Can't Wait to Get Started!

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Can't Wait to Get Started!

Matthew Ward
Duluth, MN · Member since 2014 · 26 posts · 13 votes

Hello Everyone! My name is Matt Ward and I live in St. Paul, MN. I recently decided that I want to pursue a career flipping houses. What is most exciting about REI to me is taking an unattractive house, and transforming it into a beautiful home. And I want to be the one to do it. I love to fix things and make things look new again. The idea of doing this to something as big as a house makes me want to buy a house today!

I currently work full-time, 40hrs/week, and live in an apartment with my wife. I don't make a ton of money and only have little saved, but I am adding to it every week! The money is what scares me. I've heard both sides: You need a lot of money, and also that you don't. My plan is to buy a house that would be an investment property, but also my home until it's time to sell. I would do this until I had enough equity to buy other houses without having to move. I need help to know if this is a good way to get started flipping houses. I've read the beginners guide and I am constantly trying to learn as much as I can. I just created my account today and I am excited to start interacting with what looks like an awesome and helpful community of real estate investors. Thank you for your help and guidance!!!

-Matt Ward

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Stewart Beal
Investor · Ann Arbor, MI · Member since 2013 · 178 posts · 225 votes
12y

Matthew, I would recommend getting pre approved for a residential loan, 30 year term, and then hook up with a realtor who will start sending every foreclosure that hits the market your way. Find a property that needs a lot of work and is scaring away other buyers and low ball it. Do most of the work yourself to build equity into the deal. This approach is a great way to get into your first deal.

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  • Joshua Gordon
    Investor · Kansas City, MO · Member since 2013 · 146 posts · 24 votes
    12y

    welcome to BiggerPockets! This is definitely the place to be to learn and get started! Good luck and can't wait to see your success stories!

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  • Stewart Beal
    Investor · Ann Arbor, MI · Member since 2013 · 178 posts · 225 votes
    12y

    Matthew, I would recommend getting pre approved for a residential loan, 30 year term, and then hook up with a realtor who will start sending every foreclosure that hits the market your way. Find a property that needs a lot of work and is scaring away other buyers and low ball it. Do most of the work yourself to build equity into the deal. This approach is a great way to get into your first deal.

    1Reply
  • Richard T.
    South Florida, FL · Member since 2014 · 21 posts · 5 votes
    12y
    Hey welcome to bigger pockets! I think a good way to get your feet wet would be to listen to some of the podcasts they have on the site and don't forget the beginners guide!!
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  • Brandon TurnerPro Member
    Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
    12y

    Hey @Matthew Ward Thanks for introducing yourself! It's great to have you here! You're awesome for reading the Beginner's Guide.

    Also - be sure to check out House Flipping: The Best of BiggerPockets. I think you'll find a lot of great resources on flipping there.

    Oh - and be sure to set up some Keyword Alerts- especially for "Saint Paul" so you'll be notified when people mention it here in the forums.

    Thanks again for introducing yourself!

    Podcast Guest on Show #92
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  • Matthew Ward
    OP
    Duluth, MN · Member since 2014 · 26 posts · 13 votes
    12y

    Wow! Not even a day goes by and I already feel so welcomed!

    Thanks @Stewart Beal for the advice and confidence. It’s good to hear that my idea is a fairly good one.

    @Richard T. thank you I can't wait to learn more. I just listened to the first podcast this morning!

    Thank you @Brandon Turner for the links and the keyword alerts that sounds so cool! I'm very excited to be a part of such a helpful community of enthusiastic REI's!

    Thanks again!

    -Matt Ward

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  • Matthew Ward
    OP
    Duluth, MN · Member since 2014 · 26 posts · 13 votes
    12y

    Evidently I don’t know how to do the hyperlink on names. Still learning!

