“Flippers Heaven” Created by Savvy Negotiating

When do you know if you have a great house to purchase, fix and flip?  Many investors start out their career looking for fast money.  They focus on Wholesaling by looking for deals to get under contract and then wholesale for a $2,000 to $5,000 profit.  I’m not saying that you can’t make money in wholesaling; however, you do need to consider all types of real estate transactions such as short sales, lease options, options, and subject to’s in order to find where you can make the most bang for your buck!

My 16 year old son, Taylor, has been involved in my business every since he was able to walk.  He is ready to get his first house!   We used to put him through windows of vacant houses to unlock doors and get inside so that we could make offers.  He has learned so much in my business; many of you heard him speak during my Foreclosures Gone Wild event in Georgia.  He is purchasing his 1^st house, rehabbing and hiring his friends, then flipping for profit with me, Kimberlee Frank, so he can purchase his first car!

This 4 bedroom, 2 bath house in Sanford, Florida is 1,072 sq ft.  They converted the one car garage into a workshop.  This Seller lead was a referral from Dream Team of trades that I use on my properties, which I teach you in my course and trainings.  I was the listing and selling broker with a purchase price of $15,125.00.  The house needs $5,000 to $15,000 in repairs depending on our exit strategy.  The AC doesn’t work, the entire kitchen needs remodeling, the bathroom sinks and cabinets need replacing, the drywall holes need patching and entire house painted, all flooring needs to be replaced, rotten wood on the soffits needs to be repaired, the exterior of the house is PINK and needs to be repainted, the roof is less than 10 years old, the hot water heater is 5 years old, an army of roaches (not kidding) need to die, we need to tear down an old shed that looks like it came from a horror movie made of random pieces of metal (sell the scrap) and the electrical box is a mess which needs rewiring.  The outside of the house is brick and stucco.  (See Picture) The prices in the neighborhood range from $60,000 to $80,000 giving us a wide range of exit strategies. 

There are many exit strategies on this property let’s look at several:

1.  Pre-hab it which means remove all the debris, clean the yard and flip it for a profit.   Cost to do that would be approximately $1,000.
2.  Wholesale the property.  Cost to do that is just holding an open house auction as I teach in my home study course which consists of signs, flyers and time.  Cost would be $200.00
3.  List it and resell it.  We would have 6% commission and 2% closing costs. 

The above choices would be an instant $15k in its present condition. Our end buyer would be landlords or someone who wants to fix up their own property and live in it.  The house would have to be sold for cash in it’s present condition.  Not bad for the first deal for a kid who is 16 years old right?

1. Fix it up and keep it as a rental which would cost $7,500.  Please note that if you are going to purchase a property as a rental you don’t spend as much in repairs as you would to flip and retail it.  Total cost involved would be $22,625.00.  He could rent the property for the $900.00 to $1,000 a month.  Which would mean by the second year, he would be pulling in approximately $750.00 a month cash flow for the rest of his life.
2. Fix  it up and retail the property for full profit.  Maximum repair cost would be $15,000 plus cost to purchase it of $15,125 = $30,125.00.  We could make a $30 to $50k profit, however, our end buyer would be an FHA buyer which requires that we have 2 appraisals and 6 sold comparables if we sold the property prior to 91 days.

The reason why Taylor got such a good deal on this property is because my office did the negotiations with the bank and created the spread based on negotiating skills which I teach.  The most important part of purchasing a short sale is to understand what requirements are on the Arm’s Length Transaction Form, meaning how long you have to hold the property before reselling it.    Since there was no hold time from the short sale lender, we have all 5 options available to us.  The property was purchased as my son’s first project and yes, he is partnering with his mom…. “ME.”  His job will be to look on Craigslist for cheaper cabinets since many people are removing all their cabinets when in foreclosure, in addition to other deals on things that we may use at a great discount.

I will be taking before and after pictures and also filming to educate investors like yourself who would have walked away from a project like this and lost out on thou$and$ of dollar$!   I had to laugh because two of my staff members said “Kimberlee you don’t want this house!”  It was an easy choice to make as I have rehabbed 100’s of houses, done over 500 short sales, and have owned over 43 rentals at a time…. nothing scares me!  What I am telling you is even if you don’t like a property, get it under contract and try the above options.  NOTE:  Short Sales and REO’s must be closed in the same name on the contract that was initially submitted to the short sale lender/REO bank versus adding personal name, LLC, trust, etc.  However, if you use my paperwork in my Home Study Course, your title company and you have a cash buyer, then you can use your end buyer’s cash to purchase the property and you don’t even have to hold the house for more than 1 hour.

The market is tight every where you go as the banks have not dropped their inventory on our market yet which means if you want a good deal, you need to control the deal by finding the seller and do marketing for them to come to YOU!  I believe the best deals that you find are short sales which take 90 to 120 days if you use my system which allows you multiple exit strategies.  Stop waiting, start marketing and get some deals!

Taylor has a big motivating factor for profit on this house.  He wants his first car and his share of the profit will be towards a new car.  So … if you need motivation, pick one thing you want and go after your dreams.  Start finding sellers, allowing you to have all the money you need to make your dreams come true and leave a legacy for your family as I am doing for mine.

Happy Negotiating!

Kimberlee Frank