Author Topic: any fix and flippers on here?  (Read 7040 times)

Longwaytogo

  • Guest
any fix and flippers on here?
« on: January 05, 2014, 03:04:55 PM »
Hi everyone, i have been reading MMM since April 2013 but am new to the forums. Seems like a lot of good advice on Real Estate and Land-lording on here. Long term it's something I would definitely be interested in but short term am considering the fix and flip as opposed to long term holding/land lording. My experience/career is construction. Some new but mostly renovations. So I would be doing most if not all of the work myself as sort of a part time job. So I guess my questions are-

1. Anyone done it?
2. Do people like/dislike it over regular land-lording?
3. I have seen many comments about the 1% rule and 50% rule for renters( which  seem like good rules ). Are there similar rules of thumb/guidelines for flipping ( I have seen the 70% of after repair value - rehab expense = max purchase price, but still seems tricky to determine ARV)

Thanks a lot!!

Melody

  • Handlebar Stache
  • *****
  • Posts: 1089
  • Age: 31
  • Location: Australia
Re: any fix and flippers on here?
« Reply #1 on: January 05, 2014, 04:22:29 PM »
My partner and I have also been investigating doing this. (He would do the construction and like you has worked in construction).

In Australia the "rule" quoted in many books is $1.50 back for every $1 you spend on cosmetic renos - so a $10,000 reno should increase value by $25,000 or it's not worth doing. But as our transaction costs are significant (Stamp duty of $20,000 on average priced house) it's difficult to make a profit just doing this. Buy, Subdivide, Renovate, Rent, Build house behind house (aka Duplex development -using a building company who will quote a turn key price), sell one house, retain one as rental is a more popular strategy (typically sell old house retain new house, for tax reasons). Average house price is $500k, typically easy to sell both for around $400k each after completion - usually "instant" equity of $50k-$80K even in a flat market.

I'll be watching this thread with interest.

Longwaytogo

  • Guest
Re: any fix and flippers on here?
« Reply #2 on: January 06, 2014, 07:47:57 AM »
Hi Melody, have not heard of that "rule". The houses I have been looking at the repair would be a more $1 earned for $1 spent so if that's the recommendation I would be way off  ):  For example buy a 50-60K town home, put 50K renovations in and sell in the 160-180K range hopefully netting 25-40K after commission, closing costs, carry costs etc.

I worked for a guy who did what you describe (buying/sub-dividing/building) for 10 years and he did really well. He would actually live in the existing house and remodel it himself over 2 years and sell that one for profit ( IN US your primary residence can be sold after 2 years and not have to pay taxes up to $250,00 I think) and he would have my company build a house on the other lot to sell. We built 6-7 houses for him over 10 year span plus him living in 3-4 he did on his own. Then he retired at around 50 years old!

It's getting tougher and tougher to do it around here as less lots are available and would be way out of my budget so for now I'm thinking more of city town homes for cheaper entry.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28251
  • Age: -999
  • Location: Seattle, WA
Re: any fix and flippers on here?
« Reply #3 on: January 06, 2014, 08:19:33 AM »
Yeah, I've done some fix and flips.

Absolutely stick to 70% ARV minus repairs as max purchase price, and try lower if you can (IMO 60% is good for those just starting out - it will take you much longer to find a deal, but when various mistakes are made or things go wrong (budget overruns, extra holding costs, miscalculated ARV, etc.), you will be very glad for the extra buffer.  Once you have some experience and more knowledge of the local market you can cut it closer to the 70%.

I've heard good things about BiggerPockets' two books on rehabbing - The Book on Estimating Rehab Costs and The Book on Flipping Houses.

In all likelihood you're buying yourself a part time job that won't pay great, especially since you're planning to do the work yourself.  But if you enjoy it, nothing wrong with that.

If you post some more specific questions we may be able to help answer them.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Longwaytogo

  • Guest
Re: any fix and flippers on here?
« Reply #4 on: January 06, 2014, 08:50:23 AM »
Quote
Absolutely stick to 70% ARV minus repairs as max purchase price, and try lower if you can (IMO 60% is good for those just starting out - it will take you much longer to find a deal, but when various mistakes are made or things go wrong (budget overruns, extra holding costs, miscalculated ARV, etc.), you will be very glad for the extra buffer.  Once you have some experience and more knowledge of the local market you can cut it closer to the 70%.

