Get in the "Flippin" Game - Information for the new "flipper" or for those interested in buying distressed properties.

1. Get in the “Flippin” Game!
Presented by:
Joleen Halloran, Keller Williams
Platinum Partners
Sponsored by:
Midwest Lending
The Bug Man
Chicago Title

2. Are you a flipper?
• What is your motivation?
• What is your skill level?
• What do you want to get from this
experience?
• What is your patience level?

3. Benefits of Flipping
• Profits
• Creative License
• Manage the job your way
• Fun!

4. Risks of Flipping
• Financial Loss
• Stress
• Physical Injury

5. Mitigation of Risks of Flipping
• Financial Loss
(research properties, sound investment decisions based
on facts, good marketing, cost analysis, contingency
planning)
• Stress
(planning and scheduling, contacts and networks, time
off, good support system)
• Physical Injury
(contractors, insurance, take care of yourself!)

6. Main Components of Flipping
• Financial
• Property (Buying and Research)
• Execution of Reconstruction
• Selling

7. Financial Component
• Cash
• Loans (Construction and Hard Money)
• Home Equity
• Investors

8. Property Component
• Finding the right home
Find a realtor that understands your needs
Understand your limitations on re-hab skills or costs
Location, Location, Location
• Knowing your market area
Be comfortable and confident with your target area
Utilize realtor provided comps to verify your plan
• Determining the offer and selling price
Estimate your costs and your desired profits
*** Don’t forget to include your quiet costs (holding costs, cost of
money, cost to sell)

9. Check Out These
Local Opportunities
• Great Buy 130K - HUD
• Great Buy 88K – Fannie Mae
• Great Buy 68K – Great Flip MLS # 16443211 1003
SW Lea $68,000 3 bd/2ba

10. Bridges Company -- Offer Calculator
Finished Price 9 NW Noel 119000
Materials Cost 22800
Dumpster 600
Garage Doors Replacement 500
Carpet (Approx 2.25 sp ft X 400) 800
Tile (1.29 x 1000 sq ft downstair)
*Includes grout and underlayment
Includes Kitchen, 2 bathrooms) 1500
Wood Floor in Living Rooms (spprox
2.79 sq ft X 350) 500
Deck 400
Exterior Repair 500
Guttering 0
Plumbing 1300
Electrical 1900
Knock Down Ceiling Application 400
Kitchen Cabinets and Hardware 1800
Equipment Rental/Finish Existing Floors 200
Doors (1 French@299 + 2 or 3 replacement) 600
Concrete Work 2500
Paint 1500
Lumber (misc updates) 1000
Misc Hardware (vents, knobs, ect) 250
Drywall and supplies 2500
Counter Tops 700
Hot Water Heater 0
Furnace 0
Window Glass Repair 1800
Roof 0
Permits/Inspection 0
Utility Bills 3@100 0
Air Conditioning Unit 0
Lighting 350
Appliances 1200 Total Rehab Cost (inc. labor) 30100
Total Holding 3400
Labor Cost 10 weeks @ 700 7000 Total Profit 25000
Landscaping (Fencing, Flowers, Seed, Misc) 300
Realtor Fee 0 Blue indicates areas for improvement in pro
Mortgage Payment
4 pmnts @ 550 2200
Contingency costs 0
Closing Costs 1200
Profit 25000
Offer Price -60500
Actual Offer Price 61000
(+ = amount that needs to be taken
Difference to out of budget)
make up in (- = amount that can be added into
budget 500 budget)
Finish time 10 weeks
Market Time 14 weeks

11. Execution Component
• Make your plan
Define your flow and understand contingencies and constraints
Determine task schedule (don’t over commit)
Plan your supply purchases
• Understand your money flow
Be aware of constraints for draws to pay contractors or purchase
supplies.
Always keep an eye on your budgets
• Adjusting your plan
Adapt your plan for budget or schedule to keep on target

