Hello, fellow BiggerPocketers! I've been listening to the podcast for the last couple months and I finally decided to join this awesome community and create my first post.
As the heading suggests, I am graduating high school. I am graduating in 7 days, as a matter of fact. I have been accepted to the University of Montana with some decent scholarship money (yay), and I plan on studying Computer Science.
However, as we all know, college is outrageously expensive. That's why I thought to myself, "I should totally flip a house this summer before I head off to school". I've been working at my local country club as a bag boy during the summer since my freshman year, and, although it is a great summer job, I only make about $3,000 per summer. I would definitely rather use my time trying to flip a house, because I would (a) hopefully make more money than my summer job and (b) it would be excellent experience.
So, I have a list of questions for you investors out there:
- How should I go about this? Essentially, I have three months until I leave for college. I have about $3,500 saved up, and no one currently willing to say, "hey Jeff, here's $100,000 for that house you've been wanting to buy". I've been reading some of the popular posts on BP about getting started in flipping, but I can't really find any posts that are tailored to young, 18-year-old high schoolers that many people are bound to not take seriously.
- What would be the best way to find a house? I have ruled out direct marketing. My goal is to buy one house, fix it up, and flip it. I feel like DM would be an expensive time-waster for my current goals.
- What would be the best way for me to obtain the necessary funding? I could try for a bank loan, but my parents would need to cosign, and (1) they wouldn't even consider doing that for their 18-year-old son and (2) I'd rather keep immediate family out of the equation.
- I guess this is the most important question... Should I actually try to flip a house? Given my time constraint, age, and standing in life, I'm slightly worried that this may be a horrendous idea for me right now, and if you think it is, I'd like to hear it!
I'm trying to learn about house flipping as rapidly as possible, as I do not feel I have adequate knowledge right now in house flipping to be comfortable carrying out this type of project. So, I'm hoping to give myself 3-4 weeks of learning and researching before I begin the real process of flipping a house. I have made some good connections at my country club over the last few years, and I plan to talk to a person that owns a contracting business here in my hometown and also a very successful apartment complex owner about my idea.
I really appreciate any tips/comments/advice that you are willing to give me. I've got my fingers crossed for a very good summer!
Hi Jeff, I am a young investor as well...My suggestion to you is wait until you get fully educated on real estate flipping. Given you are going to college, you have time constraints.. Real estate can drag on & with you going to college soon you do not want to have the headache of the property not selling. Remember, theres property taxes, utilities, lawn care and more more things that go along while the house is on the market for sale.
Get an education..do some classes in real estate in college... save up $... graduate and go full force....Real estate is a great way to make money but it's all about timing...in your life and the properties! You will be just fine with your ambition, I know it!
IMO Flipping is the most risky/expensive you can do. Not to be discouraging but why not try wholesaling. It's less of a commitment and can be done for much less than your $3500. $3500 isn't much to get you a property much less be able to pay for the repairs and holding costs.
I would say don't do it.
Despite what you see on HGTV, flipping houses is hard work with no certain payoff. Especially in your case -- no job, no credit, no experience -- you're either going to pay way too much for the money and/or end up running out of money because you couldn't raise enough. And selling the flipped product can be a real problem, one that may not resolve itself within your Summer timeframe. Are you prepared to hold the house through the winter if it doesn't sell? If no, then don't do it.
If you want to get a taste of the industry hire on to a crew of some kind. Paint, or frame, or other construction trade. Or maybe paint a house or 2 on your own. Or answer the phone at a Real Estate agency. But don't go deeply into debt (even if this is an option) to try flipping a house. Just too many ways this can and probably will go wrong.
Your time to invest will come. Finish school and see what you want to be in a few years. After you've started your career there will still be houses to flip and $ to be made in many places in the industry.
Get the education base before you dive into any kind of real estate dealings,
it is a serious game that if not planned out with a solid exit strategy can
hurt you at a early age. Get your degree and keep your eye on real estate
at the same time.
The biggest issue is getting money. You will need help from someone, friend or family because no one else is going to lend you enough money.
The second issue is it takes me at least 4 months to flip if everything goes perfect! It will probably take 6 months, you don't have that much time.
