Flipping houses for newbies
Virginia Beach, VA · Member since 2016 · 4 posts · 5 votes
@Jon Q. How do you recommend that folks get experience? We all start somewhere and the biggest hurdle for most folks is to get started. It looks like you're an experienced investor who can offer some guidance for newbies looking for a way to get into the business.
Welcome to BP Kadijah! I can tell you that for me it was sort of out necessity. I left my FT job and needed (fairly) quick income. Keep in mind that there are many other lucrative ways of making money REI than simply flipping homes. While you are correct, you'll need to have your numbers in check but you will have to have a passion to see each project through to the end.
There will be plenty of "on the job" learning experiences that you won't completely understand until you've encountered them even after reading about it every book and article. My suggestion would be for you to maybe partner with someone who has experience - even if it's just on your first 1 or 2 deals. They'll at least get you moving into the action phase of your plan. Then, you can take it from there. Wishing you success!
Kadijah, I get it! I've never posted before because I'm in the middle of my very first house. Believe me, the learning curve is steep and at this point I haven't felt I'd have much to add, just much to learn. But I do know something about getting started.
For me, it was about two things. First, getting my experts in place. I have a contractor I trust who's worked on my home. I found a realtor who works with investors and has flipped houses himself. And I got my financing lined up.
Second, it was about making it part of my daily routine. First thing in the morning with my coffee, I check all the potential houses on websites and I list the possibilities. Then, whenever it's convenient or I'm already out (or I have time), sometime during the day I drive by the houses. If I find something that I think has potential, then I send a text to my realtor to schedule a showing. I did this over several weeks, I saw a lot of houses that didn't work for various reasons. But we finally found one that matched up: realtor saw post renovation market and a ballpark rehab cost, and contractor looked and gave me ballpark rehab cost, my numbers worked and I pulled the trigger. Sure we were off in some areas and as I do this first house, I'm learning a lot about this and how I want to do things.
But getting started: experts in place, make looking for one a regular part of your routine. That worked for me. Good luck!
Hi Kadijah!
I'm Soleila and I am from NYC! I am dealing with the same feelings you are, except, I've been reading for a few years =) My main focus is educating myself and working on my credit because I feel as though investors wouldn't take me serious if they see my credit was all over the place. In regards to that, I have been doing much better this past year, credit score going up, strict with my money and always on time payments. Also, I am so glad I joined BP! I recommend going PRO and watching the webinars, they are very useful. Also, you can use the tools (house flipping calculators) and once you put in the correct numbers, you'll pretty much know if you have a bad deal or not.
Good luck!
@Elaine Brooks, hi!! If you don't mind my asking, when do you perform the financing? In other words, do you look for deals first, I do you have your financing lined up with a lender then look for deals?
Your input is appreciated, thanks!
There are pros and cons to getting your license. You can even google them, but I recommend to get J Scotts book on flipping houses, which is sold here on this site, and he gives you the break down.
Check out the books on house flipping and estimating rehab costs on BP. They might help.
Hey guys my name is Kadijah I'm from Virginia beach, Va. I'm interested in flipping single family homes. I've been reading articles and books for the past few weeks and I have to admit I'm a little afraid and I keep feeling like I need a spreadsheet of every little detail/step that goes into flipping a house. I want to do this I know I do..... I guess I was hoping you guys could maybe share how you finally started the action phase of flipping...
"Newbies" should not be flipping houses.
Check out the books on house flipping and estimating rehab costs on BP. They might help. I. I. J j I j j I'm i
@Jon Q. How do you recommend that folks get experience? We all start somewhere and the biggest hurdle for most folks is to get started. It looks like you're an experienced investor who can offer some guidance for newbies looking for a way to get into the business.
@Elaine Brooks to follow up and expand on what @Soleila Gonzalez was asking; what kind of financing did you line up, Private money? Hard money Loan? Conventional?
I agree with @Alex Yost. @Jon Q. how do you recommend people get started? I always find that people are saying that newbies should get their feet wet doing wholesaling. However, one of the many reasons I would like to invest in RE by flipping houses is to eventually quit my job and wholesaling is a whole other job and a major hustle. Please tell me, why shouldn't newbies flip houses? Thanks.
I'm not really the person to talk to about financing. This is only my first project and I was able to get conventional financing on my personal credit. There are a lot of knowledgeable people on this site who can help. I will say this emphatically though: Don't start until you know how you are going to fund this all the way to the end. That's about all I know for sure at this point in the journey.
The comment about newbies should not flipping houses is probably pretty accurate. As I look at possible houses for investment, I see plenty of abandoned half renovated houses out there. People got in over their heads. I actually commend all of you, as I put myself in that category, for taking it slow.
