Flipping houses

holy 10/10

Have a network of tradesmen you can get to work for cheap paying them cash.

ie Learn spanish. And get a realtor's license so you don't have to let some part time housewife to eat into your profits. FSBO.

Only buy houses that you can get cheap

It's easier to just get a rental house and collect the profits.

I'm not the most experienced flipper, but bought 8 properties this year and flipped 3 of them. Others I'm keeping for rentals or are in the process of being renovated / built.

My strategy is buying super low shit houses. Usually houses that scare other investors away. I look for mold, foundation issues, water issues, and major rehabs. I own a construction company and have 30+ employees so I keep it almost all in-house.

I won't touch anything rural or high-end. My flip purchases this year were $100,000 .... $155,000 ... and $120,000.

I finance them through a local small bank. This is the approach I came up with that works to do this with little out of pocket ... The 100k house is worth $175,000 after rehab. I have the appraiser go to the house and give us to appraisals, the first one being the current value of the property, and the second one being the "after rehab" value of the property, which he will derive from my construction statement that I will also give the bank. The bank will then loan up to 75% of the rehab value, but will only loan up to 100% of the purchase price. So I am on the hook for the repair bill, but once the repairs are made, the bank comes out and inspects the house and then will rewrite the loan for up to 75%. So $131,250. They then cut me a check for $31,250 and I can use that to fund the next project while we wait for the current one to sell and close.

This year ...

Flip 1: Bought 100k, sold 165k ... approx 25k profit
Flip 2: Bought 155k, sold 243k ... approx 4k profit ... this one sucked.
Flip 3: Bought 120k, sold 185k ... approx 30k profit, but also I sold on contract for deed, so there's $250 cashflow per month

There's my 2 cents.

could you elaborate on the process of getting your finance? it seems to me the only reason the bank would loan you because you already have your own construction company.
Do you think you would have gotten the loan to buy the houses if you did it without your own official company?

also - did you ever buy anything wayy less then 100k and turned profit? or is this the magic amount

to continue from
i actually have a network of tradesmen that i know in several specialities so i'm thinking about using this to create my own company and sort of do the things you did.

What do you think is the smallest amount of employees you could start working houses efficiently?
how much capital should we bring with?
any tips what to look out for or things you learned the hard way?

thanks in advance

I'm not sure if it was the construction company or not. My credit got trashed in the 08 collapse, they had a couple of questions about some marks on it that I had to answer to, but at the end of the day they said they really didn't care what my credit score was. Pretty much they said they are looking for competent people that have a history of doing deals/running a business. As long as I had a path to 25% equity in a project they will pretty much finance anything I bring them. They only look for 20% equity on new construction. Major rehabs, $80k+ they just write as construction loans.

You're going to have to bring something to the table for them to work with, either business history, credit scores, or money. You could probably team up with someone too.

Other than that, I'd get your real estate license.

As far as the 100k purchase price, this is just what I'm comfortable with. I figure anything way above that will be hard to cash flow if I had to rent it out, if it couldn't sell. If you're buying at $40k to 60k, that means nobody wants it and you're looking at some pretty outrageous repairs or in a shit neighborhood. I currently have 2 offers out there between 40-50k. One of them has a boiler that froze and exploded, so that could be fun ... the other has some major foundation problems. And I'm closing on a 93k next Friday.

I think 3 guys working on a project is the most efficient. 2 guys that know what they are doing, and a peon that just helps out and moves 2x4's all day. Use a temp agency to start with.

My ideal project costs $30,000 to complete and takes 3 to 5 weeks. I've had them range from $6k to $80k.

Find local mom and pop shops that will finance some of your costs. The place I buy carpet from will hold my bill for 90 days, and charge me 1% interest per month. My electrician, plumber, and hvac contractors hold me 60 days, more if I buy them beer on Fridays. I load up all the materials on my Chase Sapphire card and uses the points for vacations.

Be very nice to the building inspector. Ask his advice on stuff, even if you know the answer. They can literally be your best friend or worst nightmare.

If you aren't going to be working the job, at least get out there every other day. Employees love to find time to fuck off and milk the clock. If they drive company vehicles, get a GPS tracking system on the vehicle so you can see where they are at all times. I use fleetmatics.com but I think there are cheaper alternatives.