Dave Clabeaux Real Estate | David Clabeaux - My New Deal: Buy for 27k, Sell for 149k

I have a great new deal that I am working on with one of my partners.
 
Here are the details:
 
-We have a house under contract to purchase for $27,000.  We close in 7 more days.
 
-We got the house for pennies on the dollar. It needs work, and the seller needs money fast.
 
-It needs about $60,000 in repairs.  We will have a hard money lender I have previously worked with finance the entire amount.
 
-We have a contractor lined up to handle the entire project. We won’t need to lift a finger.
 
-I already have all the materials, finishes, and paint colors chosen.  I use the same ones for every project. All I need to do is email the list to the contractor.
 
-The rehab should take about 6 weeks.
 
-We will be able to sell the house fast for $149,000.
 
-After all commissions, carrying costs, etc, we should clear right around $48,000 profit.
 
Remember, you have to TAKE ACTION in order to make money in real estate. Most people do not take action, and therefore never reap the financial rewards.

My Life As a House Flipper

If you are like me, you have probably watched dozens of house flipping shows on HGTV.
 
You typically see an attractive female in charge of a flip, swinging a sledge hammer, getting her hands dirty helping demo the property.
 
This seems to be a bit of a stretch from reality for two reasons:
 
1.  As the person flipping the house, I give orders, and just about never use a tool or assist in any way.
 
2. My construction sites are typically lacking in attractive females ;)
 
All jokes aside, this is what my typical day as a house flipper looks like:
 
8 am: Check email to see of one of my team members has sent me a property. If the property looks good, set up a showing.
 
10 am: Hit the gym (not as often as I should)
 
11 am: Swing buy any active projects and make sure project is moving forward.
 
12 pm: Grab lunch. Kale salad with arugula sprouts and salmon.  (Also not very often. Basically never. In fact, I don’t even know if arugula sprouts is a real thing.)
 
1 pm: Go to any potential new showings.  
 
2 pm: Calls with partners
 
4 pm: Family time or personal time.
 
Keep in mind, when I first started and was flipping just 1 house at a time, I kept my day job and only spend about 4 hours a week working on that 1 project. That’s about all it takes on average.
 
Are you ready to start flipping houses?

Off-Market Deals by Dave Clabeaux

Let me share a story with you:

It's 3:48 pm on a Thursday.

The phone rings.  It's a woman who lives in a nearby town who needs to sell her house quickly.

The taxes haven't been paid in 3 years and the County is going to foreclose in less than a week.

She owes $40k in back taxes and her house is worth $140k.

If the county takes the house, it will be sold at auction and the county keeps ALL the money.

Some counties keep the "overages" made at auction.  In other words, when a property sells for more than the taxes owed, the county keeps the extra money.  

The previous owner gets nothing.

Given the speed that our team would have to close on this deal, we offered her $90k.

She had two options:

1. Let it go to foreclosure and get nothing.

OR

2. Sell it for $90k and walk away with some cash.

Here are how the numbers work out:

As-is property value = $140k

Offer price = $90k

Projected profit before closing costs = $50k

These deals are called "off-market" deals.  Time is of the essence and the owners have no time

to list their house with a broker.  

As a result, you have little to no competition and you can find properties for pennies on the dollar.

Here a few other examples of off-market deals:

Dave Clabeaux

Dave Clabeaux

Finding off-market deals is smart.  You get a house with enormous amounts of automatic equity.

You can find off-market deals on classified listings, FSBO sites, by posting bandit signs, online marketing campaigns, and networking connections.

If you're looking to do your first deal, an off-market deal may be a good option. Because there is so much built in equity, lending is typically not an obstacle.

Plus, you have plenty of room for any surprises or mistakes.

Kitchen Rehab Checklist – Dave Clabeaux

Because a kitchen is a primary selling point of a home, it makes sense to allocate the budget necessary to make the kitchen amazing.

The first step is to look at the kitchens of the houses that have recently sold in the neighborhood.

This gives you an idea for what you'll need to do in order to get top dollar for the home.

Use Zillow to see the photos. That way you can do this research right from your laptop or computer.

Once you do that, use this simple checklist for your kitchen rehab:

1. Cabinets - Inspect the cabinets and figure out if they need to be replaced or can be refinished.

Old laminate cabinets will likely need to be replaced. They become discolored.

Install new handles and knobs on the cabinets. Satin nickel is a good choice for the finish.


2. Counter tops - Install granite counter tops. There are three grades of granite: low, medium,
and high.

Unless you are rehabbing a luxury home, go with low or medium grade.

Choose a slab with neutral tones and subtle patterns.

