Bronchick William - The business of flipping homes: short-term real-estate investing for long-term wealth

Praise for The Business of Flipping Homes

A must-read for anyone who wants to learn how to generate serious wealth in the new economy.

Dr. Albert Lowry, PhD, New York Times bestselling author

People who tune in to my radio show, or read my books and blog, often ask me how they can create multiple streams of income, one of my five secrets to a happy and successful retirement. Done right, investing in buying and selling real estate can be a tremendously effective way to add an additional source of income to your portfolio. In The Business of Flipping Homes, William Bronchick and Robert Dahlstrom provide you with all you need to know to move properties quickly, legally, and ethically. If youre looking for a way to diversify through real estate, Im a fan of their work, and this book.

Wes Moss, host of Money Matters and author of You Can Retire Sooner Than You Think: The 5 Money Secrets of the Happiest Retirees

THE BUSINESS OF FLIPPING HOMES

Short-Term Real Estate Investing for Long-Term Wealth

WILLIAM BRONCHICK AND ROBERT DAHLSTROM

Copyright 2017 by William Bronchick and Robert Dahlstrom

All rights reserved. No part of this book may be used or reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles or reviews.

BenBella Books, Inc.

10440 N. Central Expressway, Suite 800

Dallas, TX 75231

www.benbellabooks.com

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First E-Book Edition: February 2017

978-1-942952-77-0 (print)

978-1-942952-78-7 (e-book)

Library of Congress Cataloging-in-Publication Data is available upon request.

LCCN: 2016037696 (print)

LCCN: 2016051587 (electronic)

Editing by Brian Nicol

Copyediting by Miki Alexandra Caputo

Proofreading by Sarah Vostok and Brittney Martinez

Indexing by Jigsaw Information

Text design by Aaron Edmiston

Text composition by PerfecType

Front cover design by Ty Nowicki

Full cover design by Sarah Dombrowsky

Printed by Lake Book Manufacturing

Distributed by Perseus Distribution

www.perseusdistribution.com

To place orders through Perseus Distribution:

Tel: (800) 343-4499

Fax: (800) 351-5073

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This book is dedicated to the motivated individuals who want to use real-estate investing as a means to take back their financial future.

CONTENTS

T heres more to flipping than redoing a kitchen or staging a property. The two of us, William Bronchick and Robert Dahlstrom, have more than forty years combined experience buying and selling investment properties. Credited with introducing the term flipping into the common vernacular, our best-selling Flipping Properties (2001 and 2007) sold a quarter of a million units and started a revolution. Syndicated real-estate columnist Robert Bruss said this about the book: Cannot be recommended too highly... on my scale of one to 10 this book rates an off-the-chart 12! We have worked with more than a thousand clients and have helped tens of thousands learn the art and science of real-estate investing. We have taken these experiences and written the new definitive book on flippingthe one you are reading right now.

The Business of Flipping Homes shows readers how to flip properties quickly, legally, and ethically. It goes beyond other attempts to write about flipping houses by not only covering the basics but also the many ways to deal with inevitable challenges. Every deal is different, yet each investor must have a clear business strategy. We have outlined a systematic approach and shared our specific knowledge on how to purchase properties and then sell them for a profit. We delve into the business sideeither as a career or simply as a part-time ventureof this particular type of real-estate investment and cut through the murky waters of confusing information to give you an A to Z guide to flipping.

Real estate has arguably created more millionaires in the US than any other profession. In a 2014 Bloomberg article, a survey conducted by Morgan Stanley reported that about 77 percent of investors with at least $1 million in assets own real estate. One of the few certainties in real estate is that the market will fluctuate. As seasoned investors, we have learned to be successful in all types of markets, up or down, hot or cold.

The principles we present apply to every market and every city, regardless of current economic trends, giving you practical wisdom to limit risks and make sound investment choices. We realize there is renewed interested in flipping, fueled by how-to television shows, highly promoted seminars, and individuals desires to find new career paths and strike out on their own.

In these pages, we show both new and seasoned investors alike the step-by-step approach to successfully flipping houses. We fill in many gaps other books do not address and flatten the learning curve in a business that can appear deceptively simple. The book begins by explaining what flipping isand what it is not. We demonstrate how to find, renovate, and sell properties using tested methods from our own personal experiences. Some of the covered subjects include time lines, working with real-estate brokers, understanding the paperwork, analyzing the numbers, utilizing technology, and finding the money to acquire properties. This book explains how to avoid many of the pitfalls and potential issues that not only add cost but could come back to haunt you later. Lastly, we address long-term planning, including how to find and work with partners, structure a business, and harness your talents, resources, and aspirations in realistic ways. Enjoy the book and find out if flipping is the business for you.

. Robert J. Bruss, Book Has Tips on Flipping Property, Naples Daily News (Tribune Media Services), October 14, 2001.

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R eal estate, like any other commodity, is bought and sold every day. Real-estate brokers (well use the terms agents and brokers interchangeably throughout this book) help facilitate a sale by finding and putting together willing buyers and sellers. They then earn some portion of a commission between 3 and 6 percent of the sales price for making the deal happen. Selling real estate is a lucrative field for many agents and brokers. Still, there are better ways for a real-estate entrepreneur to make a living.

Most small-time real-estate investors purchase single-family homes or condos for rental. And of course there are also developers and people who specialize in commercial projects and long-term ventures. Someone who owns only one rental property, someone who is part of a real-estate investment trust (REIT), and someone who owns many large buildings are all classified as investorsthe spectrum is broad.

A flipper is yet another type of investor. Investors who flip houses buy real estate with the intention of immediately reselling for profit. Its that simple. Unlike investing in the stock market, investing in real estate short-term places much control in the investors hands. A flipper is not just speculating about future trends in the housing market but is also buying at a discount (i.e., instant equity) and adding value by preparing the property for a retail sale (i.e., additional profit potential).