I A Acquisition strategy absentee homeowners, 60, 61 bank-owned/real estate owned, 39 foreclosure auction, 39, 40 bid winning, 52 exit strategy, 50 lien holders, 51 opening bid, 50, 51 professional bidders, 50 property ownership, 52 trustee s sale, 49 foreclosures judicial states, 41 nonjudicial states, 42 preforeclosures, 39, 40 (see also Preforeclosures) REO, 40 motivated home sellers, 61 real estate owned (REO) (see Real estate-owned (REO)) underwater homeowners, 59, 60 Advanced cosmetic repairs, 89, 90, 92 Advanced mechanical repairs, 90 92 Appraisal management companies (AMCs), 139 Appraisals cancellation, property sale, 146 Coroner s report, 138 desk review appraiser, 138 HVCC, 139 improvements and comparables, 140 lower closing costs, 145 mortgage underwriter, 143, 144 new lender, 145 opinion of value, 144 realtor, 140 red-hot real estate market, 145 review, 138 Arizona Regional Multiple Listing Service (ARMLS), 114 B Back property taxes, 65 Bankruptcy, 66 BiggerPockets.com, 168 Borrower s transaction, 147 Business vs. working business, 73, 74 Buyer s real estate agent, 121 C Child support judgments, 66 Civil judgments, 66 Closing costs, 175 Contract analysis As Is sale, 130, 131 bank-financed buyers conventional home buyers, 126 FHA-approved home buyers, 125, 126 VA approved home buyers, 126 cash buyers, 125, 127 closing costs, 129 closing date, 127 down payment, 127, 128 earnest money deposit, 128
222 Contract analysis (cont.) HOA, 130 home warranty, 129 offer price, 124 title company, 129 Cosmetic repairs, 89, 90 Cost control contractors and trades relationship, 98 fixed material and supply list, 98 negotiating with trades, 96 98 overimproving, properties, 100, 101 underimproving, investors properties, 99, 100 D Deal analysis active listings, ARV (see Fast flip formula, fixed costs) backyard bonanza, 25 barking dog discount, 24 block party bonanza, 25 busy street discount, 25 online market analysis after-repair value estimation, 26, 27 income method, 27 replacement cost method, 27 sales comparison method, 28 realtor and real estate investor additional revenue streams, 30 increased visibility, 30 MLS, 29 terms of sale deal, sales comparison approach, 32 estimated ARV, 31 fix-and-flip investor, 32 normal sales, 30 timing, 31 upgrades and repairs, 31 Debt partners vs. equity partners, 183, 184 finding, 183 hard money disadvantages, 182 institutionalized lenders, 181 mom-and-pop lender, 181 requirement, 181 Defects/clouds existence, 66 title insurance company, 66 E Equity partners Form D and PPD, 178, 179 joint venture agreement, 177, 178 legal advice before capital acceptance, 179, 180 LLC with operating agreement, 178 Exit strategy buying and holding, 8, 9 fixing and flipping, 9, 10 seller (owner) financing, 9 wholesaling, 8 F, G Facebook, 167, 168 Fast flip formula, fixed costs holding costs, 35 price offer, 36 purchase costs, 35 rehab costs, 36 selling costs, 36 Federal Housing Administration (FHA) approved home buyers, 125, 126 Fix-and-flip, 72, 73 bad deals, 65 deals, 77, 78, 87, 88, 97, 106 foreclosure, 65 investor, 152 overpaying, 64 Fixed pricing, 97 Form D, 178, 179 H Hard-money lenders. See Debt partners Holding costs, 104, 175 Home buyer, checklist, 108, 109 Homeowner s association (hoa) fees, 130 liens, 66