I would never try to discourage a young person not to jump in and just go for it.But having a 3 month window on a flip might just be a little unrealistic.Too many unknowns and things would just have to be perfect.Maybe in those 3 months you can study and get a Real Estate agents license $3500 would more than cover it. It will give you more knowledge about the business,more contacts in your area,and access to the MLS where you can find deals in the future.It would give you such a head start on your real estate career.Just a thought. Im sure thats not what you want to hear, but you'll get there! Good Luck
not to discourage you, but first deal? With 3500 in the bank? I'd begin with wholesaling. You have school to worry about. You were accepted into a great college. Why ruin it?
Congrats on your scholarship and acceptance! Well I am a young person that dove into real estate right after high school eager to make money. From experience my first deal was a wholesale deal to a cash buyer. in other words found a great deal put it under contract and found a cash buyer and assigned the contract. Has the lowest amount of risk and great way to get an idea of how it works. Made $1,500 in less than 30 days. Was a hectic 30 days trying to learn all the ropes but it can be done.
I read Larry Goins Ultimate Buying and Selling program which helped me a lot.
Taking your time and seeking advice is really important as well!
@Jeffrey Lester - Jeff, one usually can't just go out and say, "I'm going to find a deal today", or this week. It might happen, it might not. Last Spring I got two offers accepted on the same day. So far this year I have yet to get a deal locked up. And I have about 10 years of experience doing this.
Hey, guys! I really appreciate all the responses :-) After thinking about this a lot, I've decided that there's a lot of due diligence to
Do before my first deal - and that's simply educating myself and building a foundation for myself before I jump into this stuff. I have a brother who has always been interested I'm doing real estate, and he almost has his doctorate in economics. I talked to him last night, and he said he would consider trying a flip with my next summer, but that this summer and school year, I should spend time reading, learning, and working with a flipper for free to learn the basics of the type of project.
Again, thank you so much for the responses. I will do as much as I can to educate myself, and hopefully around this time next year, you can all hear about a flipping story from me. :-) I'll have many questions between that time and now, so I'll keep posting to the forums!
You guys rock.
Hey, good to see another high school kid online, or former high school kid. I myself am almost 17 and have been avid on investing for about a year now. I have to say, lucky you for being 18, right now being a minor who is trying to get into real estate investing makes everything 10 times harder. Flipping may or may not be the best choice for you considering your situation, but i have heard of them being done in 3 months or less, but the real issue is there is no way you can do it with only 3500 dollars. AFTER getting a good education your best bet would be to wholesale to start, which is manageable in three months but will be really hard. Honestly i think i'd give you the same advice that your are giving me, and that is to take a few real estate classes, get a realtors license, and then start investing. Hope to see you do well though, as i do not see many kids my age on the investing scene.
@Jeffrey Lester Just as you could 'paper trade' a stock portfolio to learn about price changes and track news, you could 'paper trade' a house flip this summer.
Even if you don't have the money, try to get yourself to an open house for a good fixer candidate. Write down everything you think needs to be done and try to build yourself a tally so you know how much you would spend and on what. New bathroom/kitchen/fixtures? Shop the materials at Home Depot. (How much of each item? Cost per foot/etc.)
New roof? Call for an estimate or do an on-line calculator as a start.
Run your comps. What would it sell for afterwards? What are the escrow fees? Would you have an agent? How much on commissions etc.? How long would it take?
Try to add up all of the real costs and be able 'show' your parents or family members or whoever is the most likely funding source how you would make the project work.
When companies want to raise money, they issue financial statements. You want to be able to prove to an investor etc. that you have a handle on the potential profit or loss. A flip financial statement (projection). You will also have a lot more luck finding a mentor if you come across as someone who has done thinking on his own.
Other ideas: Get the books from Kaplan to pass the real estate agent test in your state. The costs are not excessive and you could even pass the test this summer I would bet.
@Tom V. That's really good advice! I work with a girl whose father flips houses for a living, and I think I may offer a helping hand just to see how it's done. That could be extremely beneficial.
And I am going to try out the excercise you laid out in your comment. I think it's a brilliant learning experience!
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