So when I initially planned on flipping 5 or so houses this year I had this crazy notion that it would be semi reasonable....1 every two months or so. Instead I ended up buying 1 from a charity and 2 at a foreclosure auction on wednesay! So we officially have 3 flips we will be starting in march and one that should be finished in a couple weeks. Perhaps I should have shot for 10 instead of 5! To think last year we only did a single flip. Oh boy well a few lessons we learned from our second flip.
1. Time is money, even though you might make a great profit with a gut rehab they tend to take a lot longer.
2. Foreclosure auctions are amazing! Often a really good realtor will be able to get you into them before the auction don't be afraid to ask.
3. Properties at the foreclosure auction tend to be in better shape than some of these houses that have been sitting for years vacant.
If anyone has any questions please feel free to ask as I will try and help out as much as I can. The cities we have bought flips in this year are woodstock, joliet, marengo and rockford.
Numbers on our second flip were 40k purchase price 90k rehab and 175k sale price
here's a couple pics hoping can get a few replies from the local rockford Illinois people maybe we can network!
Looks good! What area of Rockford are you focused on? I see a ton of homes for sale up there and have taken time to see a few. Just never pulled the trigger since prices are all over the board and a lot of area’s seem iffy.
@Arthur Hebda great question there are a ton of great areas in rockford. Any town with 150,000 people has a plethora of good and bad options. For starters it depends if your concentrating on flips or rentals. If your looking for apartment rentals the entire east side is more desirable, if looking for house rentals really most areas work since people all desire houses. If your looking for flips the east side has a few great areas anything east of alpine has strong neighborhoods lots of home owners and not many rentals.
How do you find properties at foreclosure? I feel like it's impossible to find those deals through regular MLS.
I love the dark cabinets & double vanity sink!
@Andrey Les I'm not sure how it works in Ohio every state is different. In illinois they are public notice. So check your local newpapers they will list the foreclosure auction time and date. From there you can find which websites compile all the data for you. It might be more than one website but once you find it you can check what listings are up for auction daily.
Man, great read and awesome breakdown. Big congrats the all around project outlook.
I am "trying" to get into Real Estate, but in NYC, and have a million and one questions. I was left a piece of property, from family estate, and recently sold it (I could not afford $22,000/annual property + expenses of living). The sale was immediately invested into conservative, income driven stocks/mutual funds, etc. But I feel like real estate is calling me, and buying and flipping is where I want to be. I am not looking to get rich, but an extra $75,000/annually would be great for the family. I want to play with no more than $200K; including down payment, rehab cost, and ancillary cost.
1. With this type of budget, is NYC even the market for me?
2. Do you do REI full-time?
3. How do I build a team? I assume having a good realtor and contractor are crucial
4. Do you only aim for foreclosures?
Those questions are random, and probably not the best questions, but may provide me with some kind of outlook to what path may be suitable for my goals. I don't think the tenant route is for me, even though eventually, I would like to have property to hold onto for the long run. Something to leave behind my little ones, you know.
Thank you for any insight and keep pushing.
@Richard Wilson how's it going man thanks for the reply i'll do my best to answer.
1. I highly doubt NYC is the market for you, with that being said there are reasonable priced places within an hour of almost every major city. It will take a little studying but I would advise picking a secondary market not a small town. The first few flips we did were in small towns populations under 40,000 people. The reason I would advise against this there is often not enough deal flow to stay in that same town. So after we get to know the city officials the permitting process all that knowledge had to be relearned in the next small town. After doing that a few times we realized we should find a bigger town population 100,000+ where we could hopefully fine enough deals to stay in the same area. So far that strategy paid off all three I mentioned were in the same town. It also helps you get deals on materials being able to buy from the same suppliers allows you to negotiate better prices 3 roofs instead of one etc.
2. Yes I do real estate full time I have a rental portfolio spread across 3 different llc with my brother and a couple close friends. Apartments have always been my first love and will be my retirement plan, however flipping is the gasoline I can throw on the fire to speed the process up.
3. This is probably the hardest question of them all. Slowly is how I have been in this for about 6 years or so now and I have gone through numerous realtors and contractors. I think the realtor is the least important part of your team you need to build, sorry to all the realtors out there lol. Realtors often have no idea of rehab costs so the deals they bring to me are often severely overpriced. Simply because the house is off market and priced 50k below comps means nothing when it needs 50k in work it's still essentially market value. Contractors are a little more valuable but still not the most important part, it is impossible to find a contractor or a team that is going to be at your beck and call unless you are providing them full time work. The best part of my team is my general contractor, he is a partner with me in apartments as well as flips. We can run 2 or 3 crews in different cities and he can oversee all the projects, if he needs to do work at one to catch it up that's an option. If i need him to take a day off with me to look at properties thats an option as well. He is a partner however not an employee and I think that's the key to that relationship working out so well.