12. Execution Component
Expense Tracking Worksheet
6/20/2010 Joleen Halloran -- 9 NW Noel Lee's Summit, MO 64081 Loan # Beginning Balance 35600
Date Actuals Sales Tax @ .0766 Actual Cost Category Description Purchased At
10/20/2009 $1.41 0.11 $1.52 Plumbing Plumbing Supplies Home Depot
10/16/2009 $20.78 1.58 $22.36 Lumber Misc. Rough In Supplies Home Depot
10/19/2009 $0.72 0.05 $0.77 Plumbing Plumbing Supplies Home Depot
10/16/2009 $325.00 0 $325.00 Trash-Clean Up Dumpster Sunshine Disposal
10/9/2009 $41.14 3.13 $44.27 Lumber Misc. Rough In Supplies Home Depot
11/5/2009 $279.00 0 $279.00 Labor Labor Costs Paul Cotton
11/5/2009 $3.99 0.3 $4.29 Lumber Misc. Rough In Supplies Owens Lumber
10/27/2009 $258.03 0 $258.03 Lumber Misc. Rough In Supplies Home Depot
10/27/2009 $97.57 7.42 $104.99 Lumber Misc. Rough In Supplies Home Depot
10/29/2009 $190.42 14.47 $204.89 Plumbing Plumbing Supplies Home Depot
10/22/2009 $350.00 0 $350.00 Labor Labor Costs Jon Renfro
10/22/2009 $474.00 0 $474.00 Labor Labor Costs Paul Cotton
10/22/2009 $200.00 0 $200.00 Labor Labor Costs Greg Belcher

13. Execution Component
Summary Budget
CONSTRUCTION COST BREAKDOWN
Owner___Joleen Halloran___________ Job Location:___9 NW Noel Lee's Summit, MO 64063
Contractor:___Greg Belcher_____________ Contractor Phone:____816-305-4397________________
Labor and
Materials Estimate Suppliers and Contractors Actuals Variance Amount (+/-)
Plans and
Specificiation
1s 0 0
Permits and
2 Survey 0 0 0
Excavating-
Backfill
3 Grading 0 0
Piers
Footings
4 Foundation 0 0
Waterproofin
5g 0 0
Steal and
6 Iron 0 0
7 Lumber 1000 1716.88 -716.88
Carpentry
8 Labor 0 0
Trash-Clean
9 Up 600 461.47 138.53
10 Roofing 0 0 0
Brickwork,
Block or
11 Stone 0 0
12 Guttering 0 0 0
Cement Slab
13 and Walks 2500 0 2500
14 Plumbing 1300 2194.13 -894.13

14. Execution Component
Financial Analysis
Joleen Halloran - Loan #87241
9 NW Noel, Lee's Summit, Missouri
Loan Closing - Funds
Title Budget Amount Available (9/30/09) Draw #1 (10/5/09) Draw #2 Interest Payment #1 Interest Payment #2 Draw #3 (12/11/09)
Rehab Costs $ 30,100.00 $ 6,500.00 $ 6,500.00 $ - $ - $ 6,500.00
Interest Carry $ 5,500.00 $ - $ 302.03 $ 303.25
Contingent/Other $ -
Total: $ 35,600.00 $ 37,564.62 $ 6,500.00 $ 6,500.00 $ 302.03 $ 303.25 $ 6,500.00
Remaining Funds: $ 37,564.62 $ 31,064.62 $ 24,564.62 $ 24,262.59 $ 23,959.34 $ 17,459.34
Loan Balance: $ 40,724.38 $ 47,224.38 $ 53,724.38 $ 54,026.41 $ 54,329.66 $ 60,829.66
* Loan can be advanced up by $78,289 per loan commitment.
* Draw #1 was for $7,000 which included $500 reimbursement of down payment and $6,500 for rehab.

15. Selling Component
• Begin your marketing early
Stick our sign and flyers in the yard as soon as you can
Staging
Emphasize your ―Wow‖ factors
Place the time and effort to create curb appeal
• Don’t wait – call your realtor
Determine your timing to get house on the market

16. •

17. Ready to Start?
Checklist
Do your homework (money, properties,
products, techniques, suppliers,
contractors)
Before you begin – research and feel
comfortable with your resources and
methods.