I definitely want to stick to the 70% rule and of course 60% would be better. My problem right now is accurately appraising the ARV. The comps seem either all over the map or too few. For example if the city has small "neighborhoods" divided by roads/train tracks/demographics etc. Some I have looked at only had 1-2 sales in all of 2013. And if you expand the search wider your really comparing apples to bananas (apples and oranges are actually quite similar despite the oft sighted expression).

I feel pretty confident in estimating rehab costs as I have been doing it professionally on and off the last 12 years. But maybe I will check out the other book you recommend.

I figure right now assuming a 50% split with my partner/investor (he provides money I provide work) I could hopefully make in the $15-$30 an hour range (of course this can vary widely based on a million factors) but compared to a part time job at Starbucks, home depot etc. it should be more. I also watch my kids as my full time gig so it would give me ultimate flexibility in hours. And yes I really enjoy the work (getting sick of the customers though which is why I wanted to give this route a try)


[Mod Edit: Quote Tags.]
« Last Edit: January 06, 2014, 08:59:36 AM by arebelspy »

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28251
  • Age: -999
  • Location: Seattle, WA
Re: any fix and flippers on here?
« Reply #5 on: January 06, 2014, 08:59:16 AM »
Yeah, ARV can be tricky, and it doesn't help that it's the most crucial number (rehab cost being second).  Thus why you want to build in the larger buffer until you're familiar with your market. 

Is there a way you can do rehabs in a more popular area?  Places with so little sales activity means you may be sitting on inventory for a long while, with holding costs eating up your profits.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Longwaytogo

  • Guest
Re: any fix and flippers on here?
« Reply #6 on: January 06, 2014, 10:27:00 AM »
Yeah just a lot of the trendier/yuppie parts of the city even the fixer uppers seem to be 100-150K (although fixed up they are close to 300K). That is a little out of our price range to start. We have probably a max 75K budget- using 15-20 for down payment, 10 for carry costs, 40-50 for remodel. (my investor could carry mortgage and utilities in-definitely out of pocket if he had too but obviously would prefer not to) I'm estimating 9 months carry (4 to renovate, 5 to sell/close)

I guess I sort of mispoke when I said there were 2 sales in 2013. There were 20-25 sales just only 2 I would consider ARV comps. 3-4 were bought in the 50-60K range by people attempting to flip them. 3-4 in the 100K range that I guess are livable by the city-local standards (not by the young professionals moving in from the burbs that I would be marketing too) and then 12-15 in a new development in the 250-325K range (one of the reasons I think the neighborhood is on the rise)

Of the 2 that were "fix and flips" of the exact same size/type I'm looking at one sold for 157,000 and one for 197,000 so "average" would be 177,000 but that's a pretty small sample.  I would say quality/scope of reno I am planning is closer to that of the 197,000.
« Last Edit: January 06, 2014, 10:32:02 AM by Longwaytogo »

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28251
  • Age: -999
  • Location: Seattle, WA
Re: any fix and flippers on here?
« Reply #7 on: January 06, 2014, 10:37:17 AM »
You may not want to limit yourself on price range.  If you find a good deal, the money will come.  I wouldn't worry about this:
Quote
the fixer uppers seem to be 100-150K (although fixed up they are close to 300K). That is a little out of our price range to start.

Partners, other investors, hard money, etc.  There is lots of possibilities if it truly is a deal.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Longwaytogo

  • Guest
Re: any fix and flippers on here?
« Reply #8 on: January 07, 2014, 07:54:17 AM »
You may not want to limit yourself on price range.  If you find a good deal, the money will come.  I wouldn't worry about this:
Quote
the fixer uppers seem to be 100-150K (although fixed up they are close to 300K). That is a little out of our price range to start.

Partners, other investors, hard money, etc.  There is lots of possibilities if it truly is a deal.

Yeah I realize there are some options; I have 1 partner and 1-2 "hard money" lenders already. I would not want to juggle any more then that on 1 deal so I guess its wether the 2-3 have/want to invest a larger $ amount or not.

I know as with anything the first step/house is probably the hardest. I guess even when I am confident I have a deal I'm having a hard time pulling the trigger. Does it always feel like a gamble/leap of faith or did you get to a place where you were super sure your doing the right thing?

