Many house flippers get into house flipping thinking that they can do it alone.
It’s easy to fall into the trap of thinking that going “lone wolf“ will help you keep all the profits for yourself and let you make more money.
It’s easy you think I can:
- Find the house on my own…
- Buy the house on my own…
- Renovate it on my own…
- Sell it on my own…
- Do all the legal stuff on my own…
- Handle the tax stuff on my own…
If I do it all on my own, I’ll make more money on my own…right?
Unless you’re a skilled real estate broker, contractor, not to mention expert accountant and know everything there is to know about real estate law, this is a losing proposition.
Bottom line is this: house flipping is not a solitary process; you need to have a team that consists of the right people.
In fact, the very first thing I tell everyone and anyone who wants to get into house flipping is that you must do is build a solid team.
It’s the most important step of flipping houses!
Forget the 70% Rule or ARV or MAO, assembling the right people to help you flip houses successfully. Because without them, your attempt at flipping houses will be an epic fail.
How to Estimate Rehab Costs!
Estimating rehab costs accurately can make or break your real estate business, and it takes years of experience for even the best rehabbers to master the art. However, you can expose yourself to less risk and get more accurate with your projections by learning how the pros think when estimating construction costs.
Five Members You Need To Have In Your Team
When all is said and done, your team will of course consist of more than five people. Five is the base number! The exceeding amount of people you will need will depend on the deal flow and scope of your house flipping career.
1. Real Estate Agent
There are two ways that you can look for a real estate agent.
One of them is to find one who already has extensive experience in house flipping and the other is to find one and train him/her.
You may need to work with more than one agent depending on the territories they are familiar with.
You can also work with real estate agents who specialize in selling foreclosures, commonly known as real-estate-owned (REO) agents.
You need to hire contractors you can trust because they can make or break the deal. You can work with them in a number of different ways so finding the right ones is very important.
If you are just getting started flipping houses, the right contractor is a step towards the right direction.
A general contractor can run the entire project and they are also responsible for hiring subcontractors.
If you can find one who can work within your budget, the better it will be for you.
3. Insurance Agent
There are different types of house flips and they all require different types of insurance.
How you set up your business structure will determine how you handle your insurance.
It is crucial that you hire an insurance agent who understands your business structure and can give you credible advice on how you should go about insuring different types of properties.
There are several elements that you should find out from your insurance agent such as homeowners insurance, liability, builder’s risk insurance.
Don’t forget title insurance as well – but that usually comes from your attorney. It’s a vitally important one and protects you from serious downside risk.
4. Certified Public Accountant
Hiring an accountant can either help you save or lose money.
The U.S real estate tax code can be interpreted in a number of ways so it shouldn’t come as a surprise when you hear different answers regarding house flipping accounting issues and real estate.
You need to find the right type of accountant by looking for one who has extensive knowledge on U.S Tax Laws for real estate investing and house flipping.
They should also be able to keep you out of trouble with the IRS as well as keep your taxes low by employing legally accepted accounting strategies.
It would also be a good idea to involve your accountant when formulating your business structure. Make sure that they consult with your attorney so that they can create a business structure that works best for you.
5. Real Estate Attorney
Many people who first venture into house flipping dismiss the idea of hiring an attorney.
Some even consider hiring a legal Internet service that is second-rate at best.
Remember that you get what you pay for when it comes to all advice, and legal advice is no exception!
So if you look for a cheap attorney you should be prepared to get cheap services.
I wouldn’t advise anyone in the house flipping business to skimp here. It’s best to hire a real estate attorney with a proven track record and plenty of experience in real estate law.
Hiring a genuine attorney may seem expensive, especially when they send the first bill to you and their retainer charges are not cheap either!
Don’t think of it as an expense though.
Think of it as an investment instead.
It is way cheaper to hire a competent accountant than to hire one who doesn’t know what he is doing.
If you’ve made it this far please leave a comment below!
Have I left out a crucial team member?
Leave a comment and let me know what you think.