3. Replace the sink. In most cases, a stainless steel sink will look great.

Sometimes, in older homes for example, buyers are attracted to a fireclay farmhouse style sink.

Replace the faucet with a modern, attractive faucet.

4. Appliances. Install new modern stainless steel appliances.

5. Flooring. In most flips you will need to replace the flooring.  If you're lucky, you
will have a kitchen with hardwood that you can sand and stain.

Otherwise, laminate gives you lots of flexibility in terms of color and patterns.

6. Lighting. Recessed lights are great for ambient and general kitchen lighting.

Hanging light fixtures over an island cost about $200-$300 and are modern and stylish.

7. Finishing touches.  Install decorative outlet and light switch plates that go with the new paint.

The standard white plastic plates look tacky. Don't use them.

Decorative plates are definitely worth the extra $2-$3 dollars.

Installing a wine cooler may be worth the investment. While not necessary, it suggests to a buyer they
are getting a luxury home.


Use this simple checklist on your next flip and you're certain to create incredible kitchen spaces
every time.

I Hope This Inspires You

 Some people are easily discouraged when they get into flipping houses.

They see the price of houses on the market and think...

"I can't buy a house for that price and still make a profit.  All the houses around me

are just too expensive."

Here is the mistake they are making:

They look at a seller's ASKING price.  Many sellers will accept far less than asking price.

Case in point:

Last week a lady came to us looking to sell her house. She needed to sell quick because

she owed back taxes, and the county was about to foreclose on her house and take

everything. (This is what happens when you refuse to pay property taxes for 5 years

straight).

Her asking price was $159,000. We offered $90,000.

She accepted.

We get a deal with a huge equity spread and the home owner gets cash out of a house she

would have lost to foreclosure.

It's a win-win.

Question for you:

Do you know of a house right now that's perfect for a rehab but the owner is asking too

much?

Make an offer that works for you.  It might be 50%, 40%, or even 30% of asking price.

You never know what somebody will accept for a house until you make an offer.

Here's the big takeaway: Don't be afraid to make low ball offers. You may get a dozen "no's" for one "yes" that leads to a $50,000 deal.

When you invest in real estate you get to play by a different set of rules than everybody else.

You get to take advantage of certain tax benefits designed for business owners and real estate
investors.

I wanted to share 4 tax benefits you get when you are flipping houses.

1. 1031 Exchange - this lets you defer tax when you flip a house and use the money to buy another property.

I like this because it rewards you for growing your real estate business.

Use this if you intend on becoming an active rehabber and plan on flipping multiple properties.


2. Pay Yourself First - when you receive a normal paycheck the government takes its share from you immediately, as soon as you earn it.

Contrast that with being a real estate investor. You get to use every dollar your earn before sharing any with the government.

Instead of handing it over to the government right away, you can re-invest that money all year long on your real estate ventures.

This can accelerate the progress you make towards your financial goals.


3. Deduct Day-to-Day Items - Even some experienced business owners overlook this benefit.

As a real estate investor you are allowed to deduct many of the normal day-to-day bills that
you pay anyways.

Here are a few examples: Home office and the corresponding share of utilities, insurance, and
capital improvements, cell phone/computer, mileage, business related travel - even if a portion of the trip is spent doing leisure activities, office supplies and educational materials.

These are just a few of the many deductions you can take advatnage of.

(One of our team members even made his spouse a 50% owner.  They get to discuss business over dinner and deduct the check.)


4. Self-Directed IRA - this IRS approved strategy allows you to use money in a retirement account (such as a 401k) to invest in real estate.

In other words, your self-directed IRA becomes your own personal source of lending for your
deals.

Remember, I'm not an accountant so make sure to consult with one if you plan on using these
strategies.

Do you want to start taking advantage of tax strategies like these?

Dave Clabeaux ( David Clabeaux ) Does House Flipping Work Near You?

One of the most common questions I get via email goes something like this:

"Coach Dave, that's great that you live in Florida, where the real estate market is booming.  But I live in Nowheresville, Nebraska. Are there any good deals near me?"

I can't tell you how many times I have heard someone say something like this.

For some reason, there is a false belief that in order to make money in real estate, you must live in either Texas, Florida, or California.

But that couldn't be farther from the truth.

The fact is, there are opportunities to flip houses in every city and town in the US.

I'm sure your friends and family are among the naysayers telling you that you don't live in the "right market" to flip houses.

The fact is, while I get emails from people who seem to be stuck on believing that there  are no deals near them, I also get emails from people who are completing amazing deals and sharing their success story with me.

Just this past weekend alone, I received at least a half-dozen emails from people landing deals and selling houses netting anywhere from $19,000 to $120,000 in profit.

