Just curious, Has anyone tried to flip a house? I was just wondering since there was a lot of experience in house building and remodeling on this forum if anyone tried the money making thing of flipping a house. it was something that I had been tossing around in my head to get some money coming in and also get some of my debts paid down.
Scott
Scott Beckett’s Handyman Service
Jack of all trades
“Can’t never did anything but can did”
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I didn't exactly flip a house (I had it for two years), but I made a very nice amount on it, and lived there for next to nothing for a year and a half. If I had been a little more motivated I could have easily finished in a couple of months, but it worked out great for me none the less. My uncle has been getting rich off of it for twenty years, but I think it's getting harder and harder to find the homes that will make money. There are so many big companies that are doing it now, there aren't nearly the number of available homes that don't need major renovations. I know a couple of guys that have lost a good deal of money. You had better do your homework. If you do find a viable one it is very much worth your while. Good luck.
Peace,
Casey
Thanks Casey, I have been tossing this around for a few months maybe close to a year and have picked up on a few things here and there. I just haven't figured out wether or not I want to try it for the reason you had metioned on the couple of guys losing money, but the thought I have is clean it up, put it on the market see what happens for the limited time the realitor will keep on there list which i think may be about 90 days. If it doesn't sell rent it out until they move out and put it on the market again so I thought this way it would still help pay for it self and not stay empty for very long.
Scott Scott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"
The ones that just need to be "cleaned-up" are as rare as hen's teeth. If that's all it took to make a profit while still paying for the cost of the money (downpayment, loan interest), the inspection cost and realtor fee he original HO would have done it.You will need to do a bathroom and/ or kitchen renovation. Then paint the place. All this on your nickle.Frankie
Exasperate your vegetables until exhausted; disturb your chestnuts in milk until queasy, then disappoint.
Arabella Weir as Minty Marchmont - Posh Nosh
I agree with you that it is getting harder to find the easy ones.
ScottScott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"
You say that you might want to do this to get some of your debts paid down, and also rent it out if it doesn't sell quickly. I would be a little worried about that scenario. What if you can't find tenants? What if they trash the place? What if they just quit paying rent? To me flipping and renting are going to be two pretty different ventures. I've never had the desire to be a landlord, but I have to imagine there is a lot that goes into it that you don't have to think about at all when you just flipping the house.
It is harder to find the good homes to flip these days, but they are still around. Mine had been condemned for a number of reasons, but I did the research on all the reasons why, and none of them were all that big of a deal. The main thing I had to do was fix the siding in the back where an illigal addition had been built, and then just build a deck where the addition had been (it was already torn down when I bought it). Other than that, it was mostly just making the place look clean and attractive. Lots of paint, new carpet, new tile, toilet, vanity, doorknobs, and some crown mostly just for fun. But I still did everything inexpensively by using leftover tile and perfectly good toilets and vanities I had taken off of other remodel jobs instead of throwing them in the trash.
If you really want to do it, there is no reason you can't. I would start talking to a real estate agent if you know one. Get a feel for the value of homes in certain areas that you think you might be able to afford to fix up. And while it may make sense that a homeowner would just clean it up if that's all it took, I can still promise you that there are homeowners out there that still just don't do it. My house had been rental property, and the guy living there trashed it and was eventually caught selling drugs. The house had been condemned in large part because of the drug issue. Apparently that is a method the city will do to get someone out when they don't like what's going on. Someone complained, and they found a way to get rid of him. House sat empty for a year while the owner did nothing. He didn't want to mess with it, so that's how I bought my house for fifty grand. I think I got a little lucky with my first one, but if you look hard and long enough you will find one that is worth it.Peace,Casey
I agree it is a strange idea if it doesn't sell to rent it out, but I already own a rental house so I have went through the good and bad with it but if I look at the total time of 10 yrs. I have owned it, it has paid for it self. I have a few things in mind to dress it up before I even try to sell it. Were had thought of selling it earlier this year but while we were cleaning it up we had someone wanting to move in ASAP so we didn't get the chance yet. I also know that it well probably be a big adventure to try to find a house that will be easy but if I go with the ones kinda like you had found that sounds like you had to put alot of though in it to make it simple to make over on a budget.
ScottScott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"
I honestly can't say I put a ton of thought into what all I would do with it. I did my research and figured out that I had a really good margin of error with what I was paying for it, and what the market was. I checked the building records to make sure that I wasn't going to have to do something that would be a huge time and money suck; like say replacing the foundation walls or something like that. Mine certainly needed work, but it was all stuff I could do on my own. The fact that I reused a lot of stuff really just increased my profit, but only by maybe a couple thousand. To tell you the truth, I would have made out better if I had just done it all in two months, bying whatever I needed when I needed it. I kind of lucked out on the stuff I pulled off of other jobs, and had it right when I found the house. The house would have been a great investment regardless.
