and take the cost figures produced by these methods with a grain of salt.
Fixed costs are those costs that stay the same over a relatively broad range of sales volume or production output. They're like an albatross around the neck of business and a company must sell its product at a high enough profit to at least break even.
Variable costs can increase and decrease in proportion to changes in sales or production level. Variable costs vary proportionately with changes in production/
Relevant costs are essentially future costs that could be incurred, depending on what strategic course a business takes. If an auto manufacturer decides to increase production, but the cost of tires goes up, than that cost needs to be taken into consideration.
Irrelevant costs are those that should be disregarded when deciding on a future course of action. They're costs that could cause you to make a wrong decision. Whereas relevant costs are future costs, irrelevant costs are those costs that were incurred in the past. The money's gone.
If you are a Real Estate professional, then it is essential that you manage your bookkeeping properly.
Why Buy An REO?
by Dallas Appraiser L.L.C. on 06/02/14
Title:
Why Buy An REO?
Word Count:
1018
Summary:
An REO is real estate owned by the bank, and many investors consider an REO property to be money just waiting to happen.
Keywords:
#DFW_Real_Estate_Bookkeeping, #DFW_House_Flipping, #property_investment,#pension, #Real_Estate_Bookkeeping, #Bookkeeping_DFW, #Bookkeeping, #DFW, #Dallas, #Appraisal, #Appraiser, #Texas, #Tarrant, #Mansfield, #Arlington, #Fort_Worth, #North_Texas, #Home_Appraisal, #Home_Appraiser, #Real_Estate, #De_Soto, #Euless, #Johnson, #Midlothian, #Burleson, #DFW_Real_Estate_Accounting, #Foreclosure, #REO, #Foreclosures
Article Body:
An REO is real estate owned by the bank, and many investors consider an REO property to be money just waiting to happen. An REO is different from a foreclosure property in that the bank has already tried to sell it at a foreclosure auction and has had no luck getting bids. Because the property was not bid on, the bank then became the owner of the property. Naturally, the bank does not want to keep the REO any longer than possible, and this makes it a great opportunity for an investor. Not every REO is a good deal, but when you look at an REO you will commonly find that there is a lot of money to be made.
So, is this a foreclosure?
Technically speaking, the home was foreclosed on because the owner of the home failed to make their scheduled payments. The bank set up and went through a public auction, but there was not any bids placed on the home, so the bank ended up owing the property. Yes, the home was foreclosed on, but it is well past the foreclosure process and the bank will be anxious to get rid of the property.
Advantages of REO vs. Foreclosed Property
When you are thinking of buying an REO you have to distinct advantages that a buyer does not have with a foreclosed property. The first is that you are able to buy on your schedule, as you do not have an auction date to work with and around. You can make an offer of the home any time; you do not have to wait for bidding to begin. Another big advantage of an REO compared to a foreclosed property is that you can inspect it before you buy, when you cannot do this with the majority of foreclosed homes that you think about purchasing. Being able to inspect the property before you buy will let you know how big of a project you will be dealing with.
Best types of REO to purchase
You might not think the type of loan the home was purchased with the first time around matters but it does. You should attempt to purchase REOss that had a conventional loan the first time around, as you will likely get much better deals with these than you will if you look at FHA and VA loans. The federal government backs FHA and VA loans, and the government can actually buy them back if they are so inclined. Homes that had conventional loans the first time are often purchased for just a fraction of their value, meaning that they can make an investor a lot more money.
Which REO’s you should not purchase
Just because the bank owns a property does not make it a good deal. In fact, when you see that a home or property is an REO you have to wonder exactly what IS wrong with it. The house was not bid on because no one saw the worth in it. Did the home just not have enough equity? Were their IRS liens against it? Was the property just too badly damaged? You need to ask these questions. If the bank cannot answer the questions then you need to be even more skeptical. Take advantage of your right to inspect the REO so that you can see with your own eyes what may or may not be wrong, hire professionals if necessary as well.
One must also be sure that if they are purchasing an REO to fix it up and sell it, that the property is located in a desirable part of town. If the home is not located in a desirable part of town, you should really think about how wise of an investment the property may be. Perhaps location is why the property was not bid on at auction. There are three big things to consider when dealing with any type of real estate and those are location, location, location. Never let a seemingly good deal let you lose sight of how important location is for any piece of real estate that you intend to sell.