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28251
  • Age: -999
  • Location: Seattle, WA
Re: any fix and flippers on here?
« Reply #9 on: January 07, 2014, 08:11:46 AM »
Yeah I realize there are some options; I have 1 partner and 1-2 "hard money" lenders already. I would not want to juggle any more then that on 1 deal so I guess its wether the 2-3 have/want to invest a larger $ amount or not.

I agree with not having so much different financing involved in one deal, but I just wouldn't limit your deals because of that - if that partner wants to do smaller deals, keep looking out for those, but don't discard bigger deals because of that - just find a different lender/partner for those.  Passing up a great deal for that reason would be silly.

I know as with anything the first step/house is probably the hardest. I guess even when I am confident I have a deal I'm having a hard time pulling the trigger.

I would question then that you've been confident that you have a deal.  You've thought you might.

Does it always feel like a gamble/leap of faith or did you get to a place where you were super sure your doing the right thing?

The former, pretty much.  There's always risk involved.  You'll gain confidence, but there's always a leap of faith.  It just becomes a "leap" of a one-inch gap, instead of (what seems like) a 10-foot one.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Longwaytogo

  • Guest
Re: any fix and flippers on here?
« Reply #10 on: January 07, 2014, 09:04:29 AM »
1. Yes I thought I had my partner locked in for the home purchase/carry costs and split profit and 1 cash person for reno budget at fixed% return. But now the cash person is backing off on how much they want to invest so I am exploring other options. I have been focusing on people I know personally who are interested. Any thoughts on meeting real estate/hard money lenders that invest with strangers?

2. A few I found have sold in 10 days or less (2 same day they were listed) so presumably someone else also thought they were a deal. Others have been on the market a while which is part of what makes me question them. I have not been able to mobilize that fast (see #1). Also I think some are cash deals where as my partner has the 20% down payment but would be still getting a mortgage. Sure some may not be deals

3.Yeah I was sort of afraid it would be leap of faith at some point. I really want to make it happen in 2014 (been dreaming discussing planning forever) but I may have to just continue my research/saving (by my partner)/planning and shoot for a late 2014 purchase for a Spring 2015 sale.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28251
  • Age: -999
  • Location: Seattle, WA
Re: any fix and flippers on here?
« Reply #11 on: January 07, 2014, 09:32:24 AM »
1. Yes I thought I had my partner locked in for the home purchase/carry costs and split profit and 1 cash person for reno budget at fixed% return. But now the cash person is backing off on how much they want to invest so I am exploring other options. I have been focusing on people I know personally who are interested. Any thoughts on meeting real estate/hard money lenders that invest with strangers?

Find a real deal.  Go to some local REI meetings, and say to people "I have this opportunity I am looking for funding for" - they'll be able to tell if it's a deal and if they're interested.  If it's profitable, you'll find funding.

2. A few I found have sold in 10 days or less (2 same day they were listed) so presumably someone else also thought they were a deal. Others have been on the market a while which is part of what makes me question them. I have not been able to mobilize that fast (see #1). Also I think some are cash deals where as my partner has the 20% down payment but would be still getting a mortgage. Sure some may not be deals

Yes, getting a mortgage is often slower, and locks you out of houses that are unfinanceable and/or the owner wants a quick (cash) sale, but it does allow you to purchase higher than you otherwise might.  Owner financing is another option you may be overlooking - paying them after you've already rehabbed and sold it is nice.

3.Yeah I was sort of afraid it would be leap of faith at some point. I really want to make it happen in 2014 (been dreaming discussing planning forever) but I may have to just continue my research/saving (by my partner)/planning and shoot for a late 2014 purchase for a Spring 2015 sale.

It is definitely a case where you decide when to take action.  Doing it today or in a month or a year or a decade has nothing to do with the market or to do with you being in the perfect "ready" spot.  Your only limit on the time frame is when you decide to do it. 

:)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28251
  • Age: -999
  • Location: Seattle, WA
Re: any fix and flippers on here?
« Reply #12 on: January 07, 2014, 02:37:31 PM »
BiggerPockets just put out a huge article called "Flipping Houses: The Ultimate Step by Step Guide".

