House flipping?

[scarlett]

I'm thinking about getting into the business of house flipping. Has anyone done it before? Any tips, tricks, advice?

[Sonicstef]

The market is starting to soften so it may not be the best market to invest in for a quick flip. Of course it depends on your area but I would be weary.

[DiscoDiva]

I'd be leery also. My brother just tried this and now he's stuck with a home that he can't sell and he doesn't have the money to fix it up. I imagine the only person who will buy it is someone who wants to flip it also.

[hmbay]

check your local laws--I know our state (MN) has a regulation you must hold onto property a minimum of 90 days before you can even think of listing it for sale--it might even be a federal law. So make sure you can handle the mortgage for 3 months plus the expenses to fix it up. Also remember there are expenses in hiring help vs doing the work yourself and realtor fees to pay to buy and sell as well as mortgage fees to take out a mortgage. You can make money flipping but a lot of first time flippers forget about some of those fees/costs and end up making a lot less than they thought or even losing money in the end.

[Tanya]

I think the overabundance of these shows on TV have made this seem a lot easier than it is, when, in reality, the flippers were in a very hot market--right place and time. Most of these are in CA, and if you tried some of these flips now (vs. a year or two ago), they might not go as well. I agree with the PPs in that costs add up incredibly quickly, especially if you're not doing the work yourself.

Disco, I'm curious, if you don't mind me asking, where did your brother try this?

[Sha259]

ITA with all the PPs. Be very careful in any decision you make. Flipping is definitely not the hot ticket it was 3 years ago, or even last year. Like a PP said, unless you are in Cali and can find a property well well below market value that you can flip within 3 months for little to no money on your part, I would say pass. But if you have good grip on all the fees, labor, materials, mortgage payments, time etc. that it will cost you, well then it's your decision.

[scarlett]

I'm definitely taking my time and doing some research before taking the plunge into this. I appreciate everyone's comments. Right now I don't think the market around me is that great, but I'm still looking into it (the market).

The TV shows did get me thinking about it, but I don't think the shows make it look easy. The other thing that got me thinking about it is the remodel we're doing of our house. I'm fairly annoyed with our contractor and figure I could have done most of the same work (hiring out the actual work to be done, but organizing and designing the work).

Like I said, this idea is just in the thinking stage so it'll be a while before I actually do anything if I decide to do it. Thanks for the advice so far and keep it coming :)

[jennylou]

My bil has been rehabbing and reselling houses over the course of the last year.

As someone else mentioned, you need to check out the local/state laws.

Here, flipping is illegal. Rehabbing is not. And there is a difference. BIL has been in the rental business for about 10 years, so he had a lot of contacts (ie banks, plumbers, drywallers, electricians, etc). He gets a lot of good deals. If he simply went out and quoted a job without knowing people, he wouldn't get the deals he gets. And thus, that's able to equal a better profit.

You may think that the organizing and designing work, and you might be able to. Do you work full time? It's going to take you that much more time to finish a house. Trust me, working full time and rehabbing a house is not much fun. We have a rental house that we rehabbed the summer before our wedding. We both worked full time. Then we came home, ate dinner and went to work until midnight or later every night. Sound fun? I'm just throwing that out there because that is the reality if you want to not take six months to a year rehabbing a house. We have another house that we've been rehabbing (not as aggresively) and in between our full time jobs and keeping up on our other rentals, well, it's been two years and it's still not done. It's a good thing the other rentals are able to carry it, because between the mortgage, taxes and insurance, we'd be eating a pretty penny. Oh, and insurance, much more expensive when it's empty and you're rehabbing.

As for the tv shows, the one on TLC is a comedy show to us. The one on A&E is a bit more realistic to us because they are pros. But remember, they are pros with a deep pocket book and lots of contractors.

[mayiko]

The TV shows did get me thinking about it, but I don't think the shows make it look easy.


I agree the shows don't make it look easy at all. The flippers are ALWAYS overbudget and go well beyond the deadlines.

[Tanya]

I agree the shows don't make it look easy at all. The flippers are ALWAYS overbudget and go well beyond the deadlines.
What I meant was they almost always make a profit, even if they go over budget. Another thing about those shows that bugs me is they never take into account the realtor fees, closing costs, and most importantly, taxes when they say what the flipper will walk away with. In reality, it's about 30% lower.

[thedoorchick]

What kills me is these people on TV bemoaning their overbudgeted-ness, and yet somehow there is always money there to finish the job. Where do they get it from?

[craftgenius]

I love the show on TLC...I think it is called Property Ladder? I love to see the big changes that they make in fixing up these houses! Pretty amazing! I'm also amazed when I see how EXPENSIVE those California homes go for!!!! Homes WAY smaller than mine go for almost a million dollars!!! WOW!

[wonderpup262]

IMO, it's too late to get in as an investor or flipper. The market has turned. Give it a couple of years and then get ready for some bargain hunting!

[pookiebear]

It is not a good buisness to get into if you don't have extra cash to spare. It often costs more to fix up the house and get it to code than expected, plus there is always the chance that you will not make as big a profit as you thought. If you are looking for "quick money" then I wouldn't try this, but if you have money that isn't essential to your living expenses and you enjoy remodeling then I would consider it.