Flipping Real Estate: Calculating Costs

If you’ve been in the real estate investing business, or more specifically been flipping real estate, for more than a few days, you’ve inevitably gotten an email that reads something like this:”Investor’s Dream. This property will go QUICK.- Property Address: 1234 Main Street- Asking Price: $100,000 (Add or subtract zeros!)- After Repair Value: $150,000- Repairs: $15,000- Profit: $35,000- Details: Needs paint, carpet, tile, new kitchen, update bathroom, some roof damage.- Tenant occupied. Need to evict!”STOP! Before you read on… Take a guess at what you think the “real” profit’s going to be on this real estate investment…If you haven’t ever gotten an email or fax broadcast like this, then rest assured, you will! I’m about to probably tick off all of the late night infomercials and pitchmen out there! Sure, I understand that when you’ve got 30 minutes (or 90 minutes, for that matter), that you’ve to sell what’s sexy… not what’s real!Now it’s my turn to expose the real deal on real estate investing! This goes for flipping real estate itself (i.e. properties) or simply flipping the contract (also known as assigning the contract). When you’re flipping real estate, you need to be able to calculate the “real” bottom line and if your assigning the contract, you need to know your numbers so you don’t get blacklisted from investors! This one piece of information will keep you from getting into trouble because of any “real estate bubble”!Purchase CostsHere goes… Have you EVER purchased and sold a piece of real estate for FREE? If you’re not sure what the answer is… It’s an emphatic NO… You are going to have costs to buy, costs to hold and costs to sell. This holds true even if you are buying a property for all cash. (Think title fees, attorney’s fees, recording fees, etc.)If you’re not getting a mortgage, your purchase costs are obviously much lower, but nonetheless, there are costs associated with any real estate transaction. Plus, more than likely, if you’re relatively new, you’re probably not paying all cash for property anyways. You’re probably going to be using a hard money investor for your initial real estate investing financing!For a quick calculation, you can estimate anywhere between 3% – 5% for closing costs to just acquire the property. That’s 3%-5% of the purchase price.Holding CostsHow much is it going to cost you each and every day to own this piece of real estate? See, if you’re making money in real estate, you’d better believe that there are a lot of other people that are going to expect to get paid and they get paid in the form of mortgage interest, property taxes, utilities, property insurance, etc. Each of these is an expense each and every day that you own the property. Here’s an example… A hard money loan on a bread and butter type piece of real estate might run you 15%. Let’s say you got the property for $100,000. Every month, you are paying $1250 in interest alone. Let’s say that taxes and insurance are another $200/month and then utilities at $100. Right there, the property is costing you $1550/month – or roughly $50/day. See, why it’s important to know your not only your holding costs on a real estate investment, but also how long it’s going to be on the market before you can flip the property.Selling CostsHere’s the third part of the real estate investing puzzle. When you want to turn around and sell this piece of real estate, it’s going to cost you yet again! Are you going to use a real estate agent and pay a commission or 3-4-5% or even more? On $150,000, that’s anywhere from $4500 to $7500 chopped of the top. Then, you can figure 1-2% in closing fees.If you can remember this… and apply what you’ve just learned to each and every real estate deal that you do, you’ll be safe flipping real estate in any market. You see, if it’s a hot market, you can calculate less time for holding cost. But, in a slower market, make your offer based on 6 months or 9 months of holding costs. It’s really simple math! And real estate really is a numbers game…

The Best IRA Services – Who Manages a Real Estate IRA the Best?

Are you looking into opening a real estate IRA, but don’t know which IRA services to work with? This is understandable, seeing that there are so many IRA services to choose from. So which IRA service can help YOU the most with a real estate IRA? This article will explain how to decide which real estate IRA service is worth your time.First of all, how well are you familiar with real estate IRA investing? Do you understand a lot about real estate transactions and the taxes and costs that come with owning real estate? Do you know how to find the best deals and how to find a qualified buyer? If you’re not too familiar with any of these things, then taking part in real estate IRA investing can be a bit tricky, especially in the beginning.If you have a pretty good understanding of how a real estate IRA would work, then you may want to choose the IRA service that offers the lowest fees. All you’ll really need them for is to hold your funds and make sure all the necessary paperwork is filed correctly.However, if you know very little (or nothing at all) about real estate IRA investing, then I suggest you take a different investing route.To start, there are different kinds of IRA services. One type of IRA service is a custodial service. This kind of service provides you with a IRA custodian that is responsible for holding your funds and taking care of all the paperwork and reports that come along with real estate IRA investing. IRA custodians cannot legally offer their clients with any sort of real estate IRA investment advice. This type of IRA service is the most popular. And unfortunately, these type of services cannot help people along the whole real estate IRA process.Then there’s another type of IRA service- one that can make real estate IRA investing a whole lot easier for you. This is an IRA service that finds you a suitable IRA custodian to manage your funds. But they also involve you in a program that their company exclusively runs. This allows them to hold your hand through the whole real estate IRA investment process. But don’t get the wrong idea- you are still in total control over what happens within you real estate IRA account.It’s just that with this kind of IRA service, they find the real estate property AND the best deals to take advantage of. Then, you can purchase and hold these properties using your real estate IRA. Some will even make all the repairs and renovations if the property is not in a livable condition, and even find you qualified buyers/renters for the property! This will save you the time and money needed to hire a contractor/realtor.Sadly, there are very few companies that fall into this category. These kind of IRA services are newly available to investors due to the potential that real estate IRA investing currently provides, and in light of all the foreclosures that have flooded the market. Now is a great time to scoop up property at ROCK BOTTOM PRICES and either flip them quickly and repeat the process over and over or rent them out to tenants and collect rental income until real estate values increase.There is one IRA service in particular that specializes in a “hands-off” approach for real estate IRA investors, like explained above. However, there’s a lot more to the program than just IRA investing. Not only does it provide a huge benefit and opportunity to real estate IRA investors, but it also benefits working class families and communities that have been neglected in the past.