Why the bank will sell an REO cheap
Basically, a bank is not set up to deal with real estate. Sure, they give loans to people, but really, they are not equipped to buy and sell real estate. Because banks are not accustomed to dealing with real estate, it often takes them awhile to get the ball rolling so that they can repair the property, and get an agent to sell the property. What this means is that while the bank attempts to get their business together they are losing money hand over fist and the federal government often penalizes them for each and every REO that they acquire.
Because the bank is loosing so much money on each REO, they are willing to sell it fast and cheap. In fact, banks commonly sell an REO property for around 30% of its value just to be done with it. Sure, they end up losing money on the deal, but they end up losing less if they sell cheap now than they would if they kept the property for another six months while they try to pull everything together so that they can sell the property.
The great thing about working with the bank with an REO is that you are not buying site unseen. Because you can walk through the house and make all the inspections that you want, you can deal with them in a way that will give you the best deal, and the bank will typically be happy with any serious offer because it will get the house off of their hand and they will stop losing money.
Generally REOs are a great investment as long as you know what you are getting into. The bank simply wants to get rid of these homes, and if you find the right property and are ready to make the serious investment, it can be a great way to get off and running in the real estate business.
Using Creative Tactics to your Advantage While Selling in a Down Market
by Dallas Appraiser L.L.C. on 06/02/14
Using Creative Tactics to your Advantage While Selling in a Down Market
Keywords: #DFW_Real_Estate_Bookkeeping, #DFW_House_Flipping, #property_investment,#pension, #Real_Estate_Bookkeeping, #Bookkeeping_DFW, #Bookkeeping, #DFW, #Dallas, #Appraisal, #Appraiser, #Texas, #Tarrant, #Mansfield, #Arlington, #Fort_Worth, #North_Texas, #Home_Appraisal, #Home_Appraiser, #Real_Estate, #De_Soto, #Euless, #Johnson, #Midlothian, #Burleson, #DFW_Real_Estate_Accounting
The real estate crash of 2008 looks to be past us here in Texas as Real Estate Values begin apprecitating again. While the market crash was certainly disturbing, real estate market crashes are really not anything new. The Saving and Loan crisis led to the real estate crash of the late 1980s and certainly caused plenty of concern. During that time; however, many investors learned to use creative marketing strategies in order to survive the crash. Whether you currently have a property in a market where sales have slowed down or you need to move your property off the market quickly, there are strategies you can employ in order to avoid becoming a victim of current market conditions.
During the market crash of the 1980s many sellers found it helpful to offer to pay some or even all of the closing costs for the buyer. In many situations this can be a highly successful tactic; however, it does not work in all situations. In some cases, the lender may place limits on the concessions the seller is allowed to make. This is often the case if the buyer is purchasing the property using a Fannie Mae or Freddie Mac loan.
These loans are often attractive to many buyers because they are able to make a lower down payment. In return; however, sellers are frequently limited to concessions of 3% of the total amount of the sales price if the buyer is making a down payment of 10% or less.
In this case, you may need to come up with an even more creative strategy in order to sell your property. One option that many used during the market crash of the 1980s was to raise the price of their property. At first glance, this strategy may certainly seem as though it would be counter-productive. In reality; however, it is a very creative way for you to provide assistance to the buyer with their closing costs.
Here is how this strategy works. Basically, you agree on a price with the buyer and then raise the price by a certain percentage. That money is then given back to the buyer during the closing. On a $150,000 home with a 3% price increase that would amount to $4,500. This money would go directly to the buyer and help them in paying their closing costs. In return, the buyer would obtain a loan for $154,500 and essentially be able to cover their closing costs using their mortgage.
For this tactic to work the home must be appraised for the higher price in order for the buyers to be able to obtain the mortgage loan. Of course, the buyer must also be willing to pay the higher asking price and understand that their monthly mortgage payment will also be slightly higher as a result.
Many sellers are reluctant to make any concessions at all, preferring to try to obtain as much money as they can from the asking price for their property. In a down market; however, it is important to keep in mind that basically every month the property sits on the market is costing money. Over a period of several months this could ultimately amount to far more money out of your pocket than you would give up by making concessions early on in order to sell your property as quickly as possible.
