All Forum Posts by: Tim Porsche

Sorry to hear that, that's crazy how something like that can happen all of a sudden with a tenant who stayed there for eight years with no previous issues. Would the tenant have had any motive to start the fire that you're aware of? As others have said, on a positive note at least you get to do a free renovation. If you can, let us know what happens to your insurance premium for the house after everything is over, I'm curious to know. By the way reading your story just  made me look into adding 3-6 months of lost rent coverage to my insurance policy instead of the one month I currently have...

Hi All,

Here is my latest plan to raise the funds needed to start flipping houses in 2016. Please let me know if you think it will work or not. I will be buying houses that need work obviously, but not ones that need so much work that they are not livable. 

Example House Price: $50,000

Example Renovation Cost: $20,000

House Downpayment: 25%

Mortgage Interest Rate: 4.5%

Loan from Lending Club for $30,000 at 7% (in case it goes over budget)

Do you see any issues with this financing strategy, or do you think it would work out well? I'd prefer to stay away from hard money because of the high interest rates, but that is an option as well. Any advice is greatly appreciated.

Thanks!!

Yes, unfortunately as I found out PMI on an FHA loan is mandatory, and you pay it for the life of the mortgage unless you refinance down the road. An FHA loan is different in this regard to a conventional loan with a small downpayment. With a conventional loan, PMI payments will automatically stop when you've reached 22% equity in the house. Not so with FHA loans.

Thanks for the replies everyone! Lots of good advice there. I have absolutely no construction experience (I work in IT. I can fix computers but am pretty much useless with anything else), and I'll be working full time while flipping, so I think it will definitely make more sense for me to get a good GC to take care of the renovation work. My main concern was if a GC would tend to cut into the profits too much, but hearing from several of you who use GCs and seem to be doing well encourages me. 

By the way, are there any resources you would recommend that could help bring me up to speed with my renovation\construction knowledge so that I can at least talk intelligently with contractors about the work that needs to be done? Books, videos, online tutorials, etc? 

Congrats! That sounds like a pretty good deal to me. I'm actually doing something pretty much identical to what you are right now, I just got an offer accepted on a duplex in Shillington, PA for $128,500, 6% seller assist, and 3.5% FHA downpayment. I'm also planning to live in one unit and rent out the other, but right now both units are occupied and renting for a total of $1,450. The only thing I'm not crazy about is that the heat is not paid by the tenants (everything else is though) and it's oil heat. Still, oil is cheap right now though, and there is a gas line that I can use to convert the heating to gas for about $3,000 if oil prices should really start rising again. Anyways congrats again on the deal, hope it works out well for you.

Hi All,

I have a real quick question for people who have flipped homes in the past or currently flip homes. Is it hard to make a good profit on a flip if you work full-time, and use a general contractor to do most\all of the renovation work for you? Or do you generally find that with the overhead a general contractor takes, it cuts into your profits too much to make it worthwhile? When I say general contractor, I mean someone who would do most of the renovation work with his team, and take care of hiring licensed, well priced subcontractors for the jobs he can't do or isn't licensed to do himself. Basically am I better off working with a GC who subcontracts, or hiring separate contractors and a handyman individually for different jobs myself?

In addition to using a GC, I would most likely be financing with hard money, so the interest from that will also cut into profits somewhat, although I would spend a lot of time on scheduling things correctly so as to try and have work going on every day, in order to get the flip done as soon as possible to cut down on interest payments.

Any input would be greatly appreciated.

Thanks!

Great answers, thanks for the recommendations everyone! Now I have some more books to go through before (hopefully) starting out flipping next year. 

Thanks for the recommendation Dan! Looks like that's one that would be worth reading for sure. Is that book focused more on the rental property\buy and hold side of real estate investing, or house flipping?

Thanks for the recommendation Patrick! I will definitely check it out. 

Hi All,

Just curious, what are some books that you would recommend someone new to real estate investing read before buying properties? I have already purchased a single family rental that is doing well and has decent cash flow, and am looking to close on a second rental property, a duplex, where I will occupy one of the units. So I have a little bit of experience with rental properties, but absolutely no experience with house flipping, which is what I want to get into in the Spring of 2016.

What books would you recommend I read to learn more about this business? I've already read Scott J's book and learned a lot, but want to keep learning.