Greetings Bigger Pockets,
My Father and I are looking to get into real estate investing and want to focus our efforts on flipping homes on the North Shore of Long Island. We realize that the market here is more expensive then most and that concerns us because we both are nervous that we won't be able to find homes to flip.
We are interested in starting with Hard Money lenders because as a self employed business owner I am nervous that I won't be able to get a second mortgage or financing to fund this project. In addition, my father just retired from the bank after 30 years and without a steady W2 he will also have a hard time getting traditional loans. The other option is using our HELOC's on our house but for some reason the idea of a hard money loan makes more sense to us because the ability to close fast.
So my question is what is the best way to start looking for the first flip? As a business owner, I understand the value of "systems" and I am interested in setting up a system that we can replicate from home to home and flip to flip.
1. I want to set my search criteria so that way I can quickly scan our target neighborhoods and identify potential flips. I have started by looking at homes on RedFin / Trulia that are on the market 90+ Days with keywords, "TLC", "Investor", etc.
2. I want to find a house that I can get for 70% of the ARV, but I know this will be SUPER difficult by using the same search methods that everyone else is using. Does it make more sense to give my search criteria to a real estate agent that can do the mining for me?
3. Our goal is to hit a steady stream of singles and not necessarily home runs. We'd like to set a goal of making $20,000 per flip every month. We realize that its hard to get one deal, let alone 12, but once I crack the formula there is no reason we can't replicate it.
That being said, how do I get over our fear of not being able to find a "good enough deal". I understand you make the money on the purchase and not the sale, but the fear of not finding the perfect deal scares me that we'll never start. It is discouraging to see people flip homes when the purchase price's are $70k etc. On Long Island where we live you have a very hard time finding a home that is in a decent area for under $350k, let alone under market enough that it is "flippable".
Thoughts, encouragement, and ideas are greatly appreciated.
@Jason Stephens ,
Congratulations on taking your 1st step to financial freedom. Good luck!
You can find deals on the MLS but I think the catch is to move quicker than the other guys (or gals).
1. Have you thought about direct mail marketing, driving for $ or real estate auctions?
2. It is difficult (but not impossible) to find an agent that will actually do data mining. On average, agents gather criteria specified by you and then you'll receive automated messages for properties fitting your criteria. Tip: the properties listed on the MLS that need work are categorized as "Fixer Uppers" and an agent could run queries pulling off of this category.
3. This is reasonable but to be able to do a flip a month (which I haven't done yet) is persistence with offers every week and then setting up some sort of property tracking mechanism to follow up on properties you've made offers that might still be available.
There are trade offs with targeting properties where you're expecting to make $20K/property. If something comes up that is significant and unforeseen or if your ARV has changed based on market conditions (therefore causing you to reduce your selling price), there is a possibility that your profits are wiped out. If you target properties at higher ARVs (and therefore higher profits), you do have more cushion (dollar for dollar) for those unexpected costs.
You always stick to your numbers. The trick is what are the underlying assumptions for those numbers. If I'm looking at a property that has 3+ comps that are identical, DOM are short, desirable school district, nice location etc. etc. then I might increase my ARV to the higher end of the range and reduce my holding period (thereby reducing my holding cost). And vice versa.
Good luck and excited to hear about your success!
Best of luck to you. Making $20k a flip is very possible, just use all the web sites such as hud.gov, craigslist, realtor.com, etc and drive looking for tall grass and/or fsbo's. I have a friend that does 1-3 every quarter and his minimum is also $20k. My first flip made $22k after expenses, went to buy and hold because the market shifted and would like to have it more a passive income than having to do the continual flips, within next 2-3 years should be 7-10k/mo...not the $20k you are searching for but enjoy the mailbox money from tenants...
I live close by in Melville. When you say flip do You mean wholesale or buy, rehab and sell. I'm guessing your are talking about rehabbing since you plan to use hard money. Be careful of tight profit margins. Holding costs can be high on Long Island.
There is a local REiA in the area. There are many investors there that you can network with.
@Account Closed Wow really close. What kind of investing do you do here in Melville? I grew up right near St.Anthony's and have even considered doing flips in South Huntington / Melville if the prices are right. Ultimately my goal is to make enough money doing flips on the side to support my wifes income while she stays home to raise our newborn. That means a few flips per year with a few rentals for long term income. Would love to learn more about your success in the area and what has / hasn't worked for you.
@Jason Stephens I'm sure the market is different, being from DC area, I know how the prices are but should give you more margin too. My flip was tight because I paid a little more than planned but did a lot of work myself, so kept costs low and fsbo, biggest problem was getting loan through for buyer... Found buyer and the rest is history. But bottom line folks are flipping everywhere and at all price ranges, so don't fret, get in the water and enjoy it!
Hello Jason. Flipping the north shore gold coast is not for the faint of heart. I have done it all on the north shore. In addition to finding under rated properties in the area they yield bigger profits. The property itself is the collateral for the loan, you can not take the property and run. The banks feel safe with that concept. I am in the real estate business and work with contractors seeking short term investments with the purpose of flipping. I have been with Trump in the past for many years and in the construction business. I am also in sales of handyman specials to investors seeking a buy. Granted the north shore is unlike any place in the country. A "buy" is relative here. You spend more and you also profit more. If numbers make you uncomfortable then you are not really an investor entrepreneur. Investors have confidence and balls. Rightfully so, they have successfully turned their first deal at a profit. This is not the stock market where you can lose everything. Real estate is secured by land and location. It is not intangible. This is why banks consider it a safe investment and make loan on property. It can not be moved. The banks feel safe with that. You have to get past the cold feet and jump into an actual candidate (property) to invest in. Most of those require rehabilitation and time is your enemy. You have to move it. MOVE IT! you can not sit on your *** while you are renovating. The property as to be on the market from the day you close. timing is critical. You need to be out before the long becomes and issue as well as the taxes. If I can help you then reach out. Best, Sid
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