Anyone here had experience flipping a house? Buy a house cheap and fix it up to sell at a higher price for profit. Can this be done at markets which are not booming like California or New York? What are the most important things you need to know? I saw the show on TLC about flipping and it sounds interesting, curious to see if people here have actually done it.
I used to work with a guy who does it. very good money in it. but from what I understood, he did most of the work himself, he used to do it with his father so he had experience in it. I think the key is being able to do a lot of the repairs yourself.
A guy I know does it, and he says that he tries to buy homes near Universities to fix up. He said the housing in those neighborhoods is usually in pretty high demand. There are always parents buying houses or renting them for their kids(some he sold, some he rented). Professors are always being hired, and need housing, as well as other administrators and the like. I don't know if that helps you too much.
A friend of mine did this years ago and he made a lot of money. He's a very smart guy and he worked really really hard. It wasn't easy. He's now into commercial real estate and is pretty wealthy. The bottom line is flipping houses is much easier said than done, nowadays. If you are inexperienced and just trying to break into the business you may have a very tough time. Real estate "bargains" are no longer secrets that only a few people find out about. I'm curious if anyone here does this for a living full-time. Just how different is it now than it was 15-20 years ago?
Seems like the money you could make in that is huge. Let's say you could make just 30k for fixing the house for 3 month. If you did this for 3 times a year, you don't need to sit in no desk and take order from anyone.
well i know in austin the housing market is still strong. overall the housing market is crap and crappier. so i guess if you want to get in it the best thing to do would be to move where there is more potential money in flipping.
dont forget to take out taxes that is something i am dealing with now since my job doesn't take out taxes.
you have to think of the problems most flippers run into, the scenario you are presenting, is far from a given, even for the most experienced house could take a long time to sell, thus eating into your profits cost overruns (which in reality, is the most sever problem, because most homes (at least in Texas) that a flipper will buy, will come with no seller's disclosure, and an inspector is limited in what he can see ....on alot of these shows, you see a small wall being torn down, then BOOM, all the electrical is out of code and your budget just increased by $10,000 for an all new electrical job most importantly, your personal time ...this is something impossible to do if you have a 9-5 desk job ......you have to be in a position to be the superintendent and to do work yourself ...contracting out 100% will eat your whole profit my wife and I are in a great position to start flipping sometime soon (next year or so) ..im still having huge reservations because of all the aforementioned problems
One of my good friends flips houses for a living (full-time). He has been doing it for about 4 years and has doen very well financially. He subs out most of the repairs, but still makes nice profits. Occasionally, he'll just find the house and let someone else flip it for a $5,000 fee.
Exactly. Last year, a coworker of my wife's went down to get the auction list for homes that are good flipper candidates ...she said there were hundres, if not thousands of people waiting in lines for the chance to bid on these homes no good flipper candidate goes unnoticed, at least, not here in Houston BTW ..Houston is not a great flip market, because the houses here are so cheap to begin with, it doesn't leave you alot of room for profit after renovations the homes you see on tv, if you notice, are always in California or Florida ....where 1,200 sq. ft. homes sell for $400,000+
No kidding! I tell my wife that all the time. A $200,000 home in Houston would be a $600,000 home in parts of California, Florida or NY (really, in lots of other areas of the country ....housing in Houston is cheap cheap cheap compared to most other areas of the country!)
Actually, the shows on TLC feature a company in San Antonio. I think the show makes the job look a lot more stressful though, as they give themselves deadline and the whole show is about "finishing before the deadline and staying within budget." Usuaully the deadline is the first day scheduled for open house. I've never flipped a house nor have any experience in it, but the concept seems relatively easy. Main problems you would want to have addressed before going in would be connections, IMO. You wanna have cheap, reliable contractors you know will do a sufficient job. Sometimes you can just go down to Home Depot for this and pick up a few Swolys. And of course, you need someone with a real estate license to show and sell the home for you. The companies on TV usually have in-house real estate agents. Also, I'd believe this profession requires a lot of free time. And of course the money to jump into it. But if you're willing, I wouldn't imagine it hard to make a nice living off flipping houses.
From experience, I strongly disagree with everything you said. 1) The deadlines are real. I contracted my own home in the past year and I can tell you, one contractor's 2 day delay can throw your whole schedule off and cause delays down the line. 2) Again, most flippers do not contract out 100%, they probably, in my estimation, do half the work themselves. 3) Staying within the budget is a totally legitimate concern on every flip. Hidden factors can turn a potential $20,000 profit into a $5,000 one. Making $20,000 for 3-4 months worth of work ain't bad, but making only $5,000 is. Im not saying it can't be done, because, it is done. But its not easy, and in the end, its a risk of your finances and time. Do you know that even experienced flippers get into situations where the best they do, is break even? Also, most flippers dont do it to support themselves, as far as a living, but rather, use it simply as an investment too for extra income. Alot of flippers have investors who finance the project from start to finish and then divide the profit in the end.
Ive been interested in this for a long time. I think the Houston market is too weak for flipping. If you can find a killer deal in the right location then you might be able to make some money, but overall there arent alot of options. Alot of the builders are buying sh!tholes, tearing them down, and building two 3 story townhomes side by side and sell them for $400K each. Thats the way to make some serious money. Otherwise the key to making money here is to RENT. Buy a duplex or something for cheap, do some minor repairs, rent it out for 10 years or so, then cash out when the market or area is right. The latter is what Im thinking about doing.
Just like any other investment you make your money on the purchase. You have to buy houses that are undervalued and fix it up to give it value. Of course the devil is in the details. How do you find houses that are undervalued? How do you fix it up? There are plenty of marketing strategies. You see those We Buy Ugly Houses signs all over the place. Those are called bandit signs. People find vacant houses with out-of-state owners (there are lists) and send them postcards. People drive around in areas they're familiar with and just look for houses. It's a lot of work. Numbers are roughly 100 houses contacted before you find one that will meet your criteria. As for fixing up, if you're handy and are willing to do it full-time then you can save a lot of money. If you can project manage a bunch of contractors then you can go that route too. There are head-aches to that method. If you want to do it only part-time, nights and weekends, then it'll take a lot longer and your holding costs for the house will be high. Make sure you can afford the mortgage while you fix it.
Different strategy for different goals. If you need money now then flipping is the way to go. Quick influx of cash. If you want long-term investment then renting is the way to go because you make a lot of money by holding for appreciation. Just ask the people who own land in the Heights. I don't want to do flipping because it's too much like a job. I'd rather buy rental property and manage it on the side. I'd have to flip too many properties to match my currently salary.
The thing in your statement is "if" it works. The thing about renting is that there is always a demand, esp. in areas with good schools, or as someone mentioned earlier, near universities. If I lived in California 2-3 years ago, Id be a flipping fool. Right now, I just think the safe option is to hold on to a property for a period of time (2 years min. to avoid capital gains taxes) and let it appreciate.
