HELP!!! New to flipping

10 Replies

I want to start the BRRRR process soon. I wasn't expecting to flip....however, I have an off market deal that just fell into my lap. If done right I can make a great profit and reinvest that into the BRRRR's. I would like to do this flip minimizing the amount of headaches, and that is why I am reaching out to you. What are the do's and don'ts of flipping?

Thanks in advance!

Hey @Jefferson Harmon - congrats on having a deal fall in your lap. ;) I think there are a couple ways you go go about this. You could consider adding in an experienced flipper as a partner and split the profits. Yes, you’ll get less, BUT maybe not as much less as you’d think. A good rehabber will know what to do and not do for improving the property, will be able to do it more efficiently and save time and holding costs, and probably will save you money on the remodel itself. Just something to consider. If you decide to take it on yourself, hire a competent GC (make sure you vet them thoroughly), and DON’T over improve the property. Look at what other similar homes are selling for in that neighborhood and bring this one up to that level, but not beyond…maybe ever so slightly to make it enticing, but not over the top.

Best of luck!

There are a ton of do's and don'ts, many of which have been posted in BP threads here. Minimizing the headaches of flipping is no easy task, especially for someone with no experience so expect headaches and problems. If you think you can minimize most of them, you will be disappointed so expect them and learn to deal with them, it is part of the business.

Building a good team of contractors, sub contractors, and project manager (which can be you) is crucial. The biggest mistakes are typically at purchase - over paying or missing large rehab items needed. Other large mistakes (also done at purchase) is buying a property with a major negative to it. That could be no garage (when all the other homes on the street have one), backing up to or on a busy main street, bordering or in ear shot of active railroad tracks, in airport flight paths, or where the subject property sits next to or across from a trashed house. There are many other negatives too, this is just to name a few of the main ones.

There are so many do's and don't's to flipping and it isn't so simple as just a brief explanation as a response to a forum post. If you are dead set with tackling this project solo then I suggest you factor in a decent amount of contingency cost and extra time for the project to run over. Not saying that you can't get it done quickly and with minimal headaches but if you expect them and they don't happen then its a win win.

Another option is to partner with an experienced flipper and split the proceeds with them. This way you can learn while you go. I have someone who has put up the down payment for my flip just to be able to shadow me and learn the process while also receiving a return on their initial investment.

You could always wholesale it to someone else. If you really want to BRRR then stick to BRRR and let someone else who knows what they are doing flip. One thing that drives me crazy is someone who buys a deals and messes it up demoing things that don't need to be demoed or doing shotty work then re listing it back on the market and trying to make a profit off of it. If you commit then commit and get it done no matter what.

Regardless whether you BRR or flip your going to need good contractors so that is a start. Make sure you find good quality contractors to fix the place up. Remember cheaper doesn't mean better. You may save money but the headaches will not be worth it. Make sure you vet all you bids by asking for references and walk jobs that they just finished and are currently working on. IF they don't have any or can't walk you then run away. They should have projects to be able to show you if they are good. One tip for finding contractors is the look at recent deals that were just flipped and go to the twp and figure out the contractor who pulled the permits. 

All in all there is several ways to tackle this but whichever way you decide just pick it and commit. Don't back out halfway through or change your mind. Follow through with whatever option above because all of them will work and make you money it just depends on how much involvement you want in this deal!!

Good luck

Originally posted by @Justin Sullivan :

There are so many do's and don't's to flipping and it isn't so simple as just a brief explanation as a response to a forum post. If you are dead set with tackling this project solo then I suggest you factor in a decent amount of contingency cost and extra time for the project to run over. Not saying that you can't get it done quickly and with minimal headaches but if you expect them and they don't happen then its a win win.

Another option is to partner with an experienced flipper and split the proceeds with them. This way you can learn while you go. I have someone who has put up the down payment for my flip just to be able to shadow me and learn the process while also receiving a return on their initial investment.

You could always wholesale it to someone else. If you really want to BRRR then stick to BRRR and let someone else who knows what they are doing flip. One thing that drives me crazy is someone who buys a deals and messes it up demoing things that don't need to be demoed or doing shotty work then re listing it back on the market and trying to make a profit off of it. If you commit then commit and get it done no matter what.

Regardless whether you BRR or flip your going to need good contractors so that is a start. Make sure you find good quality contractors to fix the place up. Remember cheaper doesn't mean better. You may save money but the headaches will not be worth it. Make sure you vet all you bids by asking for references and walk jobs that they just finished and are currently working on. IF they don't have any or can't walk you then run away. They should have projects to be able to show you if they are good. One tip for finding contractors is the look at recent deals that were just flipped and go to the twp and figure out the contractor who pulled the permits. 

All in all there is several ways to tackle this but whichever way you decide just pick it and commit. Don't back out halfway through or change your mind. Follow through with whatever option above because all of them will work and make you money it just depends on how much involvement you want in this deal!!

Good luck

 Hey Justin,

Thank you for your response even though I'm not the original poster :) Would you care to go a little deeper on how your partnerships were structured legally?  Were there lawyers involved? Did they come onto the deed? How did you guarantee them that once the project was finished you would not run off with the profits? 

Thanks

@Mel Hayes

Hey, So basically there is several ways to go from NJ to California. I say that to say this, its whatever way you and your partner feel most comfortable is the right way. The only way I would not recommend doing it is verbally. So basically in my situation I did work with family where they owned the house and I renovated the property for a lump sum payout upon closing. With other partners I have created a Joint Venture agreement and also loans agreements. So these are good because they spell out the duties of each party and what they must bring. One party can go on the deed while the other party brings the money and at the end the split is 60/40. I have paid partners a return on their money at 10% interest on there investment. I haven't shared an LLC or deed with anyone yet but I am open to it. I would start with Joint Venture agreements so its just for one specific project and not an LLC that would need to be disolved. Keep in mind that I am just an investor I am not an attorney so by no means is my advice to be used without first checking all details for yourself and by no means will what I am saying work out for you. You need to speak with an attorney about how to structure your business. It isn't expensive maybe $150 for a consult and you can learn a ton!!!!