House Flipping Tips

Discussion in 'General Home Improvement Discussion' started by janky, Feb 20, 2018.

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  1. Feb 20, 2018 #1

    janky

    janky

    janky

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    Hi everyone,

    I've looked through a few threads on the forum re: house flipping and have gleaned a few tips.

    1.) Find a reliable/honest house inspector
    2.) Don't be afraid to ask questions of local officials re: permits required
    2a.) In fact, just go to the local official who will tackle your case to find their
    "take" on local regulations


    Also was looking through this graphic on house flipping this morning. Seems to have some interesting angles worth considering before jumping into house flipping. Anyone have any other tips they would like to share for a first time house flipper? [​IMG]
     
  2. Feb 20, 2018 #2

    aNYCdb

    aNYCdb

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    My general advice;

    1) Be prepared to lose money on at least one out of every 4 flips.
    2) Geographic location matters for they type of flip that works best in that particular area
    3) Generally the most profitable flips are the ones that cost more money to buy upfront. On the lower scale its a good investment to buy for $100K invest $50K and have a $200K house, on the higher end a $500K buy with a $100K investment can turn into a $900K house
    4) If you are in an area were <$100K houses are common these often times make sense as long term rentals. The general rule of thumb is the monthly expected rent should be about 1.5-2% of the total investment.
    5) My first few flips were disasters, because I didn't have a good handle on what I should be paying for sub contractors. Know what the costs should be so that you can estimate what you need to invest (for example Hanging/Taping/Mudding/Sanding of Drywall should be ~$1.50-2.00/sq ft)
     
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  3. Feb 20, 2018 #3

    janky

    janky

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    Thanks so much ANYCdb -- very useful advice!
     
  4. Feb 21, 2018 #4

    nealtw

    nealtw

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    If you are single, buy a house you can live in. You work longer hours and have less theft to worry about.
     
  5. Feb 21, 2018 #5

    K_M

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    Very good advice here.

    Be warned. House flipping is full of perils. Be cautious about what you are getting in to.

    Also, don't fall prey to what your info graphic and other sources say about profit.
    Most of these source call any money left over after hard costs "profit".
    If you are working on it yourself, you need to pay yourself.

    Your labor is not "profit". You need to treat your labor the same way you would treat someone else's labor- with a "wage" for services rendered, even if it is only in your mind.
    No one wants to work for free.

    Now all of a sudden this marvelous "profit" everyone touts isn't so large.

    All I can say is to make sure you know exactly what you are getting yourself into.

    And where I live, run down dumps are in the 300K+ range and rents for them would be $1500-1800/mo. A far cry from the 1 to 2% rule. Know your area!!!

    Good luck!
     
    Last edited: Feb 21, 2018
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  6. Feb 21, 2018 #6

    aNYCdb

    aNYCdb

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    Excellent addition. Spending hundreds of hours working to make a little bit on the sale is a waste if you could have made the same or more putting in extra hours on the day job.

    I would also add that everyone that I know that is successful either comes from a background in Real Estate or the trades or is willing to can quickly immerse themselves in it (If you don't plan on being your own GC don't even start). If you don't build your own relationships (and potentially your own crew) in many markets you will quickly find that your "house flipping" competitors are also some of the trades you are going to potentially hire.

    One of the hardest thing for new flippers to understand is that Rents generally have much less variation than housing stock does. People aren't willing to pay 2x more to rent in a "good school district," but they might be willing pay that much of a premium to buy.

    Based on that you generally want to buy flips in good areas and do rentals in less economically developed areas.
     
    Last edited: Feb 21, 2018
  7. Feb 25, 2018 #7

    slownsteady

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    I think you also have to decide in the beginning what kind of flipper you want to be. Some flippers are renovating properly with an eye for quality, and others are just trying to cover up a multitude of sins with the cheapest material they can find.
     
  8. Feb 25, 2018 #8

    bud16415

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    I personally wouldn’t buy a house that I suspected was a flip. But I wholeheartedly would be supportive of anyone buying a distressed property with the idea of doing the kind of things flippers do to have a great place to live in the end. Too much of what I see in flips is bottom line driven and going after the most appeal to the buyer for the dollar invested.

    When you buy your own distressed property you see it in its worst condition and then decide what to fix first. The flipper might see a bad looking roof and do a roof job but when something structural that is marginal surfaces under the roof that’s going to cost some major money but could be pushed out 5 years also will opt to let it slide. The buyer sees the new finishes and assumes what they don’t see is as good.

    We bought a very distressed house 5 years ago that was on the market for a couple years. The flippers all passed on it as it was in a town where there were a lot of houses all done nice and for sale relatively cheap as move in ready. Not flipped just well kept up by an aging population that was moving to nursing homes and young people don’t live here because there is no work around. The place we bought was super labor intensive but material costs were not that high. I viewed it as a years worth of work like a part time job and a chance to get a house done just like we wanted.

    So in a way I flipped it for myself and the upside was we got a house free and clear without ever a payment.
     
  9. Feb 26, 2018 #9

    Chris

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    All my homes I have lived in have been a sort of a flip, buy low, buy the cheap house in a good neighborhood or the small house in the good neighborhood and the neighborhood will help bring the value up along with fixing it up. My first house I lived in for 6 years while fixing it up and made a huge profit and then the next I lived in for 2 years while fixing it up and made a good profit, I also bought us a cabin in the mountains and we enjoyed it for 4 years while doing some work on it and after everything out of pocket including bank interest and all we profited and had a house in the mountains for 4 years basically for free. I have now jumped from buying and working on homes and now have nine rentals which were purchased from the proceeds of the sales of the other homes with no extra money out of pocket. I would mind getting back into a flip or two but I can tell you if you need a house inspector that maybe a flip is not right for you. I have been a contractor myself for 11 years and been in construction my entire life and I still learn every day. I think it can be a great business for the right person but you have to be willing to do the majority if not all of the work yourself because with where contractor prices have gone it would be hard to make a profit after hiring people.
     
  10. Mar 10, 2018 #10

    LupeHerring

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    Hey, I really liked the infographic, it conveys a lot of information about flipping the house.
     

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