It contains dozens of links to other articles and posts.  Should give anyone wanting to flip hours of worthy information to read, and many, many things to think about or consider that you may have overlooked.  :)
« Last Edit: January 07, 2014, 02:39:23 PM by arebelspy »
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Longwaytogo

  • Guest
Re: any fix and flippers on here?
« Reply #13 on: January 07, 2014, 08:48:10 PM »
Looks like a good article, skimmed it just now. Will have to dive into it more thoroughly this week. I guess I need to work on #1. Commit!

Going to the meetings to meet some people sounds good although seems like I would still be slow to mobilize that way but I could of course meet people to have at the ready when the next "deal" came along. Guess I'm still having trouble wrapping my head around the whole hard money thing.

Owner financing would be awesome but a lot of the ones I've looked at are bank owned. I have also started looking at some cheaper more "transitional" areas where we could maybe just buy one without a mortgage. That would take some of the carry costs pressure off (not that I would want to take forever on the reno)

Definitely need to take action, I've been letting the financing hold me back forever but I just have to get over it and figure it out. I'm going to draft some emails this week to my partner/potential investor and get their word on commitment levels.

I know some people/family with money that may/may not be interested but I know your not supposed to mix family/money/business. I also wonder if they would want to lend me the money as a favor type thing instead of a legitimate business deal (which I would prefer) with hard contracts, interest rates etc.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28251
  • Age: -999
  • Location: Seattle, WA
Re: any fix and flippers on here?
« Reply #14 on: January 07, 2014, 10:44:57 PM »
There's too many things for me to tackle in reply to that post.

So I'll just say this: If you decide you want to move forward, I'd be glad to give you a call and we can discuss what's holding you back (and discuss that post), but there's a lot of misconceptions and hesitation there.

You can do it!  Read that BP link and take action!  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Melody

  • Handlebar Stache
  • *****
  • Posts: 1089
  • Age: 31
  • Location: Australia
Re: any fix and flippers on here?
« Reply #15 on: January 08, 2014, 03:35:05 AM »
Yeah just a lot of the trendier/yuppie parts of the city even the fixer uppers seem to be 100-150K (although fixed up they are close to 300K).

If I could find an opportunity this good I would take it. How about a low rate credit card (e.g. here in Australia we have promo offers that are 0% on purchases for 12 months) to pay rehab costs? (Obviously you have to have some income to qualify for this, but could your spouse apply for it?)

Longwaytogo

  • Guest
Re: any fix and flippers on here?
« Reply #16 on: January 08, 2014, 09:06:50 AM »
There's too many things for me to tackle in reply to that post.

So I'll just say this: If you decide you want to move forward, I'd be glad to give you a call and we can discuss what's holding you back (and discuss that post), but there's a lot of misconceptions and hesitation there.

You can do it!  Read that BP link and take action!  :)

Yes even as I was typing the post I realized how "complainypants" it sounded". I would really like/appreciate talking to you about it if/when you have the time.

As for hesitation I think it partially stems from the fact that I myself screwed up financially with credit card debt from some misteps from 2008-2011. So I feel like its hard to use other peoples money when I don't have any "skin in the game". But my other partners are fine with it and realize me putting in hundreds of unpaid hours on speculation is equal to them investing their money. So I just need to realize that my income producing/flipping potential is totally separate from my previous debt issues (obviously the idea is for the one to help the other as opposed to currently where I am letting the other hold me back) .

My wife thinks I should wait until we can "afford" it; but if I'm 4-5 years to get out of debt and then 2-3 to save money and improve my debt/income ratio for lending purposes I feel like it will never happen. So I want to move forward now with the partner/s. That being said my wife is on board if I go through with it (we are mostly living off her income anyways while I watch our kids and 2 others). My hope is if I can get started figuring it out and do a few successfully I could move into it full time when my youngest starts school in fall 2018.

I was actually just made aware today of a house that has really good potential for "owner financing". I assume the idea with those is we agree that house is currently worth $X and anything over $X minus renovations is split between me and owner? Are there boiler plate contracts for this type of arrangement, what stops them from screwing me after the sale and not giving me my share?