4. I have bought foreclosures and I have also bought severely distressed properties. I don't have a big enough sample size to say for sure I will only be buying foreclosures in the future but if I had to guess that's were all the evidence is pointing. Some of the reasons why are foreclosures had a mortgage at some point fairly recently. If the bank got the house appraised and it wasn't a rehab loan or something just a standard loan. The house was in fairly decent shape in say the last decade, meaning the electric is probably fine the plumbing the roof etc. As opposed to the house from the 50's no one has put a dollar into in the last 60 years. As anyone who has done flips knows the expensive parts aren't the things you can see but the things you cannot see. I have found foreclosures to be much more structurally sound than the other deals I have bought.
I hope all this helps if you have any questions feel free to reach out anytime, I would be happy to help.
@Philip Williams good job, what side of town did you buy this 40k and Priced it at 175k. That is a really good find.
That information was so on target. I definitely want to surround myself with a great team. #3 certainly hit home, and I too, thought it was a difficult question.
I really appreciate you for taking the time out, to thoughtfully respond to my newbie-esque inquiries.
I have a lot of homework to do. Thank you again and best of luck on all of your projects!
Do you go to a physical auction or buy online from sites such as auction.com?
Hi Phillip, I am wondering if you could share any info as to who you structured your partnership with your GC. Any info would be really helpful!
Updated 4 months ago
Revision to questions - "how" you structured your partnership with your GC, not "who". Thanks!!!
Great work, and very inspiring! Can't wait to see what your numbers will be for the year!
Congrats the rehab looks great keep grinding and growing!
How did you finance your first flip? I have 2 rentals in a terrible market where the homes aren’t appreciating at all, therefore I’m stuck with them as rentals. I’m tapped out on down payment for another but would like to do a flip to set “gasoline to the fire”, as you mentioned. I need to make my next move and it has to be my best move. I don’t have much support, it’s just me trying to make this work, so any advice is helpful. You’re my inspiration today.
Is that LVP flooring in the kitchen? I did that when i redid the kitchen and it came out very nice.
Philip, You're my first follow. I'm just getting started and I really appreciate these kinds of posts (and the advice in the comments to Richard). Ive been involved in REI since I was a kid but going off on my own has been daunting. It's stuff like this that gets me excited to get researching. So thanks a lot for this article! Keep up the good work and best of luck to you.
@Chris Sukala Everything I have bought in Rockford has been on the East side of town most east of Alpine. It would have been a much better find if it didn't need so much work! I would much rather have done a light rehab that took a few weeks than one that took half a year.
@Richard Wilson Absolutely there is a ton of knowledge out there and sifting through articles and podcasts can get overwhelming at times. So if someone asks me a direct question I'm going to answer it to the best of my ability
@Kyle N. This is a great question I go to the physical auctions for a number of reasons. First I tried auction.com online to start, it was not at all a even playing field. I had to deposit 2500 per property that I wanted to bid on. Now the big players don't have to do that they can bid all they want without a deposit. So while you or I might be picking the best 4 properties they can simple put in minimum bids on them all. Second there is no guarantee anything will get sold at the online auction at a live auction the reserve is set about an hour before the auction starts sometimes a few hours. They are often overpriced and go back to the bank. If however you bid even a dollar over the reserve there are no ghost bids like there are online. Third since you physically have to go to a live auction in person there is no where near the competition. I think about 14 people were the most I have seen at a live auction in the last 30 or so I have gone to.
@Camie Stephen It's actually pretty simple nothing fancy, we are 50/50 partners in the apartments that we own together. The flip company that we are going to establish there are 4 of us each will own 25%. Our Gc chose to put sweat equity in so his first year of working was for his quarter of the company. As for the flips that I am doing on my own it gets a little more complicated because he is still overseeing them I am just paying him for the work he is doing. These three I actually bought on my own I was planning on filling the gap between when the companies last flip ended and we incorporated to keep the guys working I guess I got a little carried away!
@Ashley Wilson Thanks I will be sure to share with you guys I appreciate all the love and support!
@Shantelle Evans Thank you so much I have gained so much inspiration I'm glad I can give some back. I was actually a profession poker player once upon a time. I actually retired about 7 years ago and used that money to buy my first rentals. One of my friends invited me to come play one of the wsop circuit events, which are the smaller ones that travel around throughout the year. I had already saved up about 60k and with a 3rd place finish had enough to start my flipping career!
@Philip Williams Congrats! That flip looks great...keep going!
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Great Post! I would like to hear/learn more about Foreclosure Auction. I will call you.
Congratulations, rehab looks fantastic!
@Philip Williams The WSOP addition to the story is just the icing on the cake. Aside from the estate my grand father left me, I do pretty well in DFS, and a bunch of successful players come straight from being poker pros. I guess it is a number thing, which leads me to one last question (I promise not to bug you too much): How do you allocate your time efficiently; is it heavily invested in crunching numbers and finding the right piece of property to invest in, or do you spend more time on the rehab component of the project itself?
It looks like you have a well aligned set of attributes all contributing to your RE success, only furthering my belief on building the right team. Thank you again for all the energy spent on responding to us all. Great stuff!
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