What should I do? (Flipper thinking about quitting job)

Mike Dymski

Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes

4y

Flip each home in three months or less and interest rates should not matter...and large declines in value are mitigated some (because 10% declines every three months should not happen over and over again).

2 Reply

Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes

4y

I think it really depends on your risk tolerance and confidence in being able to continue to flip. Maybe don't do as many flips and look for "higher quality" deals.

How are your resources? Do you need the day job to help qualify for loans? What about benefits such as medical?

I agree that macro economic market conditions are changing. If you aren't able to adjust your "side job" to accommodate, then its best to keep your current day job.

4 Reply

Scott Mac

Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes

4y

And if housing Tanks like many fear, you might be in a sore situation without a W2 job.

Good Luck!

2 Reply

Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes

4y

Quote from @Josh H.:

I am REALLY confused about what to do. My wife and I have grown our flipping business over the past couple of years to doing 10 flips currently.

I was just getting ready to quit my job that pays $150,000/year to focus on real estate full time, but the rising interest rates has me very concerned, with no end in sight. We just had a .75% rate rise yesterday and will likely see another one by the end of the year (maybe two?). We have enough money to last at least a year. The hope was to quit my job and focus on finishing our 10 flips because it has become too much for my wife to handle. We are in the Northern Virginia and Maryland markets in case that is helpful

I am concerned that if we see a big dip in prices, I will regret it because the 10% profit we typically get ($50K on a $500K flip) will basically mean we are doing flips for free.

I would love for some very seasoned investors to give their opinion on whether I should stay in my job, or focus on our flipping business that is doing well

Thanks,

Josh

With a W2 of $150,000 you should be cash flowing, not flipping. Meet with a tax professional, ASAP.

8 Reply

Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes

4y

@Account Closed

Maybe they don't want to.... :)

@Josh H. I just assumed you were flipping because you liked it and gave you a stream of income to live on. Is that you goal? Your strategy/goal is key portion of this decision process which I didn't mention earlier...

Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes

4y

Quote from @David M.:

@Account Closed

Maybe they don't want to.... :)

@Josh H. I just assumed you were flipping because you liked it and gave you a stream of income to live on. Is that you goal? Your strategy/goal is key portion of this decision process which I didn't mention earlier...

Lol. He's either bad at math or bad at taxes or both. Or, he just likes his silent partner, Uncle Sam, very, very, much. Because he sure pays him well and his Uncle Sam takes no risk.

4 Reply

OP

Flipper/Rehabber · Northern Virginia · Member since 2019 · 58 posts · 32 votes

4y

Quote from @Account Closed:

Quote from @Josh H.:

I am REALLY confused about what to do. My wife and I have grown our flipping business over the past couple of years to doing 10 flips currently.

I was just getting ready to quit my job that pays $150,000/year to focus on real estate full time, but the rising interest rates has me very concerned, with no end in sight. We just had a .75% rate rise yesterday and will likely see another one by the end of the year (maybe two?). We have enough money to last at least a year. The hope was to quit my job and focus on finishing our 10 flips because it has become too much for my wife to handle. We are in the Northern Virginia and Maryland markets in case that is helpful

I am concerned that if we see a big dip in prices, I will regret it because the 10% profit we typically get ($50K on a $500K flip) will basically mean we are doing flips for free.

I would love for some very seasoned investors to give their opinion on whether I should stay in my job, or focus on our flipping business that is doing well

Thanks,

Josh

With a W2 of $150,000 you should be cash flowing, not flipping. Meet with a tax professional, ASAP.

I appreciate that line of thought, but we've made $500k flipping this year vs 150k at the day job. I feel like the day job is limiting my income but at the same time, the market is shifting, which is why I'm not sure what to do. I'm not sure flipping will be sustainable in a cooling market with higher rates. Ugh.

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

4y

@Josh H. Interest rates are completely irrelevant. Pay no attention to them.

Look, interest rates are up a little, but still low. I was making big bucks when they were twice what they are now. It is always and only about the profit margin.

Think about it like this - interest rates are up a little....but housing prices are down. So without doing the exact math, it is an inverse proportion, right. Your monthly output could/should be the same.

On the other hand though, why do flips when you make your kind of dinero? Lots of fun, but lots of risk....

Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes

4y

That's a great profit! Lets face it many to most business areas are cyclical. Other than having to pay nearly half of that $500k to various taxes (I assume you've been reporting it correctly as active, ordinary income), have you been saving up that money? That's what you'd need to supplement your income when the market cycles down...

If you are flipping well/correctly, I agree that interest rates directly shouldn't be a driving factor. However, I understand that with rising interest rates buying power is down so home prices are dropping. As investors, we know that you "make your money" when you purchase the property, not when you sell it. Do you think your leads will dry up? Do you think you can't continue to purchase low?

The market maybe cooling, but there is still a huge shortage of homes. Buyers, even qualified ones, still exceed the available home supply.

Not to thrown "down the gauntlet," but if you are really "good" at flipping, then you should at least survive if not do "well enough" at flipping during a down market. Of course, if we have a complete meltdown or crash that's a different story..

Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes

4y

Quote from @Account Closed:

Quote from @David M.:

@Account Closed

Maybe they don't want to.... :)

@Josh H. I just assumed you were flipping because you liked it and gave you a stream of income to live on. Is that you goal? Your strategy/goal is key portion of this decision process which I didn't mention earlier...

Lol. He's either bad at math or bad at taxes or both. Or, he just likes his silent partner, Uncle Sam, very, very, much. Because he sure pays him well and his Uncle Sam takes no risk.

@Account Closed Yes, its great to make $500k a year, but too bad so much of its going to Uncle Sam. Hey, paying taxes is the result of making money. Tax efficiency comes second...

OP

Flipper/Rehabber · Northern Virginia · Member since 2019 · 58 posts · 32 votes

4y

Quote from @David M.:

I think it really depends on your risk tolerance and confidence in being able to continue to flip. Maybe don't do as many flips and look for "higher quality" deals.

How are your resources? Do you need the day job to help qualify for loans? What about benefits such as medical?

I agree that macro economic market conditions are changing. If you aren't able to adjust your "side job" to accommodate, then its best to keep your current day job.

Hi David,

I don't need the day job to qualify for loans since they are hard money loans. And we found medical insurance through our broker that insured all of our flips.

We have 1-2 years of money for runway. But I don't want to blow that then have to go back to work.

I think we can continue to flip

OP

Flipper/Rehabber · Northern Virginia · Member since 2019 · 58 posts · 32 votes

4y

Quote from @Josh H.:

Quote from @David M.:

I think it really depends on your risk tolerance and confidence in being able to continue to flip. Maybe don't do as many flips and look for "higher quality" deals.

How are your resources? Do you need the day job to help qualify for loans? What about benefits such as medical?

I agree that macro economic market conditions are changing. If you aren't able to adjust your "side job" to accommodate, then its best to keep your current day job.

Hi David,

I don't need the day job to qualify for loans since they are hard money loans. And we found medical insurance through our broker that insured all of our flips.

We have 1-2 years of money for runway. But I don't want to blow that then have to go back to work.

I think we can continue to flip

... But am trying to make sure that will still be a viable option in the coming months

Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes

4y

Okay, then flip... (yeah)

Also, realize that the more/most successful investors are able to utilize/succeed with different methods and even different investing class/types. If you have to use the correct "tool" for the job. So, while it looks like you are killing it with flipping, maybe you can try other things and don't be a one trick pony. Diversify to "protect your income" --- granted, thats what your day job was doing...

Good luck.

Greg R.

Investor · Dallas, TX · Member since 2016 · 887 posts · 1k+ votes

4y

I would strongly recommend you keep your day job. If you think the market of the last two years is normal or sustainable you are in for a big surprise. Try to get out of your 10 flips asap before rates go even higher and values fall more. In any event I recommend you closely observe the market and where we're headed before quitting your 150k job. Just my .02

5 Reply

Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes

4y

Quote from @Josh H.:

Quote from @Account Closed:

Quote from @Josh H.:

I am REALLY confused about what to do. My wife and I have grown our flipping business over the past couple of years to doing 10 flips currently.

I was just getting ready to quit my job that pays $150,000/year to focus on real estate full time, but the rising interest rates has me very concerned, with no end in sight. We just had a .75% rate rise yesterday and will likely see another one by the end of the year (maybe two?). We have enough money to last at least a year. The hope was to quit my job and focus on finishing our 10 flips because it has become too much for my wife to handle. We are in the Northern Virginia and Maryland markets in case that is helpful

I am concerned that if we see a big dip in prices, I will regret it because the 10% profit we typically get ($50K on a $500K flip) will basically mean we are doing flips for free.

