We buy properties in need of repair, renovate them and make good money selling them for profit (Flipping). Our technique for buying ensures our profit at the time of purchase. This is known as the “Forced Appreciation Method”, which I have explained in other areas of the website.
The most common question that we get asked at REI Signature Homes is “How do you find properties that you can renovate and flip for a great profit without paying a premium for them to begin with?”
Education starts with learning how to find the great deals, how to determine the cost to repair and then to determine the market value after repairs are made. The Savvy Investor knows where to find the right contractors, realtors, escrow officers, etc. and build the right network.
He/she also knows where he/she can get the right financing, ideally private money. However, there is also hard money or the bank’s money to do the deal.
An unsavvy or uneducated Real Estate Investor shows up at the courtyard steps bidding on properties competing with other investors and gets in an all cash bidding war with no clue as to the cost of repair. Or he spends hours looking for properties, reviewing short sale and mortgage reports, and though these are good sources, a lot of time and effort is expended to finally locate a property to purchase and renovate, and still he may get a surprise or two as he begins the rehab.
Whereas the savvy real estate investor has a network that provides him/her with a constant flow of properties to look at. He does not even have to read the short sale report or default mortgage report (these are good sources but takes time and effort). His network has already done that legwork for him.
Let me give you an example of how a network helps get the job done:
A while back, a friend of mine went through an extensive educational program, got involved with a community of savvy investors and had the benefit of a very experienced mentor helping him. Many of the same people that I have worked with over the years.
He found a good property for $85,000 and invited his contractor friend who he met in his investor community to give him an estimate of repairs. He writes the contract subject to financing and inspections and gets a counter offer to buy “AS-IS”.
Armed with this information he reaches out to a private money investor, also in his network and made a call. He and the private money investor came to terms, which were 10% interest and no points. 90 days later the renovations are complete. The property sells for $189,000 with closing and sales cost of $9,000 my friend makes $65,000 of profit. The Private Money Lender gets his payday, and it all happened in just 90 days. That’s a very good first deal for his location and market.
REI Signature Homes works in Bay Area Markets, and now their rehabs all over $1,000,000 in purchases and rehab budgets; thus, our Private Money Investors are making much greater profits. But his first deal was clean, easy to follow and sound, which is why I used it as an example of how having a network can make you quite profitable and successful.
The bottom line to this article is that we have built a network here at REI Signature Homes. We have the right people in the right places at the right times, which makes everybody involved in the process successful. But, since we are also expanding, we are always looking for more people to join our network, especially private money investors.
Our net worth in real estate will always equal our network! In this business, education, knowledge and people are the greatest currency.
If you’ve been looking for the right real estate investment company to invest your private money in, then please contact us. We’d love to get to know you!