I'm sure you can find one if you are dilligent about it and do your homework. Someone said getting ones that cost more with a larger profit. I wasn't financially able to do that. Maybe you are in the same boat. You are doing the right thing by asking questions here, and there has been some good advice (as usual). Don't let the nay sayers scare you away, they just don't want the competition. But I still think if you are going to flip a house, that's what you should do. I wouldn't try to rent it if it didn't sell right away. One thing my uncle taught me is that he buys low and sells low. Price the house to move. I remember when I was selling my house another house on the same street was going on the market for quite a bit more than mine. Theirs is still on the market, I got my check a month after I had it ready to sell. I maybe could have gotten a few grand more, but I could also still be waiting for it to move. If I hadn't moved up to Chicago to work with a christian ministry I would probably be looking for another house to invest that money into. Good luck finding yours.Peace,Casey
Thanks, but its still in the thinking stage. I'm not sure of what I am going to do yet.
scottScott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"
Just a hint...break up your post into shorter chunks, so old folks like me with CRS can read it more easily...I think you were giving good info, but by the time I struggled down to the end, I forgot the beginning. 8>)
sorry, I'll try to do better next time. I tend to get a little carried away.Peace,Casey
That was quick! Thanks -
Certainly doable but be sure you know exactly what you're getting into before hand. Properties needing just a simple sprucing up are few and far between in my area, most 'flips' require major work which means - unless you can afford to carry the property for awhile - the 'free' time and spare cash to do it now.
I picked-up a duplex just before it went into foreclosure last year, plan was a quick reno and rent it out. In spite of a solid plan, here's a real short list of what happened instead;
- Get rid of the existing tenants. Paid the tenants on one side to leave, cheaper than legal fees and quicker than eviction. They essentially abandoned everything in the apartment when they left. Took a month of time and 7 dump trailers of trash to get to the bare walls.
- Other tenants became squatters, took 6 months plus legal fees to get them evicted. No rent came in during this time and no work could take place while they were still there.
- Squatters parting shot was to call the state fire marshall and building inspector & report various hazards. State inspected the property and since I was renovating anyway they made me replumb and rewire the building to bring it up to code.
- Place was such a hell hole (most of the plumbing & wiring ran thru a claustrophobic dirt crawl space) it took several months to find a plumber & electrician willing to work in it - at a premium price of course.
- Missed my renovation 'time window' and now have had to juggle running my business and doing the reno at the same time. PITA.
I've had to put too much cash into the building for it to be a viable a rental. I could sell it as a finished duplex and still make a few bucks but have decided to convert it into two townhouse condos and sell them individually. Great money in this approach but will take another couple of months (and cash out of pocket) to complete the legal work.
It's all doable but takes some flexibility and cash to address the problems that WILL come up.
Good luck, -Norm
I see what your saying but how were you able to sell a duplex as seperate town houses, I guess I really don't understand that concept totally.
I am not really ready to go for the idea as far as my money situation because I have only been doing some of my handyman jobs off and on sine I am helping build a house right now, but this is something that has been stuck in the back of my mind that I might want to try a flip or two just to see how the process works and if it is possible for me to do good or if it would be a flop. Like I said though I don't really see it being too much of a flop if I go the rental idea if it doesn't flip fast. It will still bring in the money to pay the bills on it.
ScottScott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"
"I see what your saying but how were you able to sell a duplex as seperate town houses, I guess I really don't understand that concept totally."Very common in the KC area.Basically two houses with a common wall and a shared lot. Each 1/2 gets a deed. I am sure that there are some kind of C&R that covers the common wall and roof repairs.
I just wasn't familiar with that idea and never heard of it, but I can see how someone could probably do it in a way.
ScottScott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"
We are really not in that ecnomy anymore. I flipped 3 houses last year and 2 the year before. made almost 400,000 total on these.
I kinda had a feeling that the game has been playing for a while and everyone interested has played the field out alot, but if I every decide to try it I just wanted to know if anyone here has looked in to it or done it.
ScottScott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"
Research is your best weapon. Location is second, both the houses', as well as yours, geographically. I suspect in MO your average housing prices aren't in the millions. When your ability to profit hinges on a few percentage points, a few percent of a mil beats a few percent of a hundred grand.
If you aren't a realtor or appraiser, knowing those people will go a long way towards keeping you realistic as to what will or won't fly in your market. I think I've probably learned more from appraisers about how they assign value, realtors what homeowners are buying.