In fact, 2 different people emailed with questions this weekend about how to legally tax shelter $90,000 and $110,000 from the sale of their recent flips.

These are not real estate gurus.  These are common folks just like you and me.

They simply found a good deal near them, made an offer, rehabbed it, and sold it for an honest profit.

Does this excite you?  I hope it does. My goal in writing this email was to give you that "nudge" you need to get out there and flip your first house.

I want to let you know that if other people can do it, so can you.

Common folks all across America are successfully flipping houses every

day.

Dave Clabeaux - David Clabeaux : Flip You First Home

As I have been telling you in the last several emails, right now at the end of the year is the perfect time for you to flip your first home.  

There is little competition, so you can get homes at far below market value.

And lenders are struggling to find people to loan money to. Remember, a hard money lender or a private lender makes money by financing your deals. And right now they are all looking for deals.

For example, I received this email yesterday from a lender that does loans all across the United States:

Hi Dave,

It's been awhile since we last  spoke. Do you have any projects for private and hard money lending on your  radar now we can look at?

I'm happy to jump on a quick  call or respond to any questions you have by email.

Let me know,

Tyler

One of the biggest mistakes people make is that they assume it is either too difficult or to expensive to get a hard money loan.

I can tell you from personal experience that could not be farther from the truth.

The bottom line is that if you find a good deal, hard money lenders will literally compete against each other to finance your deal.

Dave Clabeaux - David Clabeaux - An Incredible Flip

This is why I get so excited about real estate: deals like this one!

This is an extremely inexpensive flip with big profit margins.  The asking price is just $3,000.

That is not an auction starting bid: that is the actual asking price.

Let's take a look at this property:

418 W First Street, Sawando, WI

This is a 3 bedroom, 1 bathroom home
with a detached 2 car garage.

As you can see, it will need a full rehab,
but since the asking price is just $3,000, that would essentially be your only cost.

Now for the exciting part: let's look at the numbers:

Purchase Price: $3,000

Rehab costs:     $30,000

ARV quick sale price:  $59,000

Total profit: $26,000

This is the perfect type of flip for a first time rehabber.  The cost is low, and the relative profits are high.

And best of all, if you get a Home Depot credit card, you can float most of the costs of your materials.

In other words, if you can come up with the $3,000 purchase price, you stand to make $26,000 in profit.

Does this get you excited?  I sure hope it does!

Dave Clabeaux - Be Prepared: House Flipping Checklist

It is important to be prepared before heading out to look at a property.

When you go out and look at your next house, make sure you have all of these items with you:

1.  Flashlight.  You do not know if the electricity will be on.  And you want to be able to peek into any dark places like attics, crawl spaces, and under the sink.

2.  Clipboard, paper and pen.  You want to be able to take notes as you walk through the house.

3.  Cell phone with camera on it. You will need to take pictures that you can refer to later when deciding if this is a house you want to flip.

4.  Tape measure.  This will help you estimate the costs of things like flooring, cabinets, and paint.

5.  Business cards.  In case you run into a realtor, contractor, or someone who could help you build your business.

6.  A full tank of gas.  This may seem obvious, but if you are in an area that you are unfamiliar with, you do not want to waste time looking for a gas station when you could be looking at

other houses.

7.  A comfortable pair of shoes.  You will be doing a lot of walking, so you want to make sure your footwear is comfortable. 

You might also be in some rough houses, and so sandals are a no-no.

Print out this checklist and use it the next time you go out and look at a property.

David Clabeaux ! Dave Clabeaux - I Hope This Inspires You

Some people are easily discouraged when they get into flipping houses.

They see the price of houses on the market and think...

"I can't buy a house for that price and still make a profit.  All the houses around me are just too expensive."

Here is the mistake they are making:

They look at a seller's ASKING price.  Many sellers will accept Far less than asking price.

Case in point:

Last week a lady came to us looking to sell her house. She needed to sell quick because she owed back taxes, and the county was about to foreclose on her house and take

everything. (This is what happens when you refuse to pay property taxes for 5 years straight).

Her asking price was $159,000. We offered $90,000.

She accepted.

We get a deal with a huge equity spread and the home owner gets cash out of a house she would have lost to foreclosure.

 It's a win-win.

Question for you:

Do you know of a house right now that's perfect for a rehab but the owner is asking too much?

Make an offer that works for you.  It might be 50%, 40%, or even 30% of asking price.

You never know what somebody will accept for a house until you make an offer.

Here's the big takeaway:

Don't be afraid to make low ball offers. You may get a dozen "NO's" for one "Yes" that leads to a $50,000 deal.