Quick Skim

Think you have what it takes to flip a house or guide clients through the process? In Flipping Confidential: The Secrets of Renovating Property for Profit in Any Market (Wiley, 2007), Kirsten Kemp reveals how to avoid the common, costly mistakes of amateur flippers. Kemp, who you may know as host of TLC’s “Property Ladder,” talks from experience as she lays the groundwork for a high-profit flip — how to choose the best property, decide what improvements to make, set the price, and stage for maximum impact.

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From the Book: 5 Musts to Flipping

Kirsten Kemp has experienced six-figure profits and six-figure losses in her years of flipping houses. She shares some valuable lessons she’s learned along the way, with the goal of helping you avoid making a “flip-flop.”

1. Find stagnant listings. Track down undervalued properties — homes that have languished on the market with no activity — and then make a lowball offer. Look for a property with problems that would repel other buyers, but aren’t too major. Before you snatch up that eye-sore, though, get an inspection and estimates for work you’ll want to do. That will give you a better picture of what you’re getting yourself into.

2. Enhance, don’t rebuild. Put down that sledgehammer. Your goal isn’t to tear everything down. Think simple — repainting, cleaning, and getting rid of that shag carpeting. Restain the kitchen cabinets instead of buying new. Add custom window treatments or crown molding instead of replacing all the windows. For larger projects, look for changes that will bring the best return on your money, such as adding a fourth bedroom or turning an unfinished attic into a den.

3. Don’t get too attached. Getting emotionally tied to a house makes it hard to stick to a tight budget, which is essential for a profitable flip. Kemp tells how she lost a major chunk of change on a flip she bought for just under a million dollars by spending $900,000 on personalized improvements she would want in her own dream home. The property went on the market for

$2.5 million, just two days before the Sept. 11, 2001, terrorist attacks slowed the market. She ended up reducing the price to $1.8 million — $700,000 less than she had planned.

4. Keep close track of your budget. Before you start working on the home, get detailed estimates from all contractors and suppliers. Kemp includes a sample budget in her book, which takes into account the cost of home inspections, appraisals, staging, and closing costs. As for your renovation budget, Kemp uses the following formula: Subtract your purchase price from your capital gains tax, carrying costs for the construction period, and real estate commissions. That number then equals a combination of your profit and renovation costs. How much you spend is how much less you’ll make. Don’t forget to buffer your budget for unforeseen delays.

5. Price to sell. The key to a quick sale: Underprice it. List the house for about 2 percent less than the closest comps in the area, Kemp says. Don’t price it high just because you overspent on renovations or became emotionally attached, or the house will likely sit on the market. The longer you hold onto the house, the more your carrying costs will bite into your profit.

Sneak Peek

“I realized I was a bona fide flipper when I got more excited about seeing dumps. Every ad that announced ‘handyman special’ or ‘lots of potential’ had me salivating. Eventually I got to the point where I couldn’t resist sneaking a peek inside any house on the market, from the condemned mold factory to the most grandiose mansion. Both instilled in me inspiration and delight. Train your eyes to see, not what is there when you’re touring a home, but what could be there. The reason you are going to flip this house is not because you have a mad urge to wield a sledgehammer, but because there’s something there you can improve.”

About the Author

Kemp first broke into flipping properties after her father died and left her an old, rundown house that needed much TLC. The experience unleashed her inner designer and opened the door for a new career. Kemp turned a $30,000 profit on the sale of her father’s house, which she immediately invested in a condo, which she flipped and then made an $80,000 profit. That was just the beginning. The veteran REALTOR® and former actress now owns her own design company and hosts The Learning Channel’s TV show “Property Ladder.”

Don’t forget to check back on June 4 to listen to an exclusive podcast with Kemp as she responds to some of your previously submitted questions.

Posted on May 25 at 11:50 AM | Permanent Link | Add a Comment (14)

Here are today's top selling business and investment books on Amazon.com:

1. The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich, by Timothy Ferriss

2. The Black Swan: The Impact of the Highly Improbable, by Nassim Nicholas Taleb

3. Blink: The Power of Thinking Without Thinking, by Malcolm Gladwell

4. The Tipping Point: How Little Things Can Make a Big Difference, by Malcolm Gladwell

5. Freakonomics [Revised and Expanded]: A Rogue Economist Explores the Hidden Side of Everything, by Steven D. Levitt and Stephen J. Dubner