The decision to go do it has to be supported by math. If the numbers dont work, no amount of enthusiasm or betting on luck is going to fix that. I'll give you an example.
A house was going to be sold recently. I knew the neighbors, who told me this thing was about to be listed and it needed a ton of work. I talked to the owner, looked at it, took notes for a couple of hours, did the research. Our market isnt high priced. I figured that home, fixed nicely, would sell at 200-205K. I also estimated that getting it to that point would take 125-130K. So I offered 60, and they passed. Big surprise.
Actually the comment made, which made me chuckle, was " we know it needs work but my brother and I are betting, at the moment, that there's someone more gullible that you out there."
A month later it sold to another remodeler for 160K.
Now in talking to the neighbors, they said his walk through the house was about 5 minutes long and he bought it the next day. They've started talking socially with him, and things now do not look good in his world. He's 90K deep and not done. On a house that might sell for 200. That he paid 160 for. Do the math.
You just have to be very realistic with yourself about what its going to take and be willing to spend your time looking and researching. You may look at 10-15 houses, make offers on 3 or 4, and maybe get one. Every time someone rejects your offer, they're just telling you they want someone else to lose their shirt, not you.
"Sometimes when I consider what tremendous consequences come from little things, I am tempted to think -- there are no little things" - Bruce Barton
Thanks for letting me in on what you had found out, and I can see what you have said is true.
ScottScott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"
Scott,
Maybe M.O. is different than here, but with all of the " Attention" flipping has been getting in the last year or so, that market is played out.
When realtors start advertising a property as " An excellent candidate for a flip". You know the game is played out.
As far as money making? I have seen a few friends of mine lose every single dime of profit as well as some of their own money on a flip that got delayed or ran into problems.
If you are looking to pay down debts or maybe get a financial boost? I would be very leary of flipping.
I had the idea that it has been played out, but I thought maybe sometime I might want to try and dable a little. Thanks for your info i appreciate it alot.Scott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"
You cant make a living out of it. It is much too difficult to exploit. Things dont always go on as planned... and houses take much longer to fix and to sell. Wealth is created by buying houses not selling them...
Yeah I can see where you really have to watch what you get yourself into because since the field has and still is being played the ones left are the ones that my have alot more work to do to them.
ScottScott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"
You will have to purchase the property at 65%-70% of the fair market value of when it is fixed up to cover all your costs and make a profit.. At least that is what my research has told me, for I have never done this. A realtor would not be able to find these properties for you. You have to be willing to go out and find people willing to give you their house for a low price. People who are thinking about foreclosure. You would have to put up "We buy Houses" signs to get phone calls. Have your financing in place and make low-ball offers. If you are in the trades you can do jobs that pay much sooner and not get involved in all the paperwork of loans and titles etc.
Never really thought of that but it is a good idea and your probably right that going through a agent would have a high price on the property.
ScottScott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"
Re-read this post, 75704.12
Its right on. When I hear a realtor try to tell me that the house is an easy money maker I usually dont even bother to look at it.
I'm not dissing all realtors but unless you have a good friend that is looking out for you your never going to have a realtor hand you a money maker.
Doug
that's right about the money maker...
the realators seem to take the goode ones for themselves or just make money off you somehow in the process..... Life is not a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside, thoroughly used up, totally worn out, and loudly proclaiming<!----><!----><!---->
WOW!!! What a Ride!<!----><!---->
Forget the primal scream, just ROAR!!!
Very true, Thanks
scottScott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"
Hey Scott you don't need to to respond individually to each poster, you can address several people in one post.
For the flipping it is getting played out, even the cable shows about the subject are slowing down. It is getting difficult to find that property with enough potential to make a buck. You see the glamour stories buy house at $100,000 put $10,000 into it sell for $200,000 all in 30days for a quick $90,000 profit. Don't forget your capital gains you get to pay on that profit.
I wouldnt exactly call what I do "flipping". I like to find disasters and completely rebuild them.
I just sold one last week. It worked out pretty good this time (I made some cash). This is the fourth house i've done and i've yet to lose on one. They are getting hard to find at the right price though.
Seems like people think they have gold mines on their hands and are asking way too much.
since the hurricane, everything on the coast has rising to a preminum price, even the junk houses. and the county loving it. they have raise property value on eventhing, so more tax money. my house is value by county 40k more than I can sell for“Our country! In her intercourse with foreign nations, may she always be in the right; but our country, right or wrong.”
Just out of curiosity,
How much of your Business/Cashflow/income by percentage does that strategy provide?
