The most fulfilling career I see is real estate development (building houses and selling). Help needed though?

Question

I'll get straight to the point - I almost need someone to give me a step-by-step on how to get to this point (ie. any licenses needed, credit, etc.).

Do you buy your first house, flip it, take that profit, do it again until you have enough to actually build a house?

Thank you in advance.....

Answer 1

wow! the answer to this question cannot be contained in this forum. & even if it could i'm not sure a professional would be willing to share the secrets of how he/she makes their living. some things you have to learn by trial and error. it is not a simple thing that you want to do. you will have to teach yourself. there are books & classes on flipping, and construction. there are even forums where people with similar goals share information. (can't think of the website offhand but you can do a search to find out).

i am studying for my real estate license now and know that you don't need a real estate license if you are going to build houses to sell, or if you buy a house fix it up & sell it. you would only need a real estate license if you assist someone buy or sell a house for a fee.

you will have to study & learn all you can about flipping and/or building. my nephew got a degree in economics & worked as a financial advisor for a while, then he got into building houses by going in with a partner who knew a little more about it. he did okay (takes a long time to really get good at it and prosper). but now with the present mortgage crisis he has not been able to sell many houses since people are having trouble getting loans. the longer he has to sit on a house before it sells, the more money it costs him. so he is not doing too good right now.

what you are wanting to do is an ambitious task. but i believe you can do it if you are determined & committed to learning as much as you can. good luck.

Answer 2

What generally makes money is time. When you buy a house for 100k, why would someone want to buy it immediately from you for more than you paid? Real estate values do generally go up as time passes, but it does not happen instantly. A flip is usually a property in horrible condition that the seller will let go of for cheap. Now comes the reconstruction. Then you sell it for a profit. On the other hand, if you build from scratch you can then ask for a profit. The difference is with a flip you are not starting from scratch and it is faster.

Answer 3

I work with investors and builders all the time. There are many facets to this side of the business. First and foremost you will need to know alot about market conditions; not just average price. You will need to know current conditions of the market ie. market value, absorption rates, average days on the market, increasing/decreasing market trends, consumers wants and needs, avaliability of inventory etc.

Another aspect will be finance. Will you u purchase using bank funding (if so, calculate closing costs, holding costs, realtor commission, construction costs, transfer taxes, pre-payment penalties etc.). All the investors I deal with use cash. Bank financing can kill the deal. Also, you would want to speak with a good accountant and lawyer (ask about 1031 exchanges, tax free benefits up to 500k).

You would also have to know about zoning if you are building a home. What is the minimum lot size, setbacks, maximum lot coverage, building height, uses, environmental conditions. Process of building homes ie. permits, approvals necessary etc.

Another major issue is finding under valued properties. Will you purchase at auctions (foreclosures) or find through a realtor. Again you will need to know the true market value before you purchase. Many people overpaid in 2004-2005 in speculating an increase in market value and when they tried to flip they got stuck. You should know the current market value and make offers accordingly.

Also you need a network of good contractors.

These are some brief points before you take the plunge. All of the investors I know (i'm from NY) who make a living flipping properties are loving the market right now. The trick is to really know your market area well. They are purchasing properties in foreclosure about 30-40% below market however the homes are in need of major renovations and they take about 2-3 months to sell on the open market. Since they purchased the properties cheap they sell them at good prices (usually 2-5% lower than the competition). Most of the builders in my area are taking it easy because they are at the top of the market (price wise) however, they are purchasing old houses, rebuilding the site and renting them out till the market gets better.

Answer 4

Alas , you picked the absolute WORST time to get into building & selling .

Best to wait a couple of years for the market to turn back .
Study while you wait and do something that will actually earn $$$ until then .

R E would be like trying to sell furnaces in LA now .

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