Rehab Newbies looking for a partner

49 Replies

My husband and I are looking to do our first Rehab and flip in WI. I am a CPA and he is a very handy ( has done work for others and also updated our old home where we turned a 65k net profit, which we invested into a new house) For the last 6 months we have been reading and listening to podcasts to learn more about this but we recognize that we need help from an expert:

1. What does a good property look like? Where can we find it

2. Funding?

Thank you all! 

1. One where you can make a profit, the signs of that are short estimated rehab time, desirable area etc.

2. If you plan to flip you can usually get away with hard money, if you want to buy and hold a bank loan is going to be the way to go.

@Ana Klein avoid hard money if possible, flipping is hard, and you could easily lose money, if you do go with hard money calculate your interest cost per day, it will motivate you to move more quickly during the rehab and to lower list price or accept a lower offer when appropriate on resale.

@Aaron K. we have about 60k in 401k money we can use, which we plan to use since our ROI on that is so low its pathetic. what do you think? it is scary regardless My husband is very very handy but we have no idea where to even start looking ( app or website) that can give us homes that are worth it

@Ana Klein I would not use 401k money if it were me. Primarily because there are steep penalties for taking it out of the 401k. Secondarily your ROI on your 401k may not be as low as you think it is, if it truly is you should compare an optimized 401k portfolio to what you want to do vs your current returns. The trick with RE investing is that you have to sift through a lot of junk before you find a diamond in the rough there is no app or website that has properties just for investors, you have to look on MLS unless you are comfortable buying off market properties, which I wouldn't be comfortable with on a first purchase.

yes we started looking on MLS and have found some home, it;s going to take a while to find our first deal and completely understand.Do you recommend getting realtor license so you can get access to comps? Have you ever done flips?

@Ana Klein depends on your price range if you are below $150k probably not worth getting an RE license above it probably is more for savings on commission than anything else.  If you use an agent if they are worth their salt they should be able to run comps for/ with you.  I have done flips as part of my job in addition to helping clients with flips when I was an active sales realtor but I have not with personal funds.

Thank you for all your help @Aaron K. ! We are going to continue searching and finding creative ways of doing it without personal money! It's a lot to digest and I need to remind myself it's not going to happen right away!

@Ana Klein

It sounds like you and your husband are in a very similar position as me and my wife. Although we have a pretty good understanding of our market, we have never performed a brrrr.

We have however bought 2 duplex’s, but saving and putting 25 percent down takes way too long.

We also have about half the funds to get a project moving. It might be cool to chit chat or shoot some emails back and forth. One thing I considered is partnering for a flip.

I’m open to any ideas, let me know if you had a specific project in mind.



@Rick Barbato I will keep you in mind! Right now we are looking for expertise more than anything. Once we have some more experience and need financing I will let you know! If you come across anything important regarding this strategy please let us know- we will do the same! We are in need of where to find the properties... they say never to use the MLS system...

@Ana Klein

Understandable, from our experience find a place that has a renewing abundance of people. For example, there is a huge hospital 5 min from our duplex’s. We always have residence looking to rent. They make great money, spend all day studying, and there is always more next year! Similarly, there is an army base about 30 min away. So look for areas that attract people. Colleges can be good too.

I’m no expert by any means but we’ve had a lot of success looking for properties with these features.

Another small tip. We remodeled our kitchen last year... well the contractor quit shortly after our job to become a realtor. Now he finds us foreclosures before they hit the market and is able to give us a quick construction estimate for us to decide if it’s a worth the investment. If you can find someone like that, hold on to them! Haha

Best of luck! And keep us in mind with any questions or ideas... I’m always down to brainstorm or give a second opinion. Even if we don’t do business directly, we can help educate each other.

@Rick Barbato absolutely! Likewise I am always open to bouncing ideas so please dont hesitate! We are looking more into straight flipping and have bigger profits. Not for ever, but our goal is to pay our bad debt and save some to eventually invest in multi family. Like you said coming up with 20% takes sooo long! 

Check out the book Flip by Rick Villani as well as J Scott's book on flipping. I bet David Greene's book on BRRR is good, too. Flip spends a lot of time on identifying your niche areas and finding houses. And please let me know if you find other good resources, if you would! :)

@Aaron K. @Ana Klein by no means an expert here—still working on getting into my first deal. This is my busy time of year so that’s slowed down a bit.

However, I listened to episode 258 today, which coincidentally talks about this very thing. The guest on that show converted his 401k to a self directed IRA and that was how he was able to use that money for his investments. I'm by no means a CPA, but it sounds like you at least might have the resources to figure out if that's the right thing for you guys!

Hope that helped some!

@Ana Klein as far as properties go, I’m learning so fast that it’s all about relationships. I asked an old high school classmate about a property she had listed and when she found out what i was interested in doing she connected me to an older guy in town who’s in the process of dumping off his properties. Not sure they’re gonna work out for me, but that connection happened so fast. Same thing happened when my realtor-aunt found out what i was trying to do. Now she’s got pocket listings that may come at a small deal for me.

Im learning that the more I talk about it and people in my area see my interest and passion, the more they’re interested in helping.

As I mentioned in my other post I'm still working on getting into my first deal but I've heard a lot about the 70% rule for flipping. If you haven't already heard that, it means buying the property at 70% of its After Repair Value (ARV) or less. By using that guideline alone I'm able to evaluate properties and know whether or not that particular property fits that business model.

@Ana Klein

Hard money is great as long as you have a clear plan of when you will finish the project and with whom. Even though your husband is handy, it is not recommended to do your own work because it can be slower, you should hire a good and reliable contractor and you husband can assist him if he is not busy with his day job, you can find good contractors here on BP or in a local RE meeting in your area, make sure to get 3-5 references at least.

As I understand you can move your 401k in to a self directed IRA and invest from there with no penalty, you will not tk to talk to your CPA about it ofcourse

Good luck

How ironic. I do 3d Architectural Design, Project Management, Value Engineering, R.E. Investment. I've recently been researching fix and flips in the Jackson Park area of Milwaukee- near St. Luke's Hospital. Oklahoma Ave. From 27th. St. West.