Flipping houses you do not o

[James McGovern]

On flipping nation they did an episode where the owner retained ownership of the property and they invested in the rehabilitation . They agreed to split the profit equally. Feels like a strategy worth exploring further 

[Bill B.]

I like this better than most flipping “solutions”. You would have to be careful if you invest any money you can’t afford to lose. Imagine the seller convinces you the property is worth $500k. You want to add $100k and sell for $700k. But several problems could come up.  

The seller hey, sounds great but I need to sell within 4, 5, 6 months. So you finish in 3 and the market has softened a little and you can only get $650k. Pay $65k in selling costs, concessions, etc etc. You’ve got $585k net. Seller asks for his $500k if you forgot to conclude selling costs but maybe you get him to pay 1/2 selling costs so he only gets $468k? So you make $17k?

Do you get to do the work and charge whatever you want for labor rehab? Essential buying yourself a job and taking the profit before the sale. Or do you hire an unrelated third party?

What If the rehab isn’t done in 4, 5, 6 months and the house is worth the same $500k more or less in its unfinished condition. (Permits, storm, covid, whatever.) He seller guaranteed their $500k or do they lose $50k?

You’re saving 1/2 the selling commissions and the carrying costs for giving up 1/w the profit. That’s your judgement call. 

The “seller’ is living in a construction zone, giving up on a known closing date, trusting your numbers and work for a possible gain, that’s their judgment call. 

It could certainly workout and I certainly like it better than the wholesale plan of just trying to steal properties from uninformed,  ignorant, old, or trusting owners with equity. (Unlivable/unsellable run down dumps being fixed up are another good use of flippers.)