But I can't say enough about getting your experts in place. For everyone, that's going to look different. For some, I think pairing up with an investor is wise. I just didn't know any. Who I did know was my renovation contractor at my own house who agreed to do the work and he's been a constant source of wisdom, information, and support. He knows what he's doing on the rehab side. I had to go looking for my realtors, but I found them. They've been doing this so long, they've flipped 10 houses themselves, so they seriously get the market and the process. So when I decided this might be something wanted to do, I assembled my people first. I had to look for realtors bc the one I knew didn't know anything about investing and flipping. After a search, I found the ones I have.
So I didn't buy anything until I had my assembled experts in place, experts I trust, and my financing in place (whatever that is for you). Then when I found something, I could run the numbers myself, but my contractor would weigh in on rehab expenses. My realtor weighed in on market. And J Scott weighed in by directing me to all the right questions to ask, and concepts I needed to understand.
My J Scott books are dog-eared and well-worn.
We are about a quarter of the way through, so I'll keep you updated. I had an inspection. My budget is complete. I know the issues and we are addressing the issues. We are almost through rough in. I have purchased major appliances, cabinets. Roof begins tomorrow.
My plumber has done this, my electrician (we have to replace knob and tube electricity), my drywall guy. I found almost everyone through my realtors and contractor. I even brought in a decorator I know to pick out paint colors. It'll take her an hour of her time (so I paid her hourly rate), colors are neutral but coordinate and they look great. Saved me paint anxiety. Experts. Experts.
And to save money, I'm going to paint the interior and assemble the ikea kitchen cabinets. Things I know I can do myself. So, you gotta be flexible.
And one more issue, for those of you interested. The driveway I was hoping to install (1925 house, needs off street parking), looks like I'll have a zoning hearing. But I've talked extensively with the municipal zoning department, read the code, and I am preparing my case. All this while my plumber was repairing and replacing old pipes. So yes, steep, steep learning curve.
i don't know how this will shake out, but my numbers work at this point. We won't really know until we sell. One of the most helpful blogs on this site reminded investors: if you made $200 on your first house, that's ok. You learned a lot, call it education. If on the other hand, you lost $50,000, somethings wrong. Plan to make your 15%, because that might go down as you learn, learn, learn.
So, newbies and flipping? Proceed cautiously, find your experts. Book reading yes, but that will take you only to the place where you can talk intelligently with and ask intelligent questions of the people who know what they are doing. Then if you do jump in, stay with it. Right now I feel like I started climbing a mountain and I am sitting on a rock ledge 1000 feet up. In order to get off this mountain I'm going to have to keep going!
Hi Kadijah,
I am just completing my first Fix and Flip. The most important learning factor for me is to just jump in and do it. Don't just stand on the sidelines analyzing. The education that you get from doing it and learning through the process is invaluable. I have learned so many things through the journey of this first one. There have definitely been some mistakes but that just means that I won't do them again. I recommend two books, How to Flip a House by Brant Phillips and Flipping Houses Exposed by Danny Johnson. Danny was on the podcast very early on.
The steps I would take are:
1. Work on financing.
2. At the same time, I would be looking for a realtor that can help or get your license.
3. Start searching for contractors, write down their info and start talking to them.
As far as people saying that newbies shouldn't flip. I don't necessarily agree. I think that if you can find a deal that is really good, then you can most definitely start with a flip. The better the deal, the more cushion you have for those "learning experiences". Even if you were to break even or lose 5k, you will learn so much. Just make sure that you ask questions while the process is going on.
Good luck!
@John Walker, I love the book by Brant! It was very informative. Thanks for the motivation, I feel as though when people say that newbies shouldn't flip, it is discouraging, especially for those who are still in the "fear" stage.
Good luck!
Do find a great Realtor and/or somebody who understands property values and what "is" a good deal, not what "you" think one is. I thought one house I was looking at was great, until my realtor told me a few things about the area. It's paramount to know what people want and where they want it. Also, make sure you have an exit plan, should the property take longer to sell or not at all.
@kadijah Hammond I was kind of hesitant myself but what I decided to do was to Tip Toe in to flipping and decided to buy a foreclosure at a really good deal. I moved in did cosmetic repairs to fix it up. Now I just received the Comps for my area and it looks like I'm around 20 to 25 thousand to the good. That was the safest low risk way for me to feel my way through a flip. Now I'm ready to do it again and venture in to buy and holds for cash flow.
Hope this helped some
@kadijah Hammond I was kind of hesitant myself but what I decided to do was to Tip Toe in to flipping and decided to buy a foreclosure at a really good deal. I moved in did cosmetic repairs to fix it up. Now I just received the Comps for my area and it looks like I'm around 20 to 25 thousand to the good. That was the safest low risk way for me to feel my way through a flip. Now I'm ready to do it again and venture in to buy and holds for cash flow.
