I want to try fixing and flipping a piece of real estate.
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If you have enough capital, go for it.
1. Best to buy a home out of foreclosure or auction where you can get a $200k home for $100-130k.
2. Know all of your contractors and be ready to break ground the day after you close on it.
3. If you run your rehab well, it shouldn't take longer than a month for 30-40k in repairs.
If you cover those three bases well, you won't mess anything up too bad.
1. Best to buy a home out of foreclosure or auction where you can get a $200k home for $100-130k.
2. Know all of your contractors and be ready to break ground the day after you close on it.
3. If you run your rehab well, it shouldn't take longer than a month for 30-40k in repairs.
If you cover those three bases well, you won't mess anything up too bad.
You don't recommend doing the rehab yourself?
If I hire a contractor, do I still need to purchase most of the building materials myself?
Not unless you know what you're doing. Its best that you hire contractors in this case. My wife does it a couple of times a year with her friend. Its all about letting your idea out and managing the crew.
You dont have to purchase the building materials, but its good that you do. RE flipping is either about making money or doing it as a hobby. If making money is your thing, then you should scour the market for the best materials while being affordable.
What types of houses does your wife usually buy? I've read that single family houses with at least 3 beds/2 baths and 1500+ sq ft are usually the best.
I want to give it a shot. I think I could manage the rehab well. I'm mainly concerned about getting a good deal on the property to begin with.
If you have good cash then find a good contractor with not so good cash to be a partner with you.
What state are you in?
Things that can blow your mind are septic systems, mold, foundation problems, termites, rot, structural problems, poor wires, poor plumbing and of coarse a house built on ancient indian burial grounds.
Your best house will be one that needs a roof, paint, carpet and hardwood sanded down. that can be done in a month all the while your RE is doing their thing so there is a buz the second it hits the market. Slouch on the launch date, fail to create a buz with other RE offices, dont hit your budget and youll have a house that will be a headache.
What state are you in?
Things that can blow your mind are septic systems, mold, foundation problems, termites, rot, structural problems, poor wires, poor plumbing and of coarse a house built on ancient indian burial grounds.
Your best house will be one that needs a roof, paint, carpet and hardwood sanded down. that can be done in a month all the while your RE is doing their thing so there is a buz the second it hits the market. Slouch on the launch date, fail to create a buz with other RE offices, dont hit your budget and youll have a house that will be a headache.
Learn everything you possibly can about the building before you close on it. Everything - foundation, electric, plumbing, hvac, etc. Take notes and try to discover every potential hidden money pit.
Stay focused on getting the work done and flipping it asap. If you do the work yourself, plan to have no life until it's done and don't back out on the work so it drags on. If you sub it out plan to have no life babysitting your subs and making sure the work is done right.
A good deal up front is nice but you usually get what you pay for. Think about it in terms of time and roi, not just in terms of the initial buyin. A house for $150k that needs a little TLC to flip for $180k may be a lot less of a headache than a house for $80k that needs your blood sweat and tears for months to get it to $150k.
Good luck bro.
Stay focused on getting the work done and flipping it asap. If you do the work yourself, plan to have no life until it's done and don't back out on the work so it drags on. If you sub it out plan to have no life babysitting your subs and making sure the work is done right.
A good deal up front is nice but you usually get what you pay for. Think about it in terms of time and roi, not just in terms of the initial buyin. A house for $150k that needs a little TLC to flip for $180k may be a lot less of a headache than a house for $80k that needs your blood sweat and tears for months to get it to $150k.
Good luck bro.
I'm in Denver.
I've never bought/sold a house before. How do you pick a realtor to work with when selling your house?
Yeah, it seems like there are tons of cheap pre-1950 houses around here that would require a ton of work. It also seems like those are the properties most flippers focus on. But, I think I'd rather just get a relatively new house (1980+) that wouldn't require anything too major.
I would say if you dont have 3x the purchase price of the house you cant afford to dabble in flipping esp. if you really have no clue. This is the big leagues you will get fucked 3 ways till sunday if you get the wrong house.
Buy yourself a duplex, rent one side, save save save, buy a SFH that you can move into, rent both sides of the duplex. Much safer imo, plus you can ride the increase in equity that will most likely be coming your way in the next 10 years.
Or go for it. You need more street smarts then construction ability. Both would be the best scenario though.
The first thing you have to realize is that realtors are lazy sacks of shit. Only 1% of them are hustlers. you only want to work with a hustler. How you find this person is the trick. It starts with how quickly they return phone calls or emails. Anyone who makes you wait a day for correspondence can go fuck themselves. Thats true anywhere though.
Secondly if you want to see a house, if they get back to you within the same half of the day with a time to see the house, they are a hustler. Thirdly if they put some pressure on you to buy, they want to close of course. Lots of realtors are content with just driving you around in their car hoping that the magic house is next. Fuck that, thats what they will do with your property. Coffee is for closers.
It depends on the location. Single family homes do best when they are in good school districts. Parents want to move to send their kids to top high schools.
If you're buying in a trendy "up and coming" neighborhood where 21-30 yr olds want to live (often these places have great rehab opportunities), a townhouse may be your best bet. 20-somethings usually would prefer not having a yard to cutting the grass.
I'm not in this game, but I would assume that you would also need to keep a close eye on taxes. Could be an easy way to kill the profits if you're not paying attention to it.
Unless you have considerable experience doing the work yourself and have managed subs on tight schedule, hell no.
One of the most important factors of a flip is time-off-market.
You want the house back on the market in under 1.5months at the latest. You want a GC that will have subs stepping over each other from day one to get it done asap. If you don't hit your mark on this, you will be amazed how quickly 3-6 months go by with the house still being on your hands eroding profit daily.
They will quote you building materials. There really isn't much value doing the work yourself unless you run a team of quality subs that fill in the gaps.
If you want to save on some costs, once you have your build plan, you can choose a few things to do yourself and have the GC do everything else.
I think that is a good idea. A 10-15k rehab is a lot easier to manage and get back on the market as opposed to a 30-50k.
Make sure you hire an extremely good inspector that catches every nuance before you purchase. Unless you buy at auction, then you need to research the area and comps really well.
Only flip side to this is rehabs with smaller margins are more susceptible to real estate fluctuations. All the more reason to be in and out asap as you said.
So far I have gathered you know nothing about construction, nothing about real estate, nothing about homebuying and nothing about anything you are about to drop $100K+ into doing.
Is that right?
Is that right?
It's not like he's putting $100k on red or black.
Speaking from experience it doesn't really matter, unless you buy something totally off the wall that nobody else is interested in your money will be safe if you buy well below market value in a good area.
Millions of amateurs have made money upgrading their own houses and moving on, without even trying. If you plan it and do the work right you won't lose money.