Just remember that contractors aren’t psychics. There are often issues that don’t show up, even with the most diligent pre- purchase inspections. You can’t tell what’s hiding in the walls. There could be a leak you won’t know about until it rains. There can also be problems with shoddy or unreliable subcontractors or annoyed neighbors who, at best, complain directly to you and, at worst, file complaints with the city. Related to the length of time a renovation takes is the amount of money it costs to hold the property. The longer the time, the more money it costs. This includes interest on any loans, insurance, and, if you have the property for over a year, long-term capital gains taxes. The latter can be up to 20%, which would obviously eat a huge chunk of any potential profits (or might even mean you losing money). House flipping is not for the faint of heart, but for those willing to do the hard work and deal with the stress, it can pay off substantially.
FINDING PROPERTIES
The first step in making profit is knowing how to find the right properties. In The Flipping Blueprint: The Complete Plan for Flipping Houses and Creating Your Real Estate-Investing Business , Luke Weber shares what he calls “The Dirty Dozen.” These are the keywords he uses to search for fixer-upper properties. When you work with a realtor like me, giving this list can help immensely. I can set up an auto-search, and any time a listing comes up with any of these keywords, phrases, or acronyms comes up, I’ll be able to send it to you right away. Here’s Weber’s list, in alphabetical order: • BOM (back on market or bottom of market)
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