How to get started on flipping houses

Question

My husband and I are very interested in flipping houses. But we are a little bit stuck on how to get started. We recently attend a flipping formula seminar which gave us some good pointers but in order to receive information on investors and getting started we were required to pay a fee and attend a 3 day course. We signed up but end up cancelling it since I did not feel comfortable paying so much money for it.

Can anyone give us some pointers where to start or what would be the first thing to concentrate on?!

Denise Leddy · Answer

Thank you so much James. I am actually thinking about getting my realtor license.

James Wise · Answer

@Denise Leddy

House flipping is a very competitive business. The status of the real estate market is going to play a major roll in how profitable or unprofitable it can be.

A couple years ago everyone was flipping due to record low prices now the market has moved up and margins have slimmed down.

To really make a go at it you need to evaluate what your competitive advantages are. Why are you going to be better than your competition.

Some competitive advantages for that business are as follows.

• Large amount of cash in the bank.
• You are Real estate agent.
• You are General Contractor.
• You are a plumber.
• You are an electrician.
• You have access to a large amount of cash in the bank.
• You have a huge pipeline of leads from distressed sellers through heavy market exposure.
• An in depth knowledge of the ARV's in your target market.

William Allen · Answer

@Denise Leddy

Welcome to BP and I think you came to the right place.  I'm glad you didn't drop a bunch of money on those seminars and came here.  I think there is great value in your education and it can certainly be jump started a bit but you need to pick the right program and the right person to follow.  The mentors that I have had in the business have been invaluable to my success and growth.

I am active military and able to run my business while performing my full time job.  The key is to surround yourself with the right people.  However, I got started doing everything myself and learning as I went just like you are doing now.  Good luck and reach out if you need anything.

John Thedford · Answer

@Denise Leddy

First, you must know your market and how to value properties. Many people make great money as flipper. Others lose. They keys to being a good flipper are buying enough under market so you have a SAFE margin, having financing or cash, and a lot of patience. If you need to rehab first, you need to back that value out of the deal first and then subtract your desired margin. If you have cash in hand, that makes you a desirable buyer. Sellers like to see cash offers vs offers with contingencies. Welcome to BP..you will find lots of info on flipping and exit strategies. The best wealth is built buying and holding rentals and flipping can be a source of additional money to accomplish that. Good luck.

Denise Leddy · Answer

Thank you Brandon and Karen. I really appreciate the help. I am checking into meet up groups in the area right now.

I also checked on financing, since we just recently took out a loan for our home and put all of our savings into refinishing it, we are have no money to buy another home. When you say traditional financing are you talking about getting a mortgage loan through the bank? I am very new to all this, as you can probably tell, but I am very interested In learning.

Yes Karen, I am very glad to I had a gut feeling and backed out of it. Now I am just waiting to get the money refunded and I need to return all materials given to us. We took some notes at the seminar and I hope I can find out more about some of the keywords they gave us. What pulled us into the seminar was them talking about private investors that would charge a 1-3% short time loan fee so we do not have to use any money out of our pockets, which is nice because we don't have any. ;) I am just glad we got out of the seminar before we end up with a bad deal and get stuck in debt.

Again Thank you guys so much for answering me ;)

Karen Barber · Answer

I really hate seeing people throw thousands & thousands of dollars away at these seminars.  I am so glad you trusted your gut feeling & cancelled.  I have been to one & they are full of hype, music, gets you all pumped up!  However, many times you either end up buying tons of material that you can grab online for free, or worse yet...they try to sell you a turnkey property that you may not be ready for at this particular moment.

Now, I am good with turnkey properties, they are good, but do your investigation & ask questions. If you are looking at a turnkey company, investigate that company!  There are good ones & there are bad ones.  If they are willing to spend time with you, if they are willing to show you houses, if they are willing to assist you on all levels...education being key.... Check out the zip codes, surrounding areas, check out the City.  Remember this is an investment so follow your gut & your feelings.  If you feel pushed or pressured in any way...then I would ask why.

Financing...this is a huge one.  When financing you can have up to 10 loans (including your primary resident) through traditional financing, however, it might be better to look at blanket or portfolio loans as well.  Traditional lines will base off credit as well as property & non-traditional financing will base off the cash flowing property.