People who engage in house flipping can see a “diamond in the rough” when it comes to looking at rundown homes. Simply put, house flipping entails buying a house with the goal of fixing it up and then selling it for a profit.
This undertaking is not meant to be done by one person, but it involves a team of qualified team players. House flipping can be a major undertaking if you don’t have the right team members. Rather than finding your team members in the telephone yellow pages, take the time to ask for references. If you’re considering house flipping, here are some of the main house flipping team members you’ll need, along with important qualities to note when selecting them.
Unless you have a license to practice real estate, one of the most critical team members of a house flipping team is a top-notch, licensed realtor. If you think you don’t need a real estate agent on your team, consider all the time it can take to manage every detail of selling the house that you’ve flipped. A good realtor not only shows your property, but also deals with phone calls and works with lenders. In other words, your realtor should be engaged in all aspects of your flip.
Make sure any realtor you’re considering is familiar with the neighbor of your house and is aware of recent neighborhood trends as this is a significant aspect of whether buyers want to purchase a home in a particular area. A good realtor should also be able to communicate with you, keeping you abreast of any changes.
A good general contractor should be included in your team. This professional needs to know not only what needs to be repaired and how to fix it, but also be able to give you a dollar amount of what repairs will cost and how long it will take.
What’s more, your general contractor should be familiar with state laws, concerning paying non-licensed repairmen. Other qualities include being able to stay within a set budget and have a good track record.
Certified Public Account
You’ll need a good certified public account (CPA). When hiring a CPA, be sure any candidate you’re considering is well familiar with the details of real estate investment accounting as hiring a bad CPA can cost you financially.
Some of the qualities of a good CPA include being exceptionally familiar with tax laws regarding house flipping, besides U.S. tax laws concerning real estate flipping. What’s A top-notch CPA should more a CPA should fit your personality, have good communication skills, being able to communicate effectively not only with you, but also with your attorney. He or she should also be able to give you advice on your business structure, from both a legal and tax perspective.
Title Insurance Company
When picking a title insurance company, be sure it has adequate experience in all types of closings. A good title insurance closer should be able to have exceptional communication skills, keeping you informed all all facets of a transaction. You shouldn’t have to ask your closer for updates because this is part of a closer’s job.
A Highly Qualified Real Estate Lawyer
Instead of choosing any type of attorney, hire only an attorney who specializes in real estate transactions. Your real estate lawyer should be able to:
- Handle foreclosures
- Draw up documents
- Answer legal questions
- Be able to manage owned-financed real estate closings.
A Good Lender
Unless you’re extremely wealthy, you’ll need money in order to fund your house flips. Your loan officer should be thoroughly knowledgeable in the all aspects of the loan process. This is particularly important today because rules continue to change. A good lender should be able to:
- Inform you whether or not a deal will work
- Do everything possible to ensure a deal will be carried out as effectively as possible
- If a deal hits a roadblock, your lender needs to know what is required to ensure the deal goes through.
Considerations and Warnings
- When searching for a realtor, try to find an REO (real estate owned) agent, who specializes in selling bank foreclosures. An REO is an invaluable resource when it comes to house flipping.
- Realtors specializing in short sales are another godsend. These are realtors who work with the banks in selling properties to sellers before the property is foreclosed.
- Be as diplomatic as possible when working with your team members. Try to see their viewpoints and not argue. When you make a mistake, admit it. Even if team members come up with an idea that was originally yours, make them feel as it the idea came from them.
For any questions you may have, please call Center Street Lending. We offer asset-based funding, providing short-team loans while properties are being renovated. Besides financing for the purchase, we also finance any anticipated repairs. Please contact us.
Center Street communications are not intended to provide business, legal, tax, investment or insurance advice. No Center Street communication should be construed as a recommendation for any business or investment strategy by Center Street or any third party. You are solely responsible for determining whether any investment, investment strategy, business strategy or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your legal or tax professional regarding your specific situation.