THE BIG PICTURE
INVESTING STRATEGIES
Comings and Goings CHOOSING THE RIGHT ENTRY AND EXIT STRATEGIES WILL HELP ENSURE A POSITIVE OUTCOME FOR YOUR FIX-AND-FLIP DEALS.
by Tarek El Moussa
investors, contractors and buyers. The first step to making money in real estate is, of course, finding a house below market value. But now that the flood of foreclosed properties has been reduced to a trickle, where’s the best place to find them? Here’s a look at my favorite entry strategies and ways to find houses below market value: Look for ugly, distressed houses, FSBOs (“for sale by owner” properties), estate sale signs, even moving trucks. Drive the neighborhoods you want to buy in and then contact the sellers. You can get their names by looking up the property infor- mation with county public records. 2 USE A GREAT REAL ESTATE AGENT Get your agent to pull expired listings and run a list of houses that have been sitting on the market for months that obviously have some kind of issue no one wants to fix. A good example is a two-story house with no deck in a neighborhood where this is expected. I’ve seen houses sit on the market for months because no buyer wanted a house without a deck, and they didn’t 1 GET IN THE CAR AND DRIVE NEIGHBORHOODS
W
hen you watch our show on HGTV, you usually see me and
my wife going through a lot of crazy things while we fix and flip houses for our real estate investing business. Most of the time, despite all of the surprises and drama that make good TV but stressful flipping, we come out on top. However, it doesn’t always end with us selling quickly and making thousands of dollars. Even seasoned flippers like us can get into sticky situations that require good exit strategies. For example, we had one house that went way over budget but that we thought could sell at a good market price. Then that house sat on the market for weeks while we wondered what we would have to do to get back on top. In another case, we had a house that had major foundation and structur- al issues, and by the time we were done with rehab, we had to take a $3,000 loss when we sold it. Even though things don’t always go as planned, we always do everything in our power to create the best possible out- come, even in the worst-case scenarios. If you have a good entry and exit strate- gy, you can cut your losses or even make a small profit instead of losing big-time and risking your reputation with your
want the hassle or expense of building one. Remember, where there’s an issue, there’s usually an opportunity! 3 SEND LETTERS TO QUALIFIED LISTS— bankruptcy, divorce, probate and houses where the owner has a different mail- ing address from the property address, which is usually indicative of a rental. Yes, this is old school, but it works. Reg- ularly send letters to these lists—at least once a quarter—and build relationships with these people. This strategy can take a little longer to yield results, but put the effort in and it can yield big results. Now let’s talk about how you can plan the right exit strategy for a flip in any situation.
WHENTHE MARKET IS FLAT If you did everything right, but your house isn’t selling because the market
26 | think realty magazine | may :: june 2016
Made with FlippingBook Online document