Sorry that you haven’t seen a blog post or much from me since the beginning of July when we posted the newest Diary of a Newbie Real Estate Investor. It has been a rough month for me. Those of you who know me well, know that my wonderful mother Ursula Sasso lived with me for the past several years. She was my room mate, companion, my best friend, my biggest cheerleader, helped me tremendously as I’m a single mother and so much more. Everyone loved my mother and called her Oma. She was wildly creative, had a special “touch” with children and with her German ingenuity, she would fix just about anything that was broken from vacuum cleaners to toilets. Oma’s health had been failing over the last 6 months and on July 13th, my beautiful mother left this world. I’m grateful that she is in a place where she is no longer in pain, however, I miss her daily. Her greatest gift to me was to teach me compassion and forgiveness and to live and even die on your own terms. She believed that we are all the masters of our own destiny and that we should do everything we can to live life to the fullest. If you want something, you have to take action and go get it! Thank you all for your patience over the last month. I look forward to getting back in the proverbial saddle. Yours in Success! Desire, Commit, Succeed! Bernadette Trafton, Boston AREIA Chief Connector!
Now…on to flipping homes in Boston…
Flipping homes in and around Boston? Everyone thinks they can do it and get rich quickly, but is it really all that easy? The short answer is yes, but then why do so many investors fail? The true answer lies in laying the groundwork. The actual process of selling a home once the rehab work has been completed is easy. The difficult part is in the preparation as if you fail, your business venture will most certainly not succeed. If you put in the hard work and follow these 5 steps your business will have the best opportunity to grow.
This is more of a brainstorming session. What is your aim? What is your budget? What is your risk appetite? Are you looking short term or long term? What type of homes are you looking into: multi-family homes, condos, commercial or single family? Are you looking to fix and flip? Are you looking to wholesale the property? What is your investment strategy? What are your revenue goals per deal and for years 1, 2, and 3? This step can take place in two hours with a notepad, pen, and a few good critiques.
This is the most important step! The internet has become the most effective and most powerful tool when it comes to researching. However, it’s easy to get lost in the data deluge. Obviously ideal neighborhoods would be ones with high performing schools, in close proximity to major transportation systems, and in areas with low crime rates. However, the market already knows this and adjusts accordingly. Keep an eye on the market update through Boston AREIA to get a good idea about foreclosures, pre-foreclosures and what has been sold in any particular area. So as an investor you need to forecast which areas will have those statistics in the next year or the next 5 years if you are looking more long term. For instance, maybe you have some inside information that there is going to be a new school being built, or maybe Boston will be cracking down on crime in a certain area, or per chance a new city park is being built. These are all factors which could drive the demand and increase the overall livability in certain areas. It’s your job both as an investor and a speculator to drive revenue.
- Set a Target
Set targets for each month! Especially in the beginning when aspects are more controllable. Set performance goals for each person you have working for you. What is your target for fix-flip projects, 3 months? Make sure to have strict, but flexible deadlines. When dealing with a volatile market, it’s important to be able to roll with the punches and to have many contingency plans. Maybe you need a reserve account that you may rely on if you have a few slow months.
- Build Relationships
Flipping homes is a process. You will most likely have to involve a few outside intermediaries, for instance title agencies, realtors, banks, general contractors, junk removal agencies, painting establishments, roofers, and maybe even moving companies. By building successful relationships with these aforementioned industry players you will streamline the business process with increased flow and also increase the revenue of these other companies. Therefore you will most likely get excellent service, maybe even at a discount. The best place to network and meet these people is to become a member of Boston AREIA and come to the meetings on a regular basis.
Execution is key. Real estate is one of the most volatile as well as competitive industries. Failure to act decisively could result in failure. Account for all your expenditures wisely as the IRS will have their records in order, so should you. I keep in close contact with my favorite real estate accountant Joe Craft, CPA. Just contact me for and introduction. If real estate is your only gig, prepare for financial duress by having an operating budget that can account for consecutive months of $0.00 in revenue or create multiple streams of income that will get you through dry months.