Hope this helped some
Weiler,
When you say you moved in. Does that mean you lived here for a while before selling? Did you do the work yourself? Also, how long did it take?
Thanks!!
@alec davis yes I moved in last October but the right of redemption wasn't up until the end of April of this year. Just in case you don't know, right of redemption means that the owner that was foreclosed on has a certain period of time usually a year to come back and claim the property, which almost never happens but there is a possibility for them to do so. The repairs that I needed with this foreclosure was only cosmetic so I did all the repairs such as broken ceiling fans, paint, laminate floors and things of this nature was finished with them a couple of weeks. I waited until after right of Redemption to do my upgrades like granite countertops and redoing the bathrooms floors and countertops because if the owner came back I would not recoupe any upgrades only the repairs. I did not do the work myself I hired someone but if you want to talk about how I got great deals to get that work done cheaply inbox me and I'll give you my number I'll let you know how I got it done
@Jon Q. How do you recommend that folks get experience? We all start somewhere and the biggest hurdle for most folks is to get started. It looks like you're an experienced investor who can offer some guidance for newbies looking for a way to get into the business.
Not by flipping houses. That activity is not for newbies, unless you are a contractor.
Yes, we all start somewhere and a safer way to get started is by buying your first home, then a buy and hold SFR to gain experience rehabbing...
First of all, flipping a house is not investing. Second, flipping houses or any other type of property is not for beginners. It is for people who have experience with rehabs, have deep pockets, financial analysis and an understanding of markets and market cycles. There are numerous risks that those flipping houses face, that buy and holders do not, most obviously market risk (cycles) and time/delay pressure, but also people management (contractors) etc.
@Jon S. Very insightful comments. I am a "newbie" and in the research / education stage and was wondering what recommendations you have. I see you mention a buy and hold. What about wholesaling? Would you expand a little on the buy and hold to gain rehab experience?
Hello Kadijah, I came in the game with close family member on rehabbing houses and renting them out. I myself is wholesaler and do fix and flip but pick what you want to do first meaning are you trying to deal with foreclosures, REO's or just go after cheap houses to flip. Be aware that learn as much as you can pay attention to the smallest thing and detail which is key. You can find hauls to get stuff out of the house for cheap that do a great job keep them around and don't let a deal not happens just because you might have to pay closing cost. Say for example if your getting $12,500 off of flipping a house with out touching it to another investor and they get mad because you won't pay for cost of $600 dollars you gone and pay that $600 dollars and get $11,900. Once you get the first deal under your belt continue going and don't get lazy after the first deal some people will after they get that fat check of $2,000 or $15,000 check. Stay positive and stick with it and be sure to get business credit with EIN never use your SSN to get it.
Hello Kadijah, I came in the game with close family member on rehabbing houses and renting them out. I myself is wholesaler and do fix and flip but pick what you want to do first meaning are you trying to deal with foreclosures, REO's or just go after cheap houses to flip. Be aware of that learn as much as you can pay attention to the smallest thing and detail which is key. You can find hauling companies that will get all that junk that the person left in the house for cheap that will do a great job keep them around and don't let a deal not happen just because you might have to pay closing cost. Say for example if your getting $12,500 off of flipping a house with out touching it to another investor and they get mad because you won't pay for cost of $600 dollars you gone and pay that $600 dollars and get $11,900. Once you get the first deal under your belt continue going and don't get lazy after the first deal some people will after they get that fat check of $2,000 or $15,000 check or whatever the check maybe. Stay positive and stick with it and be sure to get business credit with EIN never use your SSN to get it.
Create a motivated buyers and motivated sellers list which is very important and make sure to have your buyers and sellers match. You don't want sellers selling there houses for $25,000 and you got buyers that want a house for only $15,000. In this case you want sellers at $10,000-$15,000 and buyers can be at $20,000-25,000 especially if you know what the houses in your market or in a certain areas is going for. This leave you at $2,000-10,000 dollar profit which is still good but charge a upfront deposit of $2,000 and get $2,000 on the back end at the closing table that is $4,000 dollar profit plus a easy flip to the buyer. That is what you gonna have to do just to get that first deal under your belt be straight to the point in price for both sides. Once you get enough buyers and sellers till you have like 30 on both sides and 12 deals out of that 30 just brought you $24,000 that is $2,000 a deal that is great with no upfront deposits from buyers. But now you gonna have to find deals for the other 18 buyers to match. You want to be able to talk the sellers down enough to get you a nice fee. If you have buyers that only want a house for $20,000 but you have a house under contract for $40,000 don't be surprise if sell that house especially if its a real good deal. You want to tell yours buyers your selling the house as is and tell the sellers that as well. Go to the local Rei's in your town like the person under me mention and get a title company or title lawyer that specialize in what you will be doing I can't stress that enough. Sell houses in different markets or just stay in your county but make sure you know there laws as well.