I'm never really broke it down that way. I kind of keep the contracting and investing seperate.
I just like getting the dumps because I like to give a good finished product. There are too many people that will paint and clean a place up and sell it. What you end up with is a nice looking house with antiquated systems (the last house I did had a four fuse panel). In my mind if its a dump it helps me justify doing all new and I like compliments from inspectors too. It makes inspections easier if the inspector knows you do good work.
I just had a guy ask me to fix some houses for him. He just wanted stuff painted. The house I looked at for him was a dump mix / match kitchen cabinets ("just paint them"), and some kind of paneling falling off the walls in the bathroom that he also wanted painted. Sorry, i'm trying to build a good reputation.
If i do try it I may have to go that route since it seems the field has been played for a while.
ScottScott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"
Sometimes its alot easier to fix things if you gut first. Another thing that was pointed out to me, was that with the margin I made on my last house and for what I paid for it I would've come out about the same in the end.
The thing is though, for four months I did what I like doing, worked my subs, found a good concrete guy, siding guy, and delivered a much nicer product.
Scott,
We've been trying to do it in our area (Tampa) but haven't found anything cheap enough unless it needs more work ($$$) than would ever turn into profit.
We either find those homes going for $200k in a $225k neighborhood that need all new bathrooms and kitchens or we find the $350k home in the $600k neighborhood but after you go in it you find huge structural problems, termites and oh yeah, its in the FEMA flood zone and the 50% rule is in effect.
So as much as we WANT to flip a house or two, we never have had the opportunity.
Mike
Thanks for the info, from what everyone here is saying the field has been played for a while and its getting harder to find the easy ones to do now.
ScottScott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"
"ut if I every decide to try it I just wanted to know if anyone here has looked in to it or done it."
Ive been doing it for the last 15 yrs. I gave up working for the pubic to do it . I do several other things as well associated with it as rentals and some building.
Ive preached here for years that talents should be used from the trades to further ones retirement at least. Since construction has not been a great indusry for pensions.
Theres several ways to answer your questions and would more resemble a book , but then the book might not addess your situation. That will happen if you start buying books.
Theres not really a place to start with out a laid out plan. Normally from the start the first question appears is how can you afford it ? The business builds from there into different sequeals.
Parts of it are not for every one as in case with Mike Smith for an example . In viewing his credits , he would seem to be perfect to be a land baron. However the area he lives doesnt actually allow him to do it where a small piece of land costs a small fortune. Rental property seems to be out of the question as well for it doesnt seem to be any for stated reasons. Rental is the "net" for exercizing a properies worth than cant be sold in time limits. Its a tool to be able to fall back on except in expensive properties where only well established business men belong. Thats a stage in the final parts and not starting out . One other way if home swapping which could be viewed as flipping , but it is not . That is the best way for a carpenter to own his home . We have used a rule of thumb that after building 5 houses for ourselves the 6th one is paid for and we move on never touching the profits. Buying preowned homes can reap the same rewards if done smartly. It took 5 homes for me .
The only thing I want to add is that its a serious business and not a hobby. Stakes are huge but through knowledge you can own the odds still making it a bettable business. Nothing is a sure thing to exactness. Yes you will know sometimes there will be a sizeable profit but you dont know when or how much it will be . If the return comes in small and the time period is long you may realize you should have passed.
Since it takes until a man is 30 to learn how to make money and his ability may only last till 50 in this industry , then his prime time may be cut short like a dogs life where physical ability leaves the proposition. Of course he may be able to work till 70 , those arent the years to be raising walls and trusses and his brain becomes the most effective tool. As a popular quote that says ; A mans got to know his limitations. However if a person learns the business enough to hold the percentages and can afford the set backs it can be a very prosperous business. Its still a very careful road that is considered dangerous.
Tim
In my years of financial planning and moving about the country, I've only come across two guys that have a solid business plan on flipping houses.
The first guy in S. Cal, owns a foundation repair company. He'll do about any such fix. When his crews are slow, he'll send them to one he recently bought that has slipped or sunk in that neck of the woods. There's plenty. Most people simply live with crooked houses there. He'll buy them at a huge discount due to inability to finance or something, send his guys in at cost to repair, and another crew to finish off after. Then relist - at a big markup.
The second guy is an attorney that sees a lot of probate work. He also owns a real estate co. He also has put together a small rehab'ing crew.
He comes across an old condo or small house that it's owner has just died. He commonly also runs that persons estate process. So he has control. He'll buy the house as is (likely it stinks so bad that no one else in the family wants it). Clean it out and repaint and recarpet to the least. Then his other RE company relists it - thus saving on that cost.