Stay Safe With Contractors When Flipping Houses For Profit
by Dallas Appraiser L.L.C. on 06/02/14
Title:
Stay Safe With Contractors When Flipping Houses For Profit
Word Count:
608
Summary:
Investors interested in refurbishing and reselling distressed properties often want inexpensive repair work, but it is important to avoid a contractor scam. Any contractor who offers significant discounts, makes large promises, asks for a lot of money up front, or wants to work without a contract should be avoided.
Keywords:#DFW_Real_Estate_Bookkeeping, #DFW_House_Flipping, #property_investment,#pension, #Real_Estate_Bookkeeping, #Bookkeeping_DFW, #Bookkeeping, #DFW, #Dallas, #Appraisal, #Appraiser, #Texas, #Tarrant, #Mansfield, #Arlington, #Fort_Worth, #North_Texas, #Home_Appraisal, #Home_Appraiser, #Real_Estate, #De_Soto, #Euless, #Johnson, #Midlothian, #Burleson, #DFW_Real_Estate_Accounting
Article Body:
Investors interested in refurbishing and reselling distressed properties often want inexpensive repair work, but it is important to avoid a contractor scam. Any contractor who offers significant discounts, makes large promises, asks for a lot of money up front, or wants to work without a contract should be avoided.
If you wish to start flipping houses for profit, you will need to work with contractors in order to rescue distressed property so that they're ready for resale. However, some scam artists prey on new investors, especially, by posing as contractors. Since a scam contractor can cost you thousands and can severely reduce any profits you might expect from house flipping, you'll want to watch out for:
1) Contractors soliciting door-to-door. Very few professional contractors need to do this. While some legitimate contractors may use this marketing technique, you have no way of tracing the legitimacy of a contractor who solicits this way.
2) Special prices or discounts that seem suspiciously low. Be especially wary if you are told that you must sign up right away in order to get special pricing. Be extra suspicious if you're asked to give money up front in order to qualify for the special pricing. Professional contractors may occasionally offer a discount, but they do not do so with a hard sell and they cannot afford to offer hugely slashed prices while also offering quality work. If someone is offering to do the work for a fraction of its actual price, you need to wonder where the corners will be cut. You also need to consider that some contractors who are scam artists will slowly increase the price of the work as they go along. Therefore, that surprisingly low figure will end up being a much overcharged amount by the time the job is done.
3) Contractors who want to work with no contract. Some contractors will try to make it sound as though they work on just a handshake. You should never have any contract work done without a legal contract in place. A contract protects both you and the contractor, so any professional contractor will naturally want to have a contract in place. The contractor who does not have a contract in place knows that he or she can walk away at any time, since no official agreement was made.
4) Large down payments. About a third of the total cost of materials is generally the maximum down payment required. Be very suspicious of anything that requires a larger down payment.
5) Long-term warranties and lifetime guarantees. Coming from a contractor who has not been in business very long, these may simply not mean much because there is no guarantee that the contractor will be in business for very much longer. Also, many of the very long-term warranties only apply to parts, rather than labor. Therefore, you or your future house owners will still be responsible for large share of the costs of any repairs. If you are flipping houses for profit, you'll want to make sure that any warranties can be transferred over to the new owners as well.
6) No business address. Look out for contractors who only have a PO address, a single private phone number, or no good way of getting in touch. These people can easily disappear overnight. Look for contractors with an established retail business or an address that has been around for at least a year or more. Make sure that you can track down the contractors if anything does go wrong. When flipping houses for profit, the last thing you want to have to deal with is a shoddy repair job and a contractor who has suddenly skipped town.
How to Build a Profitable Property Portfolio
by Dallas Appraiser L.L.C. on 06/01/14
Title:
How to Build a Profitable Property Portfolio
Word Count:
706
Summary:
Ten top tips from property professionals to aid and abet all those interested in purchasing property and building a real estate portfolio for maximum profitability.
Keywords:
real estate,investment,real estate investment,property,real estate investor,property portfolio,#property_investment,#pension, #Real_Estate_Bookkeeping, #Bookkeeping_DFW, #Bookkeeping, #DFW, #Dallas, #Appraisal, #Appraiser, #Texas, #Tarrant, #Mansfield, #Arlington, #Fort_Worth, #North_Texas, #Home_Appraisal, #Home_Appraiser, #Real_Estate, #De_Soto, #Euless, #Johnson
Article Body:
As more and more of us look for better ways to secure our financial future than investing into stocks and shares or relying on our government to provide for us in our old age, so interest in purchasing property as an investment asset is increasing.
