I'm a 19 year old college student. Recently, I've been interested in trying to flip a house. I was wondering how I would go about this? Most important, is it possible to get a mortgage at my age?
2006-12-30 08:42:54 · 6 answers · asked by Billy188 1 in Business & Finance ➔ Renting & Real Estate
Your age isn't really the primary issue.
But first, let me say that trying to "flip" a house is risky, and you don't need to be taking that kind of risk at this stage of your life. (How risky, you ask? In the past year, the real estate "bubble" has burst over much of the country, and the once-easy money that could be made by flipping has turned into a nightmare for many people. The NY Times had a recent article about smart investors in Naples, Florida who were caught by the downturn. Rather than "flipping" property they bought, then were forced to sell (because they couldn't make the mortgage payments on the property they thought they would flip in a month or two). A couple of typical stories: One property was purchased 8 months ago for something like $1,050,000. It sold at auction for about $850,000. The investor lost more than a quarter of a million dollars on this venture. Another bought a property for $505,000, and sold it for $395,000, more than a $100,000 loss.
"Flipping" successfully required good timing, and nobody can predict with 100% accuracy when the time is just right. One thing is for sure, the time isn't right. (Right now, in Ft. Myers, FL, where I live, there are more than 13,000 homes for sale. This time two years ago, there were about 4,000 homes for sale. The supply of houses of way greater than the demand, which means dropping prices.
Enough about the wisdom of trying to flip at this particular time.
In order for you to get a mortgage loan, the lender wants you to make a down payment of 20% of the purchase price. Then, the lender wants to see that you have the income to make the payments on the property you buy. (And the lender wants to know that you can make payments more than a few months, but for potentially for a few years.) As a college freshman, you likely don't have that kind of income.
So, for two very good reasons, you should forget about trying to flip a house. A large number of people who are much more attuned to the real estate industry than you are have lost a LOT of money doing that. Forget about it.
Spend your time working hard to make very good grades. Then, apply for all the scholarships you can get, based on those grades. That will be much more valuable to you than the "flip" you want to do. And there's absolutely NO risk involved.
Good luck.
2006-12-30 08:56:38 · answer #1 · answered by David545 5 · 0⤊ 0⤋
Age has nothing to do with it, ability to repay does.
Considering that you are a student, you do NOT have the time to devote to flipping a house at present. That requires a time committment on the order of 70 - 80 hours per week during the remodeling phase.
Get your degree and get your finances in order first. Flipping houses will come along later. If you are seriously considering this, I'd take some electives in real estate, construction management and business management if you're not majoring in those areas already.
It would also be a good idea to get training in basic carpentry and electrical and plumbing work. Successful house flippers put in a lot of sweat equity to keep costs under control. If you're not good with your hands, house flipping is probably not for you.
2006-12-30 17:07:21 · answer #2 · answered by Bostonian In MO 7 · 1⤊ 1⤋
The only loan you can get from a traditional mortgage co. is a true no doc loan, where income, employment, assets are not checked. Here's the catch, you will need to have excellent credit and doing this type of loan on an investment property will require a significant down payment, probably 20%.
The other type of loan you can get is a hard money loan. Real estate investors will use these types of loans as a short term investment strategy when they have no other option. Again, income, assets, employment not verified, but you typically will need 35% down for a down payment.
2006-12-30 16:51:50 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Unless you have the income to back up the payments and 2 years in the same line of work, you would have to have someone else like a parent be the primary borrower. But, your age of 19 doesn't matter.
2006-12-30 16:53:06 · answer #4 · answered by staceydian 2 · 0⤊ 0⤋
GOOD CALL Billy!
Real estate investing is one of the most powerful ways to build wealth. I commend you for realizing this at such a young age.
We have a young man on our team that is currently working on real estate aqusitions and investment. He can tell you everything you need to know. His name is Kyle. Just drop me a line if you would like to speak with him.
The most important consideration for one intending to invest in real estate is his or her credit or FICO score, so that one may get the best rates. Do you know how BIG a factor your credit score plays here?
Take a look:
If your FICO score is... Your interest rate is... Your monthly payment is...
720-850---------- 5.72%----- ----- $872
700-719---------- 5.84%----- ----- $884
675-699---------- 6.38%----- ----- $936
620-674---------- 7.53%----- ----- $1,052
560-619---------- 8.53%----- ----- $1,157
500-559---------- 9.29%----- ----- $1,238
Having stated that, what's your credit like?
2006-12-30 17:12:14 · answer #5 · answered by Anonymous · 0⤊ 0⤋
I have ties to a hardmoney lender (investor) who specializes in flipped properties. Check out the situation evaluation form at
www.totaldebtsolutionsllc.com
2006-12-30 20:40:55 · answer #6 · answered by Anonymous · 0⤊ 1⤋