Can I hear from our investor pros.
How long does it usually take to flip a property? How do you determine what the After Repairs Value is before writing an offer to a seller. Do you hire a home inspector each time you make an offer which is costly? How do you determine if there are termite, foundation and other major problems with the property without doing a proper inspection first. As far as repair cost goes, when you already have title to the property and you are fixing it to flip, do you have to pay all the repairs up front or can it be taken out in escrow?
I look forward to all responses from seasoned investors.
First off, let’s refer to flipping as rehabbing just to be clear.
How long does it usually take to flip a property?
As you probably expected, this could be as little as a week up to a year for residential property. Depends on the amount of work, number of workers, skill of workers, and speed of code inspectors and a slew of local market factors. For a big project I typically shoot for 1 month of renovation and no longer than 5 months to sell in a slow market.
How do you determine what the After Repairs Value is before writing an offer to a seller.
Knowing the market helps. Get a CMA from a RE agent to be sure.
Do you hire a home inspector each time you make an offer which is costly?
I don’t use home inspectors because I used to be one and now I have very experienced people on staff to do that. Hire one if you need one, they can be worth their weight in gold. The standard protocol is to hire one after an offer has been accept as part of your due dilligence.
How do you determine if there are termite, foundation and other major problems with the property without doing a proper inspection first.
If there is obvious damage, you’ll know. If you don’t, hopefully a home inspector will pick it up after you’ve made an offer. If they don’t, it’s one of the many surprises of rehabs! Make your offers contingent upon things like this that a good inspector should pick up, you can always negotiate after you’ve had an offer accepted.
As far as repair cost goes, when you already have title to the property and you are fixing it to flip, do you have to pay all the repairs up front or can it be taken out in escrow?
If your working with a lender, the renovation money will be held in escrow to be taken out in draws. It will either work on a reimbursement basis, where you pay for a phase of construction, prove to the lender you paid, and will be paid back. Or in rare but more desireable cases, you send the contractors invoices to the lender to prove work has been done and now it’s time to pay them.
Hope this helps.
Thank you Danny! I appreciate your response.