18. Ready to Start?
Checklist
• Make your plan and set your limits – set
objective goals
• Obtain your financing
• Get a realtor (hint hint – I am a realtor)
• Look and procure your property
• Put your budget and schedule together
• Execute your flip project

19. Ready to Start?
Checklist
• Start your marketing
• Sell your home
• Celebrate and start planning your next
project!!

20. General Tips and need to know
facts
• Be Prepared to work hard
• Don’t forget that the money is made when
you buy the property – not when you sell
it.
• Include your ―Wow‖ factors into your
budget and your plan
• Re-hab appropriately to your price point!!

21. General Tips and need to know
facts
• Develop a strong network of contractors,
suppliers and support services
• Add value to your property any time you
can (additional bath, open up dated floor
plans)
• Look for easy updates that add value and
beauty - (fireplaces, cabinet facing, knobs
and pulls)

22. General Tips and need to know
facts
• Expect to run into unknown issues
• Keep your cool
• Don’t forget the importance of curb appeal
(flowers and shrubs are cheap and the payback is big)

23. Distressed Property

24. Rules: Traditional vs. Distressed
• They’re different!
– Price Knowing these differences
– Speed will give you clear
expectations—and help
– Decision-Making you get what you want!
– Communication
– Negotiation

25. Rules – Price
Traditional REO
• Priced to sell by
• Seller motivation and institutions with no
emotion play a big part emotional stake
Short Sale
• Priced by listing agent
and owner; bank must
agree to this price

26. Rules – Speed
Traditional REO
• Offers get quick reply
• Normally proceed with • Last-minute closing
all due haste delays common
Short Sale
• Slow offer response
• Acceptance brings fast
close

27. Rules – Decision-Making
Traditional REO
• Bank or lender decides
• Homeowner/seller
decides Short Sale
• Seller decides what
offer to accept; lender
must approve

28. Rules – Communication
Traditional REO and Short Sale
• Good communication • Banks, listing agents
expected but not pressured by volume—
always practiced
hard to reach
• Buyers must insist on—
and provide—great
communication

29. Rules – Negotiation
Traditional REO and Short Sale
• Negotiation common on • Some negotiation
price, condition, and possible with Fannie
terms Mae REOs
• Short sale negotiation
rare—properties sold
―as is‖

30. Seize the Opportunity
Six Realities Define Your Opportunity
1. Buyer’s market—capture value now!
2. Mortgage rates are great, but for how long?
3. Affordability—home buyer dollars going further
4. Number of foreclosures remains high
5. Foreclosure inventory nearing peak
6. All parties motivated to sell
Percentage of buyers who bought distressed
property tripled from 2008 to 2009.

31. Opportunity: 203k Loan
FHA-backed Home Purchase and Renovation
Program
– Purchase price and documented repair/rehab
costs bundled in one loan
– One set of closing costs
– 3.5% down; can be gifted
– Eased qualification standards
– Loan limit range $271k-$730k
– Possible energy-efficiency add on

32. Foreclosure Trends – Moving
Up!

33. What’s Stopping You?
What have you heard that concerns you
about buying?

34. Ignore the Myths
1. Myth: Foreclosures are mostly low-end,
in poor condition, and in bad areas.
2. Myth: Foreclosures have lots of title
problems including liens.

35. Ignore the Myths
3. Myth: The best foreclosures get sold
in bidding wars.
4. Myth: Loans are hard to get for
foreclosures.

36. Ignore the Myths
5. Myth: Foreclosures take a
long time to close and aren’t worth the
wait.
6. Myth: The best opportunities have
already been snapped up.

37. Be Ready to Go
1. Motivation
+
2. Preapproval = Success
+
3. Expert Advice

38. Be Ready to Go
1. Strong Motivation
Know your “Big Why”
Have criteria set and be prepared to
make decisions.
Be ready to communicate clearly at all times.

39. Be Ready to Go
2. Preapproved Wallet
Whether all cash or financed, solid buyers are
the winners in this market.

40. Be Ready to Go
3. Expert Distressed Property Agent on
Your Team
In this market, more than ever, you need
great representation!
Quality advice counts.

41. Let’s Get Started—
Now Is the Time
What Questions Can I Answer?
Name:
Phone:
Email: