Hello everyone. here is what I am facing. I currently have a house that my wife and I inherited and are planning to sell. We will be able to sell north of 200k after about 20k in renovations. It is paid for so will all be profit. I have a decent saving that I could live of of for about a year and a half. Her life long dream has been getting into flipping houses, seeing this opportunity now it’s possible. The thing is that she wants me to quit my day job and focus on the house full time so we can sell while the market is as good as it is. I’m not necessarily opposed because I HATE my job but would be a bit reluctant to make that decision. Considering all factors, what would be advised? Thanks
With all due respect, your wife doesn’t know what she’s asking you to do.
Keep your day job …until you can successfully replace the income from your wholesaling.
Meantime, make the house you inherited clean and functional, and rent it out. You need experience managing property. You don’t need experience remodeling, nor do you need the cash from it to wholesale deals.
Meanwhile, you were just given what takes 30 years for most people to acquire, and now you’re gonna sell it? What on earth for? It will bring in free income, that you can reliably invest into your marketing budget for your wholesaling business. That is, your renter is gong to help pay to find deals for you.
If you’ve got a year’s worth of savings to live on, then you’ve got enough hiccup money already on hand to blow on some mistakes, while you’re learning the business.
Once you’ve learned the business, which includes learning how to prospect for, negotiate, and close on deals (or flip them, etc.) and maintain a pipeline of them, then you can consider quitting your job.
Before you plow into this business, spend $3K on some training …Todd Toback, Sean Terry, Ron Le Grand, or ?? Each has a significantly different slant and approach, but all are massively successful at actually doing this business. These are my current three favorite (living) wholesaler “gurus.”
***As an aside, new investors with money, are notorious for ending up as retired investors with no money. Why? Probably because having money made them sloppy and unprofessional, if not reckless in their decision making.
Operate your business, as if you had little money, but negotiate as if you owned the world.
I really appreciate your advice and agree, the thing is that my wife is really not wanting to be a landlord. Besides that, the house was her dads and she wants to completely detach herself from it, I guess our situation is a little different. Either way it goes, we want to invest and real estate is where we would like our investments to go.
Your wife needs to get over her neurosis.
Your wife is turning a business decision into an emotional decision.
You’re already invested free and clear in a two hundred thousand dollar property. Anything you do to liquidate that investment is going to result in a financial loss. Commissions, fees, taxes, and the list goes on.
It would be cheaper for you to buy a house far enough way, that your wife never sees that other house again, than it is to sell it, to get cash.
That said, after you’ve learned to manage property, you could then borrow against that house, and use that money as a down payment on good-sized multifamily income property. Now you’ve got a house funding your down payments on some apartments, and your apartments are now funding your entire wholesaling marketing budget.
Later you buy some commercial space where you locate your wholesaling and property management offices.
All because you kept that house and made it work for you, instead of letting your emotions influence you into making stupid, short-sighted, financial decisions.
:beer
I appreciate it, I think I will just keep my questions at BiggerPockets. But seriously, Thanks.
You’re welcome. Good luck at biggersuckets. Seriously.
I guess that “Advice Needed” turned into “Advice Not Wanted”
:beer
I actually didn’t mean any disrespect towards you or this site, just wanted to find an alternative compassionate peice of advice given the situation. My thank you was not sarcastic.
I understand. Sometimes I forget what I sound like… Using the word stupid to refute an alternative, for someone wanting help is, well, ‘stupid.’
My apologies.
Follow your dreams. Definitely fix and flip the house and use the proceeds for something bigger. I learned a lot from the school of hard knocks if you want to go that route (nothing wrong with it) or you could search the message boards for your questions or hire a mentor which may save you time and inspire you–it’s all up to you.
Should you quit your day job? Depends. How much do you make? If you make $25K a year, quit because that’s lost opportunity cost and you can definitely make more on your own and you’ve already saved enough to live a year and a half on your savings, which is more than enough time to fix and flip that house. I don’t think you’ll go broke because you sound like an ambitious person and ambitious people know how to seize good opportunities.
If you make $100K+ a year, I’d say keep the job you hate. That kind of income looks really good these days on your application when applying for a low interest mortgage to buy rental property plus it gives you stability and savings to get you moving faster to where you want to be in your life.
Quiting a job in the current economic situation has to be a well-thought-out decision. In another hand, since you hate that job, maybe this house is the opportunity for you to start another life and we all know how short life is so I’d say listen Madam and start working on that new real estate project.
But as it’s been said before, this gonna be your new job and as to be considerate as such, make a living of flipping houses is harder than it looks on TV. Take the time needed to learn the business and make sure you have adequate savings in place to carry the house, utilities, insurance and maintenance.
Wish you good luck in your adventure
I urge new investors to also consider owner financing property. My mentor has become very wealthy by owner financing affordable homes in TX. Bought in the right area, you can net over 15% cap rate with ZERO repair costs. Zero. The occupant maintains the home.
This is a wonderful cash flow model! I love it. I own two and I am working on getting more capital to buy more.
I’m new here, So the only real advise I have will be from my own experiences.
I have a house that has been paid for for10 years. 120K range. tried selling and could only get low bids of 85 to 90 k . really didn’t want to dump my investment. I rented it for about 4 yrs and rental income is about 11k annually. Not enough to retire on but is a nice added income to our salarys.
last year I went in and did a refinance of that house borrowed 80k against house at 3.99% with no money out of pocket for refinance costs. Used the money to finance my new house. A forclosure on two acres 58K in the country. rehabbed that home and now have a 150k home in the country with a small pmt. of $330. The house in town is rented and makes the pmt on our new refurbished home .
A friend and myself now have just signed the papers on our 41st rental property (all single homes) with no money down. It gets easier as you grow in business. I would change some purchases we have made. We have flipped a few along the way (9 yrs). but most are rented.
We both have full time jobs, which provide health insurance and lets us fully invest in our retirement programs… Thats the most costly expenses we face today. The banks like the fact were not living off of the rentals. Makes the repayment option look better as far as cash flow.
I have a few rules as a landlord.
Rent to no friends or relatives, they will be the first to take advantage of you.
Partner is the nice guy they deal with on a daily basis. im the one he warns u about .
I drive by my rentals pretty often, just to keep an eye one the yard, whats going on there.
I get to know a neighbor when we do the rehab. they are eyes and ears watching the property.
Remember if the bank says no! there’s another one down the street, we currently are working with 5 banks. That’s my version. it’s working for me, but only you can decide what’s best for you.
Son started doing his at 25 now has 8 houses , with a refinance going through right now . his first house and his truck will be paid for next week. He was 30 in April. Again no money down.