Flipping
Fairburn, GA · Member since 2016 · 2 posts · 0 votes
OMG Where to start!!!
As Jonathan said, its not all glam like the reality shows depict! And the costs add up FAST! One thing a lot of folks neglect to include in their analysis are the property taxes you are responsible for while you hold the property, plus utilities! And don't forget closing costs, realtor fees, conveyance fee (depending on your state the % varies). Also, unless you are an agent, a lot of the good buys are gone before they even hit MLS - and when there is a bidding war on a low valued property, ENSURE and INSIST on have the seller initial your OFFER. That is the ONLY way to guarantee they even saw it. A good buyer agent will ask to do the offer in person to the seller to ensure you are fully represented! So after ALL those fees, then you can focus on the cost of the rehab - and realize, buyers are savvy and know the difference between quality workmanship and crap. Don't cut corners, it may save you a few dollars in the short term, but you will be wishing you spent them when your prop is still on the market at day 60! So now you've gone thru the "cosmetics" Kitchen remodel/bath remodel/opening up the floor (and don't forget the cost of the "supporting beams") , new flooring, paint, smooth ceilings; don't neglect the structural aspect and exterior - electrical upgrade? Plumbing upgrade? Condition of heating/cooling system, chimney repointing, gutters/siding (oh does the house have lead paint on the exterior - that's a nightmare!); driveway, sidewalks, steps, decks, patios. Is your basement dry? Now how about the landscaping and tree removal? It adds up - we've looked at 50 properties all of which appear great on the MLS until you start digging and find these things.
So besides knowing your market - the 1st thing I would suggest if you don't intimately know, is to bring a general contractor with you upon inspection of the home and start adding up the costs (plus the cost of the money you are borrowing, monthly interest, points etc). You will soon find out that once said and done, it may not be worth your while. Get yourself a good investor friendly realtor and general contractor!
I would also start with specific criteria so you are not overwhelmed looking at every listing. For my husband and I we decided that no matter what the home we flip will have a listing price no higher than $400k - we know that's the price range that moves quickly in our area. Next we decided that we will not buy a property that has well or septic - my buyers ask me to always exclude those from possible purchases - so I do not want to limit my demographics - so I do not consider those homes for flips. Also, we do not want to get involved in the structural unknowns of antique homes so our age range is 1950 and newer. We stay away from cities as well. So determine your criteria first as well
Lesley I want to thank you so much for the very detailed answers. Do you go by anything like the 70% rule? Why dont you want to buy in cities? Hoe do you handle capital gains tax? I have so many questions for you I don't wantbto overwhelm you
How to flip houses, by MSOOTKAUG the handsome!
People ask these questions all the time. And everyone rushes in to give some answer (no matter how amazing that answer) along the lines of, do the numbers, use the 70% rule, get a contractor to give you a good cost o repairs, etc. etc. etc.
Sorry.. great answers, but seriously.. HOW does one start flipping? None of these answers really help. Imagine I wake up one day and want to start flipping. What do you do? Sure get an education. The classic textbook answer you can give. But how does one do ANYTHING?? Of course learn how to. That doesnt tell you anything nor is this really helpful.
So my little buttercup, let me tell you how I started flipping, and you determine how awesome my answer is. Spoiler? Yes it is pretty damn awesome, my answer).
Step 1:
Make sure you have several chickens, 5 goats and 3 virgins ready. You need them a the end of this read!
Step 2:
You start wholesaling! If you do not want to start wholesaling, you start wholesaling anyways!
Step 3:
If you reallllly do not want to start wholesaling then you pretend that you are wholesaling and wholesale!
Why?
What do you think a wholesaler does?
The FACT of the matter is, unless your butt is on the lie you will simply not take it seriously. But the second you invest YOUR mone, believe me suddenly you triple check all the numbers!
Most investors, do not take all these things seriously, and just want to jump to flipping. They just estimate the COR, and the ARV and get to it.
A good wholesaler, in turn needs to pretend that THEY are buying the house. Suddenly, they no longer "wing it", or guesstimate the COR. Now suddenly they are more careful! More accurate. And once you master these skills (like I did), guess what. You only sign homerun deals!
The most important thing wholesaling will teach you is finding leads! Once you master this, there is no stopping you!
Not long ago I was the newbie here. Asking everyone for help. I mostly got retarded answers and I thought "well these are the people that know how it is done so let me not be stubborn and let me try to do as they say". BIG mistake. I went nowhere. Then I did it my own way.
Before you know it, all the steps I needed to do to become the top person here in CT people turn to to sell their house to me, beg me to buy their house, was very clear.
I wrote all these steps down and worked on them. One by one. All to strengthen my wholesale skills. I took nothing lightly. The smallest thing I wrote down and seemingly the most insignificant things I took very seriously. Every single step I wrote down got my full attention and worked on it till I knew my work was better than anything out there! I made SURE of it!
