5 Flip Tips
1. Know the developer. Has the developer had a successful project before? What is the completion date? Do your research? Make sure you have a very comprehensive idea of project completion. I see it more and more where people are holding out contracts and deposits, and the developer isn’t moving as quickly as the investor had been told. Carrying costs need to be analyzed know the cost of delays. When using a real estate professional be sure he or she knows and goes over these costs.
2. Be sure the contract is assignable. I’m seeing lately that there are restrictions on assignments. Many times this information comes as a surprise to the investor. I see developers with regulations that say the buyer can’t assign the contract until he or she has lived there for one year or before a certain percentage of condo units are sold. Also, the developer may hold the best units for the end, which makes assignment prior to that nearly impossible.
3. Look for fees. Recently, developers have been charging assignment fees that may be five figures. In order to assign the contract, the buyer has to pay a fee to the developer. Also, some developers are saying that resales must be done in-house. The buyer has to use the developer’s real estate associate. For associates that’s fine, but for buyers or investors, it isn’t always a good thing.
4. Know the money. It’s important that you know you should get professional help, such as from a certified public accountant (CPA), about ongoing tax liabilities. So for investors, real estate professionals should advise them to get accounting advice, and that will help them determine whether to hold the contract or the unit for a while before they resell it.
5. Know the local area. When it comes to a specific investment property, you or your real estate professional must be experienced in that area and in that neighborhood. If the market has reached top price, then investors need to be cautioned.