I want to get some savvy investor/flipper opinions on my current situation. I have some equity to take advantage of along with VA Loan benefits. How did you start flipping? Where did you get the capital? Spit ballin' ideas here so please give thoughts on general plan and ignore specifics because I don't really have them yet.
General Background information
- I've been watching my areas real estate market pretty closely since 2015 so I understand my local market fairly well. Prices were climbing and flippers were going crazy. It has started to calm down but there are still some good homes that could be flipped for profit but don't have enough of a profit margin for the greedy cash flippers to come in and work on. (they do ~30% profit)
- I am fairly handy. I have remodeled my own kitchen, done flooring, plumbing, installed a toilet and even some electrical fixes in my own home. I am able to do nice work for 1/2 cost of contractors.
- Both mine and DH's credit scores are ~810
- When we bought our current home with the VA Loan we were able to put 0% down and paid only $2K in closing costs. (VA Loan is incredible)
- According to mortgage calculators that consider debt to income ratio we can carry mortgage loan(s) up to 700K or so.
- I would either get my own real estate license or use a friend in the industry to sell who would take a discounted commission
Primary Residence 3b/2ba
Original 30-yr VA Loan principal: $217,500
Start date of mortgage: August 2015
Current principal: $198,000
Current interest rate: 3.75%
Current value of home according to zillow: $305,000
Note: Could appraise for even more because of upgrades I've made. Bought one of the worst houses on a great street in a great neighborhood.
The crazy plan...
1. Do a zero closing cost re-fi on current home for 80% LTV which is 244K. This would give us 46K cash. New loan should have rate at <4%
2. Find the RIGHT home to do a live in-flip. Purchase price would be <250K
3. Finance with VA loan to put 0% down and pay ~2K in closing costs
4. Take remaining 44K to do flooring, kitchen, bathrooms, doors, trim and paint. Try and stay 2/5 years.
5. Sell home for a 15%+ profit OR rent house and move on to next live in fix.
6. Repeat steps 2 - 5 with added flip profits until I reach my FIRE number
I have been listening to the book Set for Life by Scott Trench. And while it does go a little fantasy land sometimes, I DO think I could get to FIRE a lot sooner than the 4 -8 years I have planned if I start thinking outside the box. Slow and steady will definitely work, but what if I could get there much sooner? I especially love projects and if the first flip or two were successful, I could quit my job to do the last few flips and be semi-FIRE and get to FIRE even sooner. I figured the WORST that could happen is I don't sell the flipped home for a profit and come out even or even slightly worse off. I can afford the higher mortgage of 244K so small risk for big reward?
[EDIT] Changed OP to involve live in flip instead of investor flip in order to abide by VA Loan residency requirements.