@Melody - see above -re: credit cards


arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28251
  • Age: -999
  • Location: Seattle, WA
Re: any fix and flippers on here?
« Reply #17 on: January 08, 2014, 09:31:20 AM »
I was actually just made aware today of a house that has really good potential for "owner financing". I assume the idea with those is we agree that house is currently worth $X and anything over $X minus renovations is split between me and owner? Are there boiler plate contracts for this type of arrangement, what stops them from screwing me after the sale and not giving me my share?

That's not a common arrangement, but could work.

It's all negotiable, basically.

Easiest thing to do, IMO, would just be to buy it from them on owner financing, where they write the mortgage for it to you (they're acting as the bank).  You disclose everything up front, that you will be flipping it.  Set some easy terms, like $0 down and no payments for the first year (you'll pay $1 now for the property, some consideration).   They get a price they are happy with (perhaps even more than they were expecting), have no risk as you will be paying a bunch of money to fix up their property (which they can take back as the lender if you default), you get a house for nothing down, can use partner money to fix it up, and then pay for the house when you sell it.

You don't have to worry about them screwing you, as the property is titled in your name.  You own it.  You get the money when it's sold.  They don't have to worry about you screwing them, as they have a lien on the property (same as a bank with a mortgage would) that has to be paid off when it's sold.

There's a million ways to structure it.  That's only one.  The key is to learn about as many as possible, so you can choose the one that is most appropriate for the situation.  Find out what the owner needs.  (Often it may just be a small amount for moving costs.)  Then use the appropriate tool to help them and create a win-win.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Longwaytogo

  • Guest
Re: any fix and flippers on here?
« Reply #18 on: January 08, 2014, 10:10:25 AM »
Gotcha, yeah that makes much more sense. My buddy is their neighbor, I'm trying to get their contact info now. They have already moved out (but house is still full of crap). They had it on market for 165K for 6 months last year (off the market now) with no takers. fixed up ones (2 in the same row) sold for 239 and 259 last year. The kitchen is in pretty good/current condition so biggest items are 2.5 bathrooms, flooring, and paint, small misc. Maybe like 20K remodel budget with 1-2 month time frame and 240-250 sale could be a sweet deal.  Only seen pictures so far though  so  not too excited yet, would have to go see it. Also an end unit so a ton of windows (which have to be historic matches) so if those are shot it would probably be too expensive, but they look OK in pics.

Longwaytogo

  • Guest
Re: any fix and flippers on here?
« Reply #19 on: January 09, 2014, 06:13:35 AM »
Yesterday's accomplishments-

1. Barrage of emails between my partner, Realtor and myself. Looks like we are looking at houses Sunday afternoon. Have 2 -3 picked out so far and 2 rehabbed ones nearby to compare for ARV and check out competition. The one we are most interested in he has not heard back from listing agent; hopefully he will today.

2.Sent email to cash person with questions for how much they want to lend, at what interest rate, and what time frame. I proposed March 1, 2014-March 1, 2015. Any thoughts on a fair rate of return ? They would have no stake in the house so it's essentially an un-secured loan on blind faith in me. Prob in the 25-35K range

3.Talked to my friend about fixer next door to him, he is trying to get contact info for me. He may also be interested in investing in that one himself (with me doing the work). I remodeled 2 of his bathrooms that turned out great. I guess he has been seeing all the flippers around him doing well and been considering getting involved. ( I initially contacted him for opinions/questions on neighborhood since he lives there; had no idea he was thinking about investing/flipping)

4.Read good chunk of the bigger pockets article cited above

Today's plans

1.Find 1-2 more houses to look at Sunday

2.Do some more research into Owner financing in case I can get in touch with those homeowners

3.Try to finish the bigger pockets article

No pre-school on Thursdays though so I have my hands full (4 kids 3 and under) so may not be as productive as yesterday

Questions-

1.If you can arrange an owner financing as arebelspy mentions above what would the terms be for at the end of the year of no payments? I assume if you can't flip it in a year your kind of fucked but just wondering if its a balloon payment (sort of what i imagine owner would want) or convert to a typical payment plan. If my partner and I are in the middle of another deal or whatever neither of us might qualify for a refinance to change it over. I guess you would most likely just strategize your pricing for a quickish sale.

2.I was thinking more folks might be interested in this topic but not many chiming in. Do you think buy/hold is more Mustachian then fix/flip since there are a lot of high earners on the site and more are looking for passive income/asset appreciation vs faster cash/but being part time job?

