Chuck Sierk from HubCityInvestors.com and CNSI Enterprises, LLC gets a great real estate investing tip from Jeff Sibert of Options Inc., in Washington, DC. Jeff explains his “chunker” strategy of flipping 3 houses to buy 1 free and clear for cashflow.
New and experienced real estate investors alike understand that cash is king in this business. Cash offers get good deals, cash allows your business to operate, and cash allows you to live the lifestyle you desire. Changes in the market, such as 2006-2008, definitely required changes in investing strategies. Jeff understands this need for change and has implemented a new strategy to allow him to maintain steady cashflow while he continues wholesaleing and rehabbing houses for resale.
Jeff’s chunker strategy consists of quick turning 3 houses to generate a “chunk” of cash which he reinvests into purchasing one property which he will hold as a rental generating him consistent monthly cashflow. The approach he takes, is based on an investing criteria whereby he will receive a 25% cash-on-cash return from each of the investment properties he holds as a rental. Excellent strategy! Stable growing monthly income to support his business which definitely makes the income more consistent than a typical quick turn wholesaling/rehabbing business model. Thanks Jeff!
Chuck Sierk from HubCityInvestors.com gets a great tip from Paul Esajan from A&E’s Flip This House, CT Homes LLC, and Fortune Builders on what mistakes to avoid when rehabbing real estate. Important things to consider including using the correct paperwork, the best contractors, and have a system in place before you start.
When evaluating a property, and making an offer, successful rehabbers have a system they follow each and every time. During the offer stage they are preparing the necessary documentation to get the contracting crews started on day one after (sometimes the same day as) closing on the purchase transaction. Key documents used in preparing for and managing a successful rehab are: 1) Rehabber’s Checklist; 2) Project Repair Estimate Form; 3) Scope of Work; 4) Quote Itemization Form; 5) Independent Contractor Agreement which includes sections for: Scope of Work, Payment Schedule, Idemnification Insurance Agreement, and Final Punch List; 6) Change Order Form; and 7) Contractor Lien Waiver.
The next key to a successful rehab includes selecting the right contractor and clarifying your expectations up front and laying out your system, process, and schedule from the start. Using the key documents and following up regularly with your contractor and being involved in the rehab process insures a high probability for success and minimal project overspending and delays.
So, by having your system in place, with paperwork prepared and ready to go, already developing the business relationship with your contractors before the project is started, you have a formula to run a successful project. Keep an eye out for any breakdown’s in your system and continue to improve the system to make you more successful, more efficient, and more money project after project.
Chuck Sierk from HubCityInvestors.com gets a great tip from Bob Lachance from Fortune Builders and PreforeclosureDailyGrind.com on a little known strategy used in today’s market. With many homes overleveraged, homeowner’s facing foreclosure, and properties being distressed, the Short Sale Rehab strategy is a perfect way to make big profits.
Why is this such a good strategy in today’s market you ask? There are many over-leveraged properties, many people facing the foreclosure process due to adjustable rate mortgages, unemployment, etc. and many are unable to afford property maintenance. The condition of properties become distressed, added to the financial distress, and the opportunity is great for the savvy investor.
Why not wholesale the deal you ask? Banks are making wholesale transactions tougher and more complex with acceptance letter restrictions. By rehabbing the property, in many cases the resale of the property will take place after the restriction period has expired. Also during these times of strict lending guidelines, lenders want to lend money on pretty houses!
Short Sales + Rehabbing = PROFIT$
Chuck and Janet Sierk from HubCityInvestors.com explain the benefits of buying your rehab materials from surplus building supply stores like Heeby’s Surplus, Inc. located in Blandon, PA. Purchase quality materials at discount prices and reduce your real estate investing expenses + increasing profits!
CNSI Enterprises, LLC purchased most of the materials for their most recent rehab project at Heeby’s saving over $1500 which goes directly to the bottom line by reducing expenses. Most surplus building supply stores have a no return policy, so consider that once you purchase, it’s yours. Don’t let this deter you because the benefits of purchasing supplies from a surplus store far out weigh the negatives for rehabs that fit the product quality range. On higher quality rehabs, it is recommended to spend the money on higher quality finishes and materials.