Correct me if im wrong

Correct me if im wrong, but to my understanding this is what im supposed to do.
For flipping/rehab

  1. Find houses I want to buy.
  2. Go to bank to get loan for it and rehab.
  3. Fix it up
  4. Sell it

(For example purposes)
ex. Say I find a house, 40k to buy … worth 60k after rehab.
I go to a bank and get a loan for 40k to buy and 10k to rehab it.
Put it on the market.
Sell it
Pay closing costs. (I don’t know how much that is… Im going to say $2,500)
so I would pocket $7,500?
-how much of that does uncle sam get. Do I pay tax at the end of the year?

Sounds too easy. What am I leaving out. Please feel free to elaborate on anything I left out.

Douh :banghead stupid noobs ahhhh. :biggrin

Yes, you’ve got the basic concept and yes, it SOUNDS easy…

I wouldn’t do a deal that only had a $10,000 POTENTIAL profit. Yes, you will have closing costs, possible realtor fees, holding costs, cost overruns on the rehab, taxes on the profit, etc.

Good Luck,


Right on!
thanx dude.
your probably my favorite one on here so far.

oh, and theres this website that seems like it has good things but they charge like $50 a month. would this be unwise of me?

By the time you take out all of your costs you’ll have no profit or a loss on a deal with those numbers. You should defnitely read this book before you buy your first flip:


I’ve seen FLIP recommended a few times. I have a few other rehab books I’ve been referencing - is FLIP really better than all the other ones out there, or would it be a waste of money to buy in addition to what I already have (I don’t recall the titles, but they all seem to follow the same format).

Well for $13.17 on sale on Amazon even if you only pick up ONE good tip from the book it will pay itself back 100 fold.

Shawn, you can go back and find quite a few threads about RealtyTrac. The general consensus is that their data is stale when posted and not worth the money. In Louisiana whan I was looking actively, they ran about 3-4 weeks behind the local Realtor listings and most of the properties had already been sold when they published the list…

When you rehab, you will be responsible for Capital Gains taxes and probably self-employment taxes…


Well, you don’t go to a bank to get a loan for a flipper. You either sell the contract, take it sub2, lease option it, or get hard money.

…or go to the bank and withdraw the money from savings! :wink:


Just finished the book “Flip”. It is excellent. About halfway through “Find it, Fix it, Flip it” by Corbett and it is not even a glimmer of the book that Flip is. Having said that, for what its worth, from one newbie to another, I can tell you that success will only come from educating yourself and preparing yourself. There is a lot to know in this business-- none of it seems too hard, but a lot to consider nonetheless. I come from a finance background, and I can assure you that the handful of books I’ve read, and REI Club meetings I’ve attended are not nearly enough to successfully do a flip.

My next steps are to start to understanding remodeling costs and to figure out exactly what houses are worth in my area, taking into account with what amenities and what they cost. I plan to start poring through Mean’s Residential Remodeling Costs and start attending open houses. Any advice on how I can do this better?

Any advice on how I can do this better?

Find houses that need VERY little work, for example, only new paint, maybe flooring, some clean-up work, and perhaps some small repair work (like a hole in the drywall, missing vent hood, missing light fixtures). Then slowly work your way up the rehab ladder with each additional property.

Unfortunately, the market I am in is very competitive and houses requiring little work are not discounted much. Houses needing minor repair repairs trade very well. I’m not looking to buy a rehab that has a lot of hair on it, but I realize that a rehab that requires a little “lipstick” isn’t going to be profitable.

The Corbett book is one of the ones I have - if “Flip” is that much better, I’ll definitely pick it up. I have a background in commercial real estate finance & investment (I worked for a real estate advisory company for a few years and am now an Investment Analyst in the RE group for a pension fund), but rehabbing residential properties for personal investment is definitely a different animal - especially when it comes down to execution.

Aside from this forum, I’ve also learned a lot in the last few weeks from talking to real estate agents and mortgage brokers with investment experience.

Estimating remodeling costs is one of my biggest concerns - trips to Home Depot can only tell you so much. When I find my first deal, I was going to bring some pro’s in for quotes during the inspection period. Does anyone have experience with Mean’s Remodling Costs? I found some other remodeling cost estimates that seemed to be a little out of line - I’d love to know if Mean’s is accurate enough to base preliminary estimates on.

Unfortunately, the market I am in is very competitive and houses requiring little work are not discounted much. Houses needing minor repair repairs trade very well. I’m not looking to buy a rehab that has a lot of hair on it, but I realize that a rehab that requires a little “lipstick” isn’t going to be profitable.

Then perhaps you aren’t looking hard enough. My area (central Texas) is very competitive, also, but I still find houses needing very little work for 20%+ under FMV. I just picked up a HUD foreclosure last fall that needed nothing more than a couple drywall holes patched, several new interior doors, and basic cleanup for 77% FMV. I went ahead and painted the whole inside myself, too. Total repair cost: $1,150.

Me too. But I realize I can’t be an expert in everything my first flip. I don’t expect to know what all materials will cost, or many for that matter. However, I hope to know exactly what jobs need to be done and have a good idea what they will cost, as well as have all actual estimates beforehand. I will be using a GC, so I hope that if I can accurately decide what needs to be done, as well as to what level of finish, then my costs should fall within a certain variance of those estimates. As long as I have properly planned these costs, the cost of quarter round should not make a difference, because it will already be built into my offer. If it turns out that I am bidding too low for properties and not getting any deals, then I either need to cut expenses and really pin down costs & materials OR sit and wait until the right deal comes my way.

Perhaps you are right. I very well may need to spend more time seeking these deals-- at this point of my learning curve, I’m not at the stage yet to actively seek properties. Having said that, I’d be ecstatic to find deals like that. Quick question-- what was ur purchase price and sale price?

Sure …

Purchase Price: $96,000
Sale Price: $125,000

Althought I live in a relatively small state, my Area of Operation covers the entire thing. There are in excess of 90 “markets” by my criteria and each one is very different. In all of those markets, I don’t know of one where light cosmetic rehabs are commonly profitable.

I would not spend any serious time or money looking for these properties specifically because they are very rare. Of course, I’d never totally count out any means of finding a good deal but I wouldn’t set my search parameters for these. A couple might pop up during the course of your more routine and fruitful searches, but “easy” and “profitable” aren’t usually in the same sentence. In terms of ease of work and yield, light cosmetic projects are home runs if you can find one that’s profitable. Singles and doubles win the games though. In terms of “net” revenue generated, light cosmetic projects suck compared to the more involved projects. Big money is reserved for big projects. Home run paychecks beat home run- easy work any day.


Even though you’re not in a position to start buying, it will be good if you can start looking. Chances are, you won’t find anything for months. You can either start that process now or become frustrated when you want to buy and can’t find anything.

I think I’m vastly underestimating how long it takes to find deals. I’ll start looking now.