Keep in mind, if a lion chases you and a friend, you do not need to outrun the lion. You just need to outrun your friend right?
WRONG!!.
You trip your friend and then you pee in his eyes so he goes nowhere!! Let the lion and your bestie fight it out while you hop calmly into safety.
Right? Wrong again Pebbles.. (What kind of person ARE you!!.. nahh I like you! I have an opening for a clever evil minion like this!)
If your work is just focussed on being better than your competitors, you will eventually be outdone again.
I came up with a better mentality.
Consider this:
My work has to simply be better than you can ever imagine. The best you can possibly do, and then make it better. I don't even look at my competitors. What happens then? Your competitors will see you are light years ahead of them and they don't even bother trying.
I HATE wholesaling even though it made me a ton of money pretty damn fast, I hated it!!
So the second I had enough funds to start flipping I jumped on it. And guess what.. All these wholesaling skills came in pretty handy. Extremely handy.
So:
The NUMBER one rule to become successful investing.. and pretty much the ultimate best way do do it...
Ready? Here it comes!
The best way starting ANYTHING real estate investing is getting a website and learning how to do your own SEO. Done, The crowd goes berserk, people throwing panties on the stage.. Jah-real, Jah-real, chanting.
The end, end of story. You made it!
Honestly, and I hate to be aggressive (not really), but anyone telling you different simply has not yet experienced the power of a ranking website. PERIOD.
Think about it. All these flippers, what is the one common problem they have?
High quality hot leads.
Wholesalers, what is the common problem they all have? (other than not knowing how to analyze cost of repairs and ARV?
High quality hot leads.
Buy and holds, rehabbers, you name it, the common problem is they have no leads streaming in.
Heck even Brandon the silly little Turner, needs to write 10 offers a day to hopefully bag one or 2. Wrong silly buns!!
If you had a website like mine you wouldn't HAVE to make offers in hopes one would bite booboo! Student became the master huh!
No matter what you want to do, you need leads PERIOD, end of story! You can pay for them.. like all these silly little mortals, or become a SEO god and .. well this:
For free, every so many hours, an other few leads beg you to pretty please come give me an offer for my house!
Why pay for direct mailing? Why pay a finders fee to wholesalers?
It is beyond me how "investors" go through so much effort to get good leads but they refuse to do one simple thing.. Let these leads find YOU!
And when THAT happens... this is bound to happen... regularly:
So there is how you start flipping.
You flipp successfully by buying the house at the right price.
Ohh but MSOOTKAUG, I have no time to do SEO. Ohh MSOOTKAUG I have no intelligence to do SEO.
GOOD!! AWESOME. Don't! I will get all the leads then! Pffft.
It is like saying "Ohh I have no time to be successful and make money and be financially independent".
People like that make my success possible. Simple as that!
OK
Step 4:
Get a team together.
Contractor & agent.
They need to be part of your team. It is very easy to find them both. ESPECIALLY when your site is ranking.
How? Show them your traffic to your site:
explain to the agent that 90% of the people submitting forms simply want to sell at market value. You will give them her (because as we all know all agents are female) and you will refer her as a great agent. All the house you end up buying and flipping, you will list them with her. Believe me you don't even have to tell her what you want in return.
Before you finish your sentence she will say: "shut up bish! I want to do comps for you and walk the properties with you and tell you what I think it is worth"
Same with contractor.
Now you have a solid team.
Step 5
Start blog. Ranking 1 on google doesnt mean you get leads. It just means you get traffic. You still need to work on your credibility score. Are you real, are you as hot as Jerryll. are you as smart as Jerryll... ha ha ha a yeah I know dumb Q, obviously not! but can you t east buy a house in cash? Yeah? ok then .. show me..
You then say.. here you go you pumbah, read my blog and see all my friggin rehabs.
To which the seller will say, OMG you amazing foreigner you, please take my money now! Credibility right there!
I know I know.. you need to have flipped a house before you can blog about it.. or DO YOU... Muuuhahahaha
No you don't. But Seriously it is late and I don't want to write too much.
Step 6
When you get your site up, you get traffic, you work on credibility, find buyers and wholesale a property to the buyer at an amazing price you ask him if you can document his flip. He will say, Yeah baby come document my flip.. in a rally creepy tone.. You then say.. OK!
Take pics, document, learn.
Do this 5, 6,.. 19 times and you will have enough funds to attempt your first flip.
And that is how I did it.
Remember the goats in the beginning?
Keep them, I just want the virgins!
Ohh for pete's sake this post is 2 years old. I want my damn money back!
@Jerryll Noordenyou are crazy man... Where ya been?