223 Home valuation code of conduct (HVCC), 139 House selling FSBO, 116, 117 realtors ARMLS, 114 balance sheet, 113 bonuses, 121 business plan, 113 buyer, 114 buyer s agent, 115 electronic signature software, 115 mortgage lender, 115 profit-and-loss statement, 113 real estate forms software, 115 REO deal, 115 seller, 114, 115 standards, 114 strengths and weaknesses, 114 W-2, 113 REO/short sale, 117 119 staging, 119, 120 HUD-1 settlement statements, 147, 148 I Income goal average acquisition price, 6 market variables, 6 rehab, 6 remodeling phase, 6 working capital, 6, 7 Investment capital, 165 Investors active vs. passive investor, 172, 173 equity vs. debt partner, 172 expectations management, 173, 174 junk drawer, 171 trade tools, 174, 175 IRS tax liens, 66 J, K Joint venture agreement, 177, 178 L Lenders finance rules, 136 fix-and-flippers, 134 home loan ecosystem, 135 questions, 134, 135 win-win relationships, 136 Lis Pendens, 66 Losing money, 10, 11 M Materials and labor cost, 106 Mechanical repairs, 90 92 Mechanic s liens, 66 Money borrowing rules, 165 fix-and-flip business, 169 investment capital, 165 networking events, 166, 167 private-equity fundraising, 165 social media networking BiggerPockets.com, 168 blog, 168 craftsmanship case, 167 Facebook, 167, 168 Skype, 169 social media holdouts, 167, 168 Twitter, 169 YouTube videos, 169 warm market, 166 Mortgage underwriter, 143, 144 Multiple listing service (MLS), 29 Municipal liens, 66 N Normal sales, 117 O Opportunity costs, 104, 105
224 P Pow outfit, 92, 93 Preforeclosures offer (contract), 46 post-boom era, 45, 46 short sale deal negotiation, 48 offer (contract), 49 reverse comping, 48 short sale preforeclosures, 47 Pretax profit, 175 Private/hard money financing, 67, 68 Private money. See Debt partners Private placement memorandum (PPD), 178, 179 Profit margins, 87 Project manager, 107, 108 Prospective buyer, psychological effect, 108 Q QuickBooks, 158, 175 R Real estate investment acquisition strategies, 187 BiggerPockets.com, 187 business financial management, 186 career, 92 cost segregation, 187 education and experience, 187 mentor, 188, 189 painful truths, 185, 186 planning and marketing tool, 187 psychology of selling, 187 realtors, 187 self-directed IRA, 186 straight-line depreciation, 187 tax strategy, 186 Real Estate News Blog, 168 Real estate owned (REO) offer writing, 56, 57 urban legend MLS, 55 182-property tape, 55 real estate market crash, 54 REO tape, 54 steeply discount, 56 Realtors appraiser, 140 home buyers, 132 Red-hot real estate market, 145 Rehab project insurance, 75 property securing, 76 utilities, 76 Rehab, time, 103 105 Repair costs, 175 Return on investment (ROI), 174 S 2nd mortgage hold, 65 Securities and Exchange Commission (SEC), 161 Seller s transaction, 148 Selling mistakes extra closing time, buyer, 151 first offer, best offer, 150 higher price homes, 149 lower-priced properties, 150 move in prior, escrow closing, 151, 152 next door friend, 149 renting house, 151 153 Staging, 119, 120 State income tax liens, 66 Substandard finished project, 106, 107 Substantive relationship, 165 T Target neighborhood fixing and flipping, 18 rehab projects, 17 remodel job, 17 Target price point after-repair-value (ARV) range, 19 cash, 18 distressed property, 20 investors flipping, 18
225 price range, 19 steep discount, 20 Target property buying criteria, 16 replacement cost, 16 Target rehab advanced cosmetic repairs, 21 advanced mechanical repairs, 22 cosmetic repairs, 21 mechanical repairs, 21 transformation, 20 Team building investor/contractor relationship, 80 blind dates, 80, 81 courtship, 81 divorce, 84, 85 engagement, 82 honeymoon, 83 marriage, 83 rehearsal dinner, 82, 83 wedding, 83 licensed vs. unlicensed trades, 85, 86 3rd mortgage holders, 66 Track record capital raising, 161, 162 Excel spreadsheet, 158 fancy business plan, 158 high-quality website, 158 mentor/partner/client leverage success, 160, 161 new investors/working capital attraction, 162, 163 own business, 162 post-boom era, 157 preboom era stories, 158 QuickBooks, 158 rebuilding, 158, 159 Troubled Asset Relief Program (tarp), 54 Twitter, 169 U U.S. Securities and Exchange Commission (SEC), 165 V VA-qualified buyers, 137 Veterans Affairs (VA) approved home buyers, 126 W, X Warm market, 166 Y, Z YouTube, 169