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  • Marcus Johnson
    Investor · Apple Valley, MN · Member since 2013 · 281 posts · 94 votes
    12y

    @Matthew Ward

    Welcome to BP. I live in Richfield, MN and think MInneapolis and it's surrounding areas have many opportunities for investing. What you'll discover is that using conventional financing is very difficult due to Fannie Mae rules that require a home to be classified as a C4 (which means move in condition with under 5k in repairs.) So that makes flipping homes very difficult unless you can pay cash, do a 203b loan or use hard money. I speak from experience, I had a heck of a deal on a short sale that was approved in 2 1/2 months and the deal went bad when the appraisal and inspection report made it to two different underwriters who both denied the loan due to the 10k of repairs needed to be done before closing the deal. So basically they are saying it would be unreasonable to resolve all of the repairs within that time period. So save up lots of cash or find an investor to work with. Good luck!

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  • Susan Gillespie
    Investor · Saint Paul, MN · Member since 2012 · 128 posts · 56 votes
    12y

    Welcome @Matthew Ward

    You should consider attending the MN REIA meetings in Minneapolis to meet other investors. You can get two free visitor passes.

    I think it's wise to own and live in a home before jumping into investing. You'll have a better idea of what to expect, from taxes to maintenance.

    Have you considered a duplex? You'd have rental income and learn as you go.

    You always need some cash or access to credit when buying and investing. Things will go wrong and you'll need to fix them.

    @Marcus Johnson I'm curious about your heck of a deal? Was it in Richfield?

    1Reply
  • Marcus Johnson
    Investor · Apple Valley, MN · Member since 2013 · 281 posts · 94 votes
    12y

    @Susan Gillespie

    To give some background on the property. Back in November I submitted an offer of 105k on a short sale in Richfield to Wells Fargo and the listing agent. The comps around it suggested I should offer 118k to 125k. After my inspection, due to some of the fixes involved which I figured would be around 12k, we submitted an addendum to the offer for a new offer price of 100k as is. The city did their own inspection which I hired a GC to take that inspection and submit a bid to the lender and the listing agent to confirm that the property would require 10k. Wells Fargo on February accepted my offer.

    I then turned to my bank and asked if the amount of repairs needed to be done would cause any problems with getting a conventional loan and they assured me no. So we ordered an appraisal and it came in at 119k and the ARV's in the neigborhood were selling for 150k to 170k so I stood to gain after repairs around $30k to 40k profit on the property after expenses.

    The problem came when the underwriter waited until the financing deadline day to review the appraisal and the inspection that they denied the loan due to 10k worth of repairs needed to be done. This left me with no recourse to try other lenders. After the fact I tried Bell Mortgage and they looked at the appraisal and also determined that because the property was a C5 classification that conventional lending would be impossible. At least I know for future reference that you have to pay cash or find someone else to finance the deal.

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  • Matthew Ward
    OP
    Duluth, MN · Member since 2014 · 26 posts · 13 votes
    12y

    @Marcus Johnson

    Thanks for your advice and past experience, good to hear from someone in Minnesota. You suggested a 203b loan; I did some research and it looks like a great idea. I couldn't find anything on move in condition and repair cost restrictions. Does the 203b not have any? Or is it a larger margin? I appreciate your time and advice. Thanks again!

    @Susan Gillespie

    I will definitely consider attending those meetings in Minneapolis. I still have a lot to learn. Thanks for your advice!
    @Susan Gillespie


    @Susan Gillespie

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  • Wendell De Guzman
    Investor · Chicago, IL · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    @Matthew Ward , welcome to BP!

    To be successful flipping houses, one thing you have to do is treat it as a business not as a hobby. Some of the people I know who LOST money flipping houses either over-rehabbed their property (so they lost money with it) or rehab it so shabbily they couldn't sell it (so they end up renting it or losing it to foreclosure).

    In addition to financing (hard money, private money, conventional financing), you have to develop several lead sources. The money follows the good deal so you need to be good, not just in rehabbing properties but in finding good deals as well.

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  • Alan Mackenthun
    Rental Property Investor · Englewood FL & Prior Lake, MN · Member since 2012 · 107 posts · 33 votes
    12y

    Welcome Matt. I'm sure you'll learn a lot here. A 203b mortgage might work well for you, but you can use regular fha mortgages as long as the home is functionally sound. If you stay in the house for at least 2 years, you can pocket the gains tax free.

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