Both have accurately focused upon the best buying price. Both have low cost repair and/or transfer formulas. Both have a secondary make the introduction to the opportunity.
One of the first considerations is financing. Some investors pay cash and thus do not have to pay bank fees, appraisal, closing costs, pre-paids such as PMI, pre-paid taxes, etc.I spoke to several lenders last week about financing real estate investment properties.One lender will allow the Seller to pay up to 2% of the purchase price toward the Buyer's closing costs. I talked to another lender and he will allow the Seller to pay up to 3%.One lender charged 8.25% interest on investment properties and the other lender was at 7.5%One lender required six months of PITI in reserves (they simply looked at your bank account for verification) while the other lender did not have this requirement.If you're going to finance the investment home, it is to your advantage to finance at 80% LTV as this eliminates PMI, gives you a lower interest rate, and the closing costs are lower.Both lenders have told me they would allow the Seller to finance 20% of the purchase price.As you can see I'm trying to come up with ways to finance investment properties with little or no money out of pocket.The main reason I'm telling you this is that you will need to figure financing as just another of your expenses as you make offers on fixer upper homes. Your financing expenditures would include (1) bank closing costs at the purchase and (2) the total of your monthly payments.Don't forget title company fees when you sell the property. Ideally you could sell it youself and not have to pay a realtor.I would like to be able to keep financing expenses down to only $2 or $3 K total as it's hard enough to make a profit after you pay all other expenses.Good luck!^^^^^^
S N A F U (Situation Normal: All Fouled Up)
"In my years of financial planning and moving about the country, I've only come across two guys that have a solid business plan on flipping houses."
One thing that has helped me is that its just like a job in waiting . When I get through with what ever Im doing and I have extra time I start attending auctions. I read four papers plus the thrifty nickel advertisers. I get on line and look for repos there . I call the banks and send out word Im searching and ask what they have in inventory and comming up. Sometimes they will refer me to "pre repossions" that are laying in waiting to come up. Then realators but they arent much help . Ive bought a few from them but honestly if they could do the deal they would have already with out me. Some way. A few times Ive bought a new house unfinished and they needed me . What they want is a quote on fixing it but I never get it from me. Sometimes they have me visit somthing like a termite property that has sunk.
One such time they sent me out to look at one that was litterally falling in on the front. The back was ok and the walls were separate from the demolition. I simply called the president of the bank and made my bid . He actually laughed at my offer of 10,000 dollars . I invited him out to look as he had not been . He said he had an appraisiel of 56,000 he had loaned from at the time 4 years ago. He came and walked through the front door and fell through the floor instantly. No Shid. I helped him out and said some apologetic words for his dress pants and the blood on his leg. He said "is your offer still good ?" I still have it as a rental. I tore off the whole front which consisted of a living room and bedroom and built it back. I poured a concrete floor because it was too close to the ground . A heavy termite treat and a contract in hand sent me back to the bank for a construction loan. I borrowed a total of 25000 with 15 of that to fix it material only. The back was only 4 yrs old and is now in new condition even after 6 years renting it . I owe somewhere around 12 on it now and gained an extra lot in the process for a duplex. The extra lot is worth what remains on it . I eat good every month off it and its good to go the rest of my life. Ive been approached to sell it several times but I would have to have about three times what its worth as it rents in a couple of days every time. The latest appraisel set it up at 79,000 as property here is sky rocketing from retirees moving into our cheap to live area. We were listed a short time ago as #8 in the nation for affordable retirement by AARP magazine. That sent them to us plus other articles.
Theres always a deal out there somewhere . The prospecting and negotiations are the real work as the construction is in hand when the time comes. Im equipped to do it all except HVAC. The celebration begins at closings as the deals are what stops the process . Its a full time job propecting. Ive often thought of opening the business up to share holders and prospecting full time where all I did was hunt down the leads and attend auctions. It would work if I were successfull . The rest falls in hand as its bid from the start just like any other house to be built. So the work itself is not very important to the success but starting out it sure helps get a foot hold on collateral. Money could be more successfull as a tool.
Tim
Hey that was great info you gave me and am glad you shared that with me. I.m not ready to try anything yet though. I need to sit down and get some of my bills situated first before I even take my first step, but I will keep your info in mind when and if I do jump in the house hunting. I think we need to get together some time I like how you think.
To everyone else I am glad you shared your info too and will keep it in mind as well.
hey guys I am starting to get addicted to this board and I am glad that I desided to come and check it out a couple months ago. I thank you all for sharing your experiences and wisdom with me.
ScottScott Beckett's Handyman Service
Jack of all trades
"Can't never did anything but can did"