After all rarely do careful investments made into real estate lose a purchaser money, whereas all too often investments made into pensions companies or on the stock market fail to come to fruition - is it any wonder therefore that more people want to know how to build a profitable property portfolio?
Here are ten top tips that expert property investors abide by when looking for property that they can do up and resell or rent out for profit. If you want to learn the tricks of the trade then read onÖ
1) Speak to letting agents and do your own research, find out how much rent you think you can comfortably get from a given property type in a given location. With that figure confirmed and in mind never pay over 100 times more than the monthly rental figure for a property. I.e., if you are sure a property will return you GBP 700 a month do not pay more than GBP 70,000 for that property and you will then achieve a good rental yield.
2) Understand and harness the power of OPM/ other people’s money! Never over commit your own personal wealth to a pure investment property, instead use loans, mortgages and credit facilities and put down the smallest deposit possible. Preserve your own wealth at all costs.
3) Do not invest in future potential, invest in real potential. If an area is considered to be up and coming because in the future it will benefit from better infrastructure never bank on the investment being made, just know that if an area has already arrived and a particular property is already profitable, the future prospects for that property are already assured and make a far better bet than speculating to hopefully, maybe, potentially one day accumulate!
4) Do not make it personal ñ an investment is a pure profit making enterprise therefore do not get emotionally attached to any particular property, remain as objective as possible.
5) When letting property let it unfurnished because you will have enough to cope with getting the rent out of tenants and keeping on top of property upkeep without having to locate someone to fix a leaking washing machine or replace a broken crockery set.
6) Seriously reconsider plans to renovate and refurbish to sell on for profit. Unless you are a builder and an interior designer and you have friends in the trade to help you and get you materials at cost you will end up paying more than you intend to pay and eating away at your profits. Yes money can be made from renovation property but it is far easier to make money from rental property!
7) Learn all you can from the wealth of brilliant books that have been published by property investors and real estate millionaires. You can bet your bottom dollar that all those who give seminars on making money from real estate are actually making their money from you attending their seminar ñ whereas if a successful property portfolio owner has committed their knowledge to print you cannot afford to overlook their wisdom.
8) Do hands on research ñ get out on the streets, visit letting agents and estate agents, look at property prices, rental rates, the popularity of a given area and only when you are certain about a location and a property type should you make a commitment to buy real estate.
9) If you do your homework and keep revising your facts and figures you should be confident in your own decisions and not be swayed by others who might say your plans will never work. You have to have dreams and ambitions and visualize all your hopes and hard work coming to fruition. Keep your feet on the ground and do not be swayed by the negativity and limitation of others.
10) Be financially pessimistic. Always underestimate your returns and overestimate your outgoings that way at best you will be spot on with your earnings and at best you will be rewarded for practical and careful budgeting.
How To Avoid Negative Equity In Real Estate Investment Financing
by Dallas Appraiser L.L.C. on 06/01/14
Title:
How To Avoid Negative Equity In Real Estate Investment Financing
Word Count:
442
Summary:
Real Estate Investment Financing is simply industry jargon for a real estate investment loan. In a bad property market where rental yields are low, the most dreaded word that you can say to a real estate investor is negative equity. So what is negative equity? It is a situation which arises when the foreclosed value of your property is less than the price that you paid for it and in certain states like in New York, the mortgagee (the bank) can then bring a deficiency action a...
Keywords:
#Investment_Financing, #Real_Estate_Bookkeeping, #Bookkeeping_DFW, #Bookkeeping, #DFW, #Dallas, #Appraisal, #Appraiser, #Texas, #Tarrant, #Mansfield, #Arlington, #Fort_Worth, #North_Texas, #Home_Appraisal, #Home_Appraiser, #Real_Estate, #De_Soto, #Euless, #Johnson
Article Body:
Real Estate Investment Financing is simply industry jargon for a real estate investment loan. In a bad property market where rental yields are low, the most dreaded word that you can say to a real estate investor is negative equity. So what is negative equity? It is a situation which arises when the foreclosed value of your property is less than the price that you paid for it and in certain states like in New York, the mortgagee (the bank) can then bring a deficiency action against the owner to reclaim the difference.
This article will therefore go on to examine three ways to prevent a negative equity situation in the longer term.