6. The Secret (4-CD set), by Rhonda Byrne and contributors

7. Good to Great: Why Some Companies Make the Leap... and Others Don't, by Jim Collins

8. Getting Things Done: The Art of Stress-Free Productivity, by David Allen

9. Stumbling on Happiness, by Daniel Gilbert

10. The Dip: A Little Book That Teaches You When to Quit (and When to Stick), by Seth Godin

Posted on May 21 at 10:17 AM | Permanent Link | Add a Comment (0)

Quick Skim

Branding is so much more than a fancy logo or catchy tagline, says Sandra Sellani, author of What’s Your BQ? (W Business Books, 2007). It’s the ability to get into your clients hearts and minds, rise above the competition, and get customers to want to pay more for your services. Find out if your brand makes the cut with Sellani’s 40-question BQ (Brand Quotient) Test, included in her book and online. Don’t worry about a low score. The rest of Sellani’s book is devoted to branding worksheets and case studies of 35 exemplary companies.

                   Buy this Book

From the Book: 5 Steps to a Strong Brand

Big budget or small, you can build a brand. Author Sandra Sellani offers some of the following tips in her book:

1. What’s your story? Having a memorable story can keep your brand in prospects’ minds. To find your story, list all of the ways you’re different from your competitors. Ask yourself: What am I doing that’s so unique? Who are my clients? Why do people use my services? Use your responses as the basis for all of your marketing materials, from your Web site to your listing presentation materials.

2. Focus your message. Summarize your story in one line — a catchy word or phrase — to provide clarity and gain immediate recognition. But before you debut your new message, hold a focus group to gather input. Be sure to have someone else moderate the focus group so you’ll receive honest feedback. Once you’ve considered outsiders’ opinions and tweaked the message, you’re ready to use your tagline or slogan everywhere.

3. Be consistent. Don’t change your tagline or marketing message because you’re bored with it. Remember, repetition cuts through clutter. Customers want to know that a brand is

consistent and reliable. Also, make sure the appearance of your marketing materials is consistent: Do your ads, mailers, and Web site look like they came from the same company? Do they use the same visuals and communicate the same messages?

4. Keep your promises. A brand is a promise, so be careful about what kinds of claims you make in your marketing materials. If you say that your company sells the most condos on the West side, you’d better be right. If not, your brand loses credibility.

5. Don’t compete with your brokerage. You don’t want to dilute your branding strategy by using a message that doesn’t jibe with your brokerage’s. Competing messages will only confuse prospects. Check with your brokerage’s marketing department before putting any personal branding plans into action.

Want more marketing tips? Check out this month’s REALTOR® Magazine, which spotlights marketing strategies to fit three different budgets, from $1,000 to $100,000-plus. Also, see how real estate marketing pieces stack up with consumers’ critiques.

Sneak Peek

“Every time I speak on branding, at least one member of the audience will approach me and say, ‘This branding stuff is great, but my business is different — I really don’t have a point of differentiation, I sell real estate ...’ I always tell them that we all sell commodities. And, in fact, many of the world’s top brands are commodities with either real or perceived differentiators (such as Chiquita bananas or Dole pineapples). If these products can differentiate themselves, so can you! If you don’t think your product is different, neither will your clients and you will end up in ‘no brand’s land.’ And remember, perceived differences are just as powerful as actual differences.”

About the Author

Sandra Sellani is an independent marketing consultant to business leaders and entrepreneurs. She’s the former vice president of marketing for Sperry Van Ness International Inc., a commercial real estate firm.

Posted on May 8 at 02:20 PM | Permanent Link | Add a Comment (3)

National syndicated real estate columnist Edith Lank, author of Confessions of a Real Estate Columnist: I've Heard it All and So Should You (Dearborn Financial Publishing, 2007), responds to your questions.

Q: I read in the book blog that you once held a real estate license and that your husband was a REALTOR®. So I'm interested to know your view of the real estate industry and the constant debate over the cost of brokerage services. What's your response to the argument that it costs too much to sell a home?

A: My first reaction is that agents don’t seem to be all driving around in Mercedes Benzes. The practice of real estate can yield a decent income for a hard-working self-starter, but it’s interesting how many people enter the field only to leave within the first year when the work turns out to be too demanding of time and energy, with no guaranteed salary. As for the cost of brokerage services — I think discount brokerages, which charge low commission rates or flat fees for “unbundled” limited services, are just fine as long as sellers know what they’ll have to take on themselves. Problem is, many people think the job consists of finding someone who wants to buy the property. That’s just the tip of the iceberg. Making sure the would-be buyer is financially qualified, negotiating a win-win agreement that suits everyone, and then running interference and clearing up problems all the way to closing are by far the biggest part of the job.

