Beginner: Flipping homes

5 Replies

I’m really new to real estate but I’ve had my eye on it for the longest time. I have some money and can get some credit line for buying a house for a flip. Iam really scared to pull the trigger on one though. What do y’all suggest? Should I jump into it?

@Amrakh Rustamov Yes. Ask others to verify your numbers before you close on a deal, and at least for your first one get a good inspection report and full scope of work from a reputable contractor before closing on the deal.

Alternatively, if you want to take a bit less risk to start out but still get a nice return, you can be a private money lender to someone else doing a flip.

Yes, as long as you have the right team around you and a mentor or partner to help walk you through the first flip. Do not try it on your own. That would be like you trying to build a house without ever using a hammer. The best place is the area where you are most familiar with and ideally very close by, as you need to stop by everyday. The most important thing is to form a team that has experience with flipping (agent, lawyer, lender, crew) and to know the market well enough so that you know what a good deal is. So that the day you find a house that is undervalued enough to flip, you can put in an offer. You only need to know 3 numbers: Purchase price, rehab costs, and ARV. I always spend at least 150k in rehab costs on my flips (I have done over 100). This may sound high, but if you do it correctly and include all the numbers (holding costs, taxes, interest), that is standard. So if you find a house for 300k, you spend 150k on rehab, the sales price (called ARV) would need to be 600k. The closing costs and commission add up to 50k and the profit margin I aim for is 100k. I aim for 100k because you need cushion for cost overages, surprises, market fluctuations, timing, etc. I also train people how to flip houses, so feel free to reach out.

I'd partner with someone experienced. You have a great leg-up on many wannabe investors--you actually have cash to bring to the table. Get involved with your local meetup. Build relationships with other investors. 

Originally posted by @Amrakh Rustamov :

I’m really new to real estate but I’ve had my eye on it for the longest time. I have some money and can get some credit line for buying a house for a flip. Iam really scared to pull the trigger on one though. What do y’all suggest? Should I jump into it?

You really need to know your market and your numbers before you start. You can network with realtors, investors and contractors to get an idea of the market and costs. Check out some local REI meetups as well as online groups to make contacts and find opportunities.

You are basically asking to get swindled if you have no background in flipping. By the end of today, you will be approached by a local contractor who wants to partner with you. You put up all the money and they do all the work. But the work will cost WAY more than expected because this and that. If you are new to real estate, you have to learn the ins and outs of flipping before you go and try to flip a home with people you don't know very well. First-time flippers make so many mistakes and the main one is choosing the wrong partners. It's much safer to go to some REI events and meet some people doing active flips and go see what they do, how they do it and first understand all that goes into it. There are A LOT of bad flips that come on the market where the flipper wants market value, but actually devalued the property with terrible design choices and didn't take into account who the end buyer will be. If you want to keep your money, don't rush into flipping before you understand every aspect of it.

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