The first key to preventing yourself from a negative equity situation is always look at the downside of any investment and analyze the rental yield of your property in a bad year. In real estate investment terms, this means that you look at the average rental yields of your property in the lean years to see if it drops below your monthly installment for your mortgage repayment. I hate guessing, so the best way is to go to a real estate agent and ask them to generate a graph and then do your own analysis to see if your property rental would go below the amount that you are paying for your monthly mortgage installment.
The second factor to consider is the price that you pay and the monthly installments. Many people during a property boom, tend to overpay for their property and as a result, when the economy turns around, the changes of a negative equity situation arising is quite possible. Excessive exuberance in the real estate market like in the stock market can make you more likely to buy the property at an all time high.
The third factor is the rebound of a sector. Spend some time looking at statistical data. Which property sectors rebound more quickly than others in response to a good market and economy? By choosing your property investment right, even if the market is bad, your chances of a turnaround are better than the national average. This is also an application of the common adage of “making the best of a bad situation” in real estate investing.
In conclusion, by spending some time to consider the three above contributing factors and spending some time to analyze a property investment can save you much heartache later and prevent you from falling into a negative equity Real Estate Investment Financing situation.
Copyright © 2006 Joel Teo.
Profit and Loss Statements in Real Estate
by Dallas Appraiser L.L.C. on 06/01/14
Profit and Loss Statements in Real Estate
keywords: #Real_Estate_Bookkeeping, #Bookkeeping_DFW, #Bookkeeping, #DFW, #Dallas, #Appraisal, #Appraiser, #Texas, #Tarrant, #Mansfield, #Arlington, #Fort_Worth, #North_Texas, #Home_Appraisal, #Home_Appraiser, #Real_Estate, #De_Soto, #Euless, #Johnson
It might seem like a no-brainer to define just exactly what profit and loss are. But of course these have definitions like everything else. Profit can be called different things, for a start. It's sometimes called net income or net earnings. Businesses that sell products and services generate profit from the sales of those products or services and from controlling the attendant costs of running the business. Profit can also be referred to as Return on Investment, or ROI. While some definitions limit ROI to profit on investments in such securities as stocks or bonds, many companies use this term to refer to short-term and long-term business results. Profit is also sometimes called taxable income.
It's the job of the accounting and finance professionals to assess the profits and losses of a company. They have to know what created both and what the results of both sides of the business equation are. They determine what the net worth of a company is. Net worth is the resulting dollar amount from deducting a company's liabilities from its assets. In a privately held company, this is also called owner's equity, since anything that's left over after all the bills are paid, to put it simply, belongs to the owners. In a publicly held company, this profit is returned to the shareholders in the form of dividends. In other words, all liabilities have the first claim on any money the company makes. Anything that's left over is profit. It's not derived from one element or another. Net worth is determined after all the liabilities are deducted from all the assets, including cash and property.
Showing a profit, or a positive figure on the balance sheet, is of course the aim of every business. It's what our economy and society are built on. It doesn't always work out that way. Economic trends and consumer behaviors change and it's not always possible to predict these and what income they'll have on a company's performance.
Flipping Houses the Sexy Way to Real Estate Riches
by Dallas Appraiser L.L.C. on 05/31/14
Title:
Flipping Houses the Sexy Way to Real Estate Riches
Word Count:
869
Summary:
A detailed explanation of why I will stick to flipping hamburgers
Keywords:
real estate, #investment, #flipping houses, #DFW_bookkeeping_for_Real_Estate, #Real_Estate_Bookkeeping, #DFW, #Dallas, #Appraisal, #Appraiser, #Texas, #Tarrant, #Mansfield, #Arlington, #Fort_Worth, #North_Texas, #Home_Appraisal, #Home_Appraiser, #Real_Estate, #De_Soto, #Euless, #Johnson
Article Body:
It seems to be everywhere, the hype makes you think that flipping houses for profit is as easy as flipping a pancake! At first I couldn't understand all the excitement. Maybe I am just old but it finally dawned on it. Flipping houses isn't new at all. It's just a new name for an old way of making a lot of money in real estate with a LOT of HARD work; fixer uppers.
That's right fixer uppers. Now, that does sound like a lot of work. Who would want to sell you an ebook explaining how to make a lot of money in real estate that involves a lot of hard work? It's better to call it something spiffy and new so the ebook and course profits are increased; without any hard work!
