House Flipping Phases

This blog is based around the 6 week process we use our selves when flipping homes.

When buying a “fix and flip” you want to calculate 65% ARV, After Repair Value, when choosing your piece of property so you are able to gain the amount of money you should desire. When using a hard money lender they will sometimes require your ARV be 65%. (See the very end to learn how to calculate 65% ARV)

WEEK ONE

• Find the deal.

• Send email to hard money lender of your choice with address and purchase price to get your pre-approval letter.

• IF you are a realtor, type an offer in dot loop. IF you are NOT a realtor submit your own offer with listing agent on the property.

THE SAME DAY YOUR OFFER IS ACCEPTED

• sign contracts. (IF you are a realtor make dot loop with contracts and a copy of escrow check, buyer/us create loop for buyer to sign.)

• Fill out application for lender for appraisal and to begin process.

• Deposit escrow check with listing company to hold the property (typically $1,000).

• 3 day attorney review starts

• IF your a realtor, send fully signed contracts to the title company and lender. IF NOT have your agent send to the title company, but you will still have to send them to the lender.

• Schedule; Home inspection, get utilities turned on, schedule at least 3-5 contractors to give a bid.

• Get property insurance quote

• You will receive a form to fill out from the title company, make sure you send that back.

• Lender will need business documents, bank statements, etc. (per lender, documents will vary).

WHEN YOU FIND OUT YOUR CLOSING DATE ESTIMATE ONE WEEK BEFORE

• To get utilities switched into your name

• GET CONTRACTS SIGNED WITH CONTRACTOR

• Get W9 filled out with contractor

• Make sure you have a calendar set up to know when each project starts and will be complete.

• Find out from the township what permits are needed

• Find out when public trash pick up is for small trash

BATTLE FORMATION (JOB SITE NEEDS)

• 32 gallon trash can

• Construction trash bags

• Broom & dust pan

• Dumpster

• Lawn mower & weed wacker

• Grass seed

WEEK ONE IN THE PROPERTY

• Demo crew removes old dry wall and anything being removed.

• Cut grass

• Roof (either add a second layer or remove and apply new roof)

• Get kitchen and bathroom lay out done

WEEK TWO

• Electric work: GFI in kitchen and bathroom and lighting

• Plumbing: rough plumbing, hot water heater, and anything that may need moving in the kitchen.

• HVAC serviced or new one installed

WEEK THREE

• Dry wall hang, tape, spackle and trim done

• Paint whole house

• Landscape

• order granite for kitchen.

HALF WAY THERE! WEEK FOUR

• Flooring/carpet

• Install doors

WEEK FIVE

• Bathroom: tub, toilet, vanity, towel racks etc.

• Kitchen cabinets install, granite, knobs

• Schedule cleaning for week six

• schedule CO for week six

WEEK SIX

• Outlet covers

• Put fire alarms in, smoke detectors, & fire extinguisher.

• CO gets done this week & post signs for open house 2 days ahead.

• Host open house you will receive offers and once you get several ask for “Best and final offers but set date usually one week after”

WEEK SEVEN

• Accept an offer

• IF your a realtor submit contracts, IF NOT have agent submit contracts

• IF realtor collect escrow check, IF NOT have agent collect escrow check and signed documents.

AFTER CLOSING

• IF YOUR A REALTOR; Submit paper work through dot loop and submit green sheet.

• IF not just deposit check to business account, if using hard money lender you must have a business account to pay yourself through.

TIME TO CELEBRATE !!

HOW TO UNDERSTAND 65% ARV

Example property; Assume the property is $100K to purchase and you are putting down 20% of your own money towards the down payment ($20K) and after repairs the home will be worth $200K (based on the comps). Now lets say the estimated repairs are $30K (rehab loan will come from hard money lender however you will need some money to begin the process with materials first) your new mortgage payment will be based off of a loan of $110K ($80k loan for house + $30K Rehab = $110K) example if your rate is around 13 percent your monthly (interest only) mortgage payments would be $1250.00. The lender wants to be sure your making at least 65% of $200K which would be $130K