FLIP THAT HOUSE

[Bretsky]

Anybody ever watch this TV show ? I find it interesting.

Anybody ever tried the concept ?

Retailguy would chastise me for even attempting this......but

I've been in the Home Loan Industry