Thanks again for all the info arebelspy, excited to check things out this weekend!

Longwaytogo

  • Guest
Re: any fix and flippers on here?
« Reply #20 on: January 10, 2014, 10:50:05 AM »
Ahhh!!! The one listing agent had not called back because they were writing/accepting a contract. And our 2nd choice came up with Sale pending on Zillow today. We may turn our Sunday into neighborhood and market research instead of looking any specific houses.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28251
  • Age: -999
  • Location: Seattle, WA
Re: any fix and flippers on here?
« Reply #21 on: January 10, 2014, 11:13:51 AM »
Ahhh!!! The one listing agent had not called back because they were writing/accepting a contract. And our 2nd choice came up with Sale pending on Zillow today. We may turn our Sunday into neighborhood and market research instead of looking any specific houses.

Always more fish in the sea.

Better to get to know your market before making a purchase anyways, it'll make you much more likely to peg the ARV correctly, know what is/isn't a deal, etc.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Longwaytogo

  • Guest
Re: any fix and flippers on here?
« Reply #22 on: January 10, 2014, 08:35:00 PM »
Yes at this point our time is probably better spent doing neighborhood and market research then focusing to much on any individual house. Even with google street view and all modern tools like Zillow and stuff nothing beats walking around on foot. So that's are plan Sunday though we may still check out 1-2 houses.

I'm such a suburban boy it still blows my mind people in the city will live in 200k houses a block or two over from boarded up 5k houses. Some have train tracks, big roads, etc. that make a conscious divide but some appear to have no rhyme or reason. Definitely still lots to learn

GoCubsGo

  • Stubble
  • **
  • Posts: 216
  • Location: Chicago Burbs
Re: any fix and flippers on here?
« Reply #23 on: January 13, 2014, 10:37:30 AM »
I've done the  fix n flip thing multiple times.  I enjoy doing the work myself, but it's important not to discount the time and energy you will need to put in (as that is a cost).  I've taken a kind of hybrid approach.  I buy each house analyzing the potential rental value along with the potential flip value.  I fix and list the house; if I get my ideal offer I sell.  If not, I rent.  I did one this past summer and I got an offer that wasn't quite enough to sell. During the rehab process, rent rates had gone up quite a bit higher than my assumptions so I happily rented it.  It's nice to have a viable exit option. 

If you have partners/lenders involved that probably won't work but if you save up for your own deal, it's something to consider. I'm a Realtor and have also found deals for multiple investor clients and have seen the process from both sides.

For straight up fix n flips, it's important to have your decision process down pat so that you can move quickly (once your comfortable with the overall idea).  The clients that wait inevitably lose out on deals because they didn't have a structure to analyze deals quickly.  If a house comes on that looks like it has potential, call your Realtor and try to get in ASAP as there are often quite a few serious investors floating around that will pounce.  Also try to target a neighborhood or two and definitely get out and see a lot of properties as that is the best experience. 

You don't always hit home runs but sometimes a solid double is a good way to start and get your momentum (and some extra cashflow) especially if you think you will enjoy the process.  I find I work harder and focus more on my day to day job when I'm flipping a house because I kick into another gear and enjoy it.  When I don't have a project I get bored. Not a reason to buy a flip but not a bad reason to make some extra money.  Best of luck!

Longwaytogo

  • Guest
Re: any fix and flippers on here?
« Reply #24 on: January 14, 2014, 02:35:24 PM »
Yes I think having renting as a backup option is a great idea; however as you mention with partner/investor i don't think its going to work at this time for me. In the future land lording is something I'm definitely interested in to grow wealth/accelerate FI.

I need to get my decision making down and still getting comfortable with the whole idea. Defintitley would be happy with a solid double starting out (hopefully not a strike out or could be a short fix and flip career).

I agree with wanting a "project", I worked 30-40 weekends last year for friends/family but I've about exhausted those options. Most "normal" customers do not really want me working on their house the only 2 days a week they are home (I watch my kids Mon-Fri). Plus we are still short living on my wife's salary only (hence all the 2013 weekend work) so even though its a gamble/longer payoff I think it could be a good option for me. I do think I will enjoy the process ( maybe not the buying/negotiating/financing/permits) as much but I for sure like the actual working on the house part. And am willing to put up with the rest