I would love for some very seasoned investors to give their opinion on whether I should stay in my job, or focus on our flipping business that is doing well

Thanks,

Josh

With a W2 of $150,000 you should be cash flowing, not flipping. Meet with a tax professional, ASAP.

I appreciate that line of thought, but we've made $500k flipping this year vs 150k at the day job. I feel like the day job is limiting my income but at the same time, the market is shifting, which is why I'm not sure what to do. I'm not sure flipping will be sustainable in a cooling market with higher rates. Ugh.

It isn't about how much you make, it's about how much you keep.

3 Reply

Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes

4y

@Account Closed oh agreed. But, you have to "make it" first before you can worry about "what you keep." Similar to another principle about being "effective" first, then being "efficient." If you doing it other way around, you wind up efficiently doing something poorly...

OP

Flipper/Rehabber · Northern Virginia · Member since 2019 · 58 posts · 32 votes

4y

Quote from @Greg R.:

I would strongly recommend you keep your day job. If you think the market of the last two years is normal or sustainable you are in for a big surprise. Try to get out of your 10 flips asap before rates go even higher and values fall more. In any event I recommend you closely observe the market and where we're headed before quitting your 150k job. Just my .02

I totally understand the market over last two years isn't sustainable going forward. What I'm concerned about is prices falling. I could even deal with them staying flat. What I'm concerned about is a fall in housing prices of 5-10%

Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes

4y

@Josh H. haven’t they already starting falling? You really think with mortgage rates skyrocketing that there are that many qualified buyers still? Granted this depends on your market and price point

Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes

4y

Quote from @David M.:

@Account Closed oh agreed. But, you have to "make it" first before you can worry about "what you keep." Similar to another principle about being "effective" first, then being "efficient." If you doing it other way around, you wind up efficiently doing something poorly...

Kind of like taking the ship around the horn instead of taking the train across country.

I get it. You got to the port when the ship leaves from first, so why waste time looking for the train depot. ;-) Take action, get on the ship and worry about your choice after the fact..

A wise man I knew once said " if you don't know where you are going, any route will take you there". Lol

3 Reply

Eliott Elias

Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes

4y

Quit the Job! Bet on yourself, no better return than that. If you can't commit to that you can't be in this game

Adam Bartling

Lender · Rosenberg, TX · Member since 2022 · 286 posts · 130 votes

4y

Quote from @David M.:

I think it really depends on your risk tolerance and confidence in being able to continue to flip. Maybe don't do as many flips and look for "higher quality" deals.

How are your resources? Do you need the day job to help qualify for loans? What about benefits such as medical?

I agree that macro economic market conditions are changing. If you aren't able to adjust your "side job" to accommodate, then its best to keep your current day job.

I think this is good advice and I know a very popular lender here ( not me) who still keeps his day job and has 200 homes, he has some wholesalers bring the deal and has a solid contractor do the work. You are getting where you do not need to flip and can get in some larger deals with these #s

OP

Flipper/Rehabber · Northern Virginia · Member since 2019 · 58 posts · 32 votes

4y

Quote from @Adam Bartling:

Quote from @David M.:

I think it really depends on your risk tolerance and confidence in being able to continue to flip. Maybe don't do as many flips and look for "higher quality" deals.

How are your resources? Do you need the day job to help qualify for loans? What about benefits such as medical?

I agree that macro economic market conditions are changing. If you aren't able to adjust your "side job" to accommodate, then its best to keep your current day job.

I think this is good advice and I know a very popular lender here ( not me) who still keeps his day job and has 200 homes, he has some wholesalers bring the deal and has a solid contractor do the work. You are getting where you do not need to flip and can get in some larger deals with these #s

Hi Adam,

Thank you for the advice. Since flipping is a job (and a hard one at that for a lot of reasons) we would love to transition into other types of revenue generation from real estate.

When you say:
You are getting where you do not need to flip and can get in some larger deals with these #s.

What do you mean by getting into larger deals? Will you please give me a couple of detailed examples?

Thanks,

Josh

Bud Gaffney

Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes

4y

Go for it!!! FLIP FLIP FLIP