Now comes the question.. what exactly is wrong with flipping houses or buying fixer uppers and fixing them up and selling them? The answer is of course absolutely nothing and it might be the best way to the best profits in real estate.
You need to know what you are getting into though. If you are already making mega bucks with fixer uppers, oops, I mean house flipping, you probably aren't searching the Internet for information. If you're looking to get started you probably ended up here and with a half dozen courses and ebooks purchased.
Now your at the difficult part. Actually doing it. If you were just investing in a simple rental property it would be easy. Buy the property, rent the property, possible resell the property. When you purchase the property you just have to decide on its value once, the rental price (possibly easy if its already rented), and determine if it is easily rented for your desired price.
For the flipper you'll need to decide on some prices. Actually "guess" might be a better word until you have some considerable experience. First you have to decide on the price you'll purchase the house it, then and more importantly you'll have to guess what price you'll be able to sell it at once fixed, and you'll have to guess at what the repairs will actually cost (and how long they will actually take). Guess wrong on any of these 3 prices (or what the repairs will actually involve) and your easy profits with no work may just be dreams digging a hole in your wallet.
Chances are you won't have the benefit of any cash flow from rental income until your fixer upper has been fixed up! If you misjudge the repairs or how long your contractor will take to finish the project you could be paying the mortgage out of your pocket.
Of course your always told to just go after the properties that need minimal work like one coat of paint and the lawn mowed. Good advice. You might ask why the person offering the property does not do that work. There are many possibilities and one might be that for some other reason the property is a dog.
Now, of course I've seen the formulas. For example you can purchase a beat up little house for $140,000 or us. It will cost you another $20,000 to have it fixed up to be the spiffiest little house on the block (OK, make that $40,000 cause your contractor forget a few details). Now the more important part of the formula is that this house is not ready to be sold for $349,000 or so. That means after a month of two of fighting with your contractor you can sell your $180,000 house for $349,000 and pocket a cool $169,000.
Who wouldn't be first in line for that? I suspect there are only two problems with this formula. Remember above I talked about guessing. Well, I guess that a house that needs $20,000 in work to be worth $349,000 will be offered on the market at something like, well, you guessed it $349,000 not $150,000.
The second problem is how we guessed this house should be worth $349,000 in good condition. In my neighborhood there are over 500 condos for sale. One web page lists 494 of them! Some of these are brand new and some are older buildings (some much older). Now this should present some excellent condo flipping opportunities. A little paint, new bathroom or kitchen fixtures and a cheap condo is ready for a millionaire!
The problem with the idea of flipping condos in my neighborhood is that a new building is going up on almost every street corner. Many of the old condos have asking prices as high or higher than a brand new condo. Now, I buy an old beat up one, fix it up, and when I'm ready to sell it I have to compete again brand new condos!
That is a sales job I don't want. Every purchaser will ask the same question, I can buy a new condo for the same price.. why do I want your old one (fixed up or not)
Bookkeeping in Real Estate
by Dallas Appraiser L.L.C. on 05/31/14
Bookkeeping
So what goes on the accounting and bookkeeping departments? What do these people do on a daily basis?
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Well, one thing they do that's terribly important to everyone working there is Payroll. All the salaries and taxes earned and paid by every employee every pay period have to be recorded. The payroll department has to ensure that the appropriate federal, state and local taxes are being deducted. The pay stub attached to your paycheck records these taxes. They usually include income tax, social security taxes plus employment taxes that have to be paid to federal and state government. Other deductions include personal ones, such as for retirement, vacation, sick pay or medical benefits. It's a critical function. Some companies have their own payroll departments; others outsource it to specialists.
The accounting department receives and records any payments or cash received from customers or clients of the business or service. The accounting department has to make sure that the money is sourced accurately and deposited in the appropriate accounts. They also manage where the money goes; how much of it is kept on-hand for areas such as payroll, or how much of it goes out to pay what the company owes its banks, vendors and other obligations. Some should also be invested.
The other side of the receivables business is the payables area, or cash disbursements. A company writes a lot of checks during the course of year to pay for purchases, supplies, salaries, taxes, loans and services. The accounting department prepares all these checks and records to whom they were disbursed, how much and for what. Accounting departments also keep track of purchase orders placed for inventory, such as products that will be sold to customers or clients. They also keep track of assets such as a business's property and equipment. This can include the office building, furniture, computers, even the smallest items such as pencils and pens.
