I would like to get involved in flipping houses.There are tons of houses available in my neighborhood for sale.
My worries are:I filed for bankruptcy a few years ago,and I only have about 5K of capital to get started with.
Any advice from all you Big Fishes would be greatly appreciated.
not a big fish, but have you considered wholesaling rather than flipping?
I don’t know much about it,but I am all ears.
Shaggy,
What do you consider flipping?
You know,buy it,fix it up,then sell it.Am I at the wrong place for that?
I just asked because flipping can mean many different things. For the sake of clarity, let’s refer to buying, fixing, and selling as rehabbing.
Your starting with $4,900 more than I had when I started rehabbing and I didn’t even have a credit score then. As I did, you will be looking to hard money to fund your deals in the beginning. There are some extremely flexible HML’s and some that are conventional lenders who like to charge high interest rates. Just keep looking around.
You stated that there are tons of houses in your neighborhood for sale. A lot of available inventory = Bad deal. When you need hard money to fund 100% of everything, your deals are not going to come from a listing agent. They will be the boarded up, forgotten-about properties in serious disrepair (some construction knowledge will be helpful). The owners are going to be using this property to store all of their junk. This property will be very uncharacteristic of the neighborhood. On a minimal budget, the best way your going to find this property is to walk/ run/ drive around areas where the houses are older, but still in decent condition for the most part. It will be very difficult to find the owner; they might be in jail, a nursing home, out of the country, dead, etc.
All and all, your fighting an uphill battle with bad credit and no money, but you knew that. You’ll need a property that you can buy for 30-40% of the after repaired value (ARV). Properties like this are not easy to find, but it’s the only thing you can consider in your situation. Your goals of rehabbing are certain attainable, but it will take more work than the average rehabber to get started.
Good luck.
thanks Danny.That is kinda what I figured.I will say That I am not in a big hurry,as I would like to amass more capital and try and improve my credit.I have a decent job right now,so I will have more money to work with in the near future.
I think that is why you may want to consider “flipping” instead or “bird dogging” to start out. Flipping,in a nutshell,is finding “anxious” sellers who are willing to sell their proerty below market price,putting property under contract for a fee to a cash buyer who wants to renovate and sale or fix and rent. Does that help out?
What you described is wholesaling. Correct me if I am wrong but I believe the term flipping is associated with an illegal type of real estate transaction.
Shaggy, you may want to take Tom’s advice. If he didnt say it I would have. You may want to start off wholesaling properties or just bird dogging. I am not sure what type of experience you have with real estate so that will be a good place to get your feet wet.
Rehabbing houses is going to take quite a bit of knowledge and I wouldnt suggest doing that as your first type of deal. There is too much that can go wrong.
Good luck
Could be that the action is the same but has different terms. Because,as I stated,what flipping is and wholsaling are the same thing,correct?
Well in some states, to even use the term “flipping” is illegal. (i.e. Maryland) I believe the term flipping was first used in commercial real estate deals. Flipping means flipping papers not property. So actually by definition they are different but we ( the real estate world ) have made them into the same thing by misusing that word, but usually when someone says flipping they mean rehabbing.
Whatever you want to call it–flipping, wholesaling–get started doing it. Even if you have stacks of cash because that is the foundation for everything else. You need to buy the properties wholesale if you want to rehab or hold. Also, you can get paid while you learn the business. That, imho, is the best aspect of wholesaling.