how do i becoma a house flipper?

Question

I am really really interested in flipping house for profit. I live in central california and know that i could do this if i just knew where to start. Do i need to take any classes or go through any type of schooling? There a few properties i am looking at right now that are very cheap but the houses need a lot of work done to them. I am interested in doing this fulltime eventually but would like to start with just one home to see how it works and eventually my sister and mother would like to get involved. I have a lot of people i can get to do most of the work for me for pretty cheap and friends and family will help at first until i know what i am doing as much as i can...
do i need to go to realators school or get any kind of special license or permit of some sort... and also how do easily get loans for this sort of thing? i am only 23 will be 24 next month, and i had bad credit wheni was younger and i am just trying to build it back up, my mom or sister will help with this....

Answer 1

I seen some good article about it at http://www.flipping-homes.com

Answer 2

IF you decide to do this it COULD be one of the biggest mistakes of your life. Why do I sa that, you are 23, bad credit, NO knowledge of even how to get started, NO funds in the bank, NO construction/rehab experience and you are WATCHING a TV show for "get rich quick" ideas.
First of all, do you notice that the SHOW always quotes GROSS PROFIT and NOT net profit? Wonder WHY? Because if tey showed you the REAL numbers then you would NOT want to watch people LOSE money and that does not make for good tv.
AND try to figure out WHEN the show was taped; the real estate market HAS turned and NOBODY can "flip" in a declining market. The ONLY thing that saved MOST of the "flippers" was the fact that the MARKET was red HOT and you could make a TON of mistakes and still survive but there is NO possible way to flip currently without a big bankroll behind you, experience, knowledge of contstruction and local real estate, a TEAM behind you.
When little old ladies are writing books about the "killing" they have made in the stock market THAT is a sign of a market top. When there are 7 shows a WEEK on "flipping" THAT is a sign of a market top.
Real estate INVESTING and FLIPPING are NOT; I repeat; NOT about the properties. IT is about numbers, financial management, rates of returns, risk management.
First you need to have a VERY solid background in the local market to be able to identify properties that MIGHT be used to produce a profit; then you need a team of experts who can put together a budget for construction/remodelling costs, a financial plan on how you are going to structure and carry the debt during the project, are you going to hold title in your name, a LLC's name, a C Corps name? Who assumes the risks and provides the credit required for the transaction? What are the tax liabilities? What is the rate of return you will get off the project? What are your exit timelines and stratagys?
Who is your target market and what are the marketting costs to locate, identify, and qualify that prospect?
I remember one "flip" shoe that showed a couple in southern California, who bought a house for $1,100,000.00 and "invested $300,000.00 and then sold for $1,500,000.00 and the show THOUGHT that was a success story. Sorry to bust your bubble but you have about 10% closing costs on the buy and sell sides of a flip so on a property that sold for $1,500,000.00 your closing costs ALONE would be around $150,000.00 and JUST that small detail makes this a losing project not counting, time, effort, $ risked, for a 50K LOSS. Good tv; bad investing. AND this was when you could buy ad SIMPLY sit on a property for a year and then resell for big profits.
What are the odds of making a profit when the avg. price is FALLING?
Watch the shows and see what they LEAVE OUT and then you MAY have enough of a clue to know that this is NOT the time to "make more money in a few months then you made all of last year".

Answer 3

This is not the easiest business to get into. There are a ton of pitfalls you have to watch out for.

You should probably read Robert Kiyosaki's real estate riches, it discusses this business in great detail.

Go house shopping. Look at about 100 different houses. This will get you to learn the prices and the market really well.

When you find a good deal you will know right away. Buy it, fix it up and try to turn it around for a profit.

I would try to live in the first few homes you flip to avoid capital gains taxes. This also cuts down on your extra bills and possibly mortgage payments. You will have to live through construction zones, if you can handle that, but it will be a lot better short term.

After you have flipped a few, then you can start to bank some cash and carry the costs while you repair and get ready to flip the property.

Try to learn how to sell the homes yourself without a realtor if you can on the first few to save on commission. These could be precious dollars at the beginning.

Answer 4

I don’t recommend starting such a business now, but….

You should find an experienced real estate agent who can help you find houses at the right price and can advise you on what to do to your projects to make them sellable without over-improving.

Next, make sure you really understand how much materials cost, how long projects take to complete, and what your local building code requires. Always assume you will spend more or that the project will take longer than the estimate.

Never assume that your friends and family will help you, even if they’ve promised because any number of things could happen. You should have an idea of what you can do or what professionals will cost you because the only person responsible for completing a project is the one whose name is on the mortgage.

I bought an as-is fixer upper about four weeks ago. This is my primary home, not a rehab project, but the task has given me an appreciation of how difficult this process can be. We got an inspection so we knew what was wrong, got estimates from professionals, and priced materials at Lowe’s & Home Depot. We have had crews of 2-6, working 4-5 hours a night and 8-10/day on the weekends, cleaning, painting, redoing floors, etc over two weeks before moving in, and the work continues on. Every single project has taken longer and/or cost more than we anticipated.

I hope you do not ask your relatives to get financially involved in this. It is difficult to make money on your first flip (or several) because you’re just learning the process. To ask someone else to risk their credit to help you take a big financial risk isn’t really fair to them.

Answer 5

You've picked one of the worst times possible to engage in such a venture. Right now the real estate inventory market is flooded with available properties due to the wave of foreclosures currently occurring. Be prepared to sit on the market with your completed project for a bit of time.

You will need financing to procure the property, plus a sizeable line of credit with which to purchase materials and pay for the upgrade labor involved. Depending on California rules, you may need a builder license to legally renovate such a property. Certain work may also be mandated to be performed by licensed professionals, such as electrical and plumbing.

You will only be able to get financing for properties at or below the amount which you pay for the property. Any improvement expenses will have to be financed in other ways.

Expect to hold the property for at least six months before attempting to resell. Some of that time will be spent on renovations and upgrades.

Know the market in which you select the property very well before jumping in. It's easy to over improve a property for the neighborhood in which it is located. You need to find a property that, when renovated, fits the market prices for the area.

Do NOT make the error of underestimating costs. When you buy properties for flipping, you may discover that you bought more of a repair job than you had anticipated. Inspect carefully so that you know exactly how much work you are going to need.

Good luck.

Answer 6

Go work construction for 3 years.

Make sure every year you change trades.

Do electrical one year, then plumbing, then remodeling.

You will need this experience to do the work yourself.

If you plan on buying a home and hiring a general contractor to do the repairs there will most likely NOT be any profit left after paying the general contractor.

Hope this helps.

Terry S.

http://www.Welcome2Arizona.com

Answer 7

you need to be able to qualify for a mortgage and be able to make payments for as long as it takes to fix it and sell it - could take 12 months or more in a slow market.

You need to have cash to do all the rehab work $10-50,000 - can't get a loan for this

flipping is not for beginners who don't have any money or don't already own their own home and in the current market where house prices are going down more than up - it's useless to even think about doing it

Answer 8

How are you going to be able to figure out what needs to be done to repair the house and how much will these repairs cost before you buy the home? The biggest mistake I see I people have no comprehension of what it takes to build/repair a home and always underestimate the costs involved. Then they complain the entire time about it.

Answer 9

sorry to see u doing this to urself.
ur enthusiasm far exceeds ur knowledge or probably money. DO u research first. Build up piles of cash that u don't mind losing.
find some one local that has do this with profit and work for them.
understand ur estimates of work to be done will be lower and cost more than thought.
visit daveramsey.com to learn ur hard lessons from others mistakes. it is cheaper.