Q: Everyone today talks about the Internet-empowered buyer. Based on the kinds of questions you get, are buyers today more prepared and more savvy compared with buyers a decade or more in the past? What's the implication for real estate practitioners?

A: Real estate professionals worry about the way the Internet has trashed the travel agent business, and it’s true that scads more information is available to the house-hunter now. But in the end, buyers most seem to turn to personal service, as far as I can learn. Home buying is a nervous business, so is selling for that matter, and it seems to require a lot more experienced guidance than planning a cruise. As for my reader mail, I have to say that readers seem just about as clueless as they were when I started the column in 1976. Perhaps the savvy ones don’t write to a newspaper columnist.

Q: What are some of the most common types of questions you get from readers?

A: I never set out to write a tax column, but almost one letter in four seems to be about the tax consequences of selling one’s home. Then, every once in a while I touch a nerve and the letters pour in — for instance, printing a letter about a problem with the neighbor’s trees, triggers loads of mail, and so does any query about how to get rid of a timeshare.

Q: How did you get your start as a real estate columnist? And how did you get your column syndicated?

A:I got my broker’s license after the kids were out of the house. By the time our newlywed son phoned to say that he and his wife were going to buy their first home, I had plenty of advice. I sat down and wrote them 10 pages, everything I knew about how to buy their first home. Mailed it off (we mailed things in those days), but then I didn’t hear from them and got nervous — I was a new mother-in-law, after all. Finally three weeks later, I got up the nerve to ask long-distance “Uhm, did you get the, uhm, real estate advice?” And my daughter-in-law, bless her, said “Edith, it was great. I’ve already lent it to three people at the office. It would make a good magazine article.”

So when our local paper started a new real estate section, I thought about sending them an article. What I liked in the newspaper was Ann Landers and Dear Abby so I thought of four real estate questions that had been asked that day in my husband’s office, wrote them, answered them, wrote three more similar columns, and sent them to the paper — which accepted them. I was in the right place at the right time.

I self-invented being syndicated also, simply by sending clippings to hundreds of newspapers. I got about a 2 percent response. I worked up to 50 newspapers in the next five years, then was picked up by the Los Angeles Times Syndicate, which got me up to more than 100 newspaper subscribers — and now, of course, some Web sites, including some real estate sites.

Q: The real estate industry seems to be buffeted daily with news of slowdowns around the country. What do you say to prospective buyers and sellers who are nervous about getting into a changing market?

A: It drives me crazy when local editors print national stories about “the real estate market.” No national story will fit any particular location, and the variations in price and market conditions are substantial, across the country. To any prospective buyer or seller, I’d advise paying attention only to the local market. And to the seller who is going from one house to another — if you’re buying and selling in the same market, it doesn’t matter which way things are going. What you lose on one end, you’ll make up on the other.

Q: The so-called subprime loan products that have been so popular for the last few years are really coming back to bite unsuspecting home owners. What do you think needs to be done to fix the situation? What role can/should real estate salespeople play in helping buyers choose mortgage products wisely?

A: When I give advice to beginning landlords, I caution them to hold out for tenants with good credit and dependable income. And then I wonder: Where do I expect the other people to live? It’s somewhat the same with those subprime loans. Yes, there are unscrupulous lenders who take advantage — but on the other hand, some of those high-interest loans do allow marginal borrowers to get into their own homes, and some of them work out well. Unless lenders are motivated by extra reward for extra risk, a whole lot of what we used to call the “deserving poor” would be shut out of the home owning market entirely. As for what should be done, I don’t know.

Q: How many letters do you get from your readers in an average week? How do you decide which one's to respond to?

A: I get only a letter or two by snail mail each day, with almost everything coming in by e-mail now. I answer every one, always have — hundreds of thousands by now. For the column, I try to select problems that might be faced by the average reader, though once in a while I hit something so intriguing, unbelievable, or funny, that I throw that in too. For my newest book I’ve Heard it All and So Should You, I gathered all the ones that I couldn’t print because I didn’t want to make fun of my readers. These are the ones that are really funny to someone who’s in the business. For example, such letters as “we want to sell on our own, I think you call it being an FSOB” and “to pay off our mortgage faster, should we send in the extra money for principal, interest, or escrow?”

Posted on May 7 at 09:26 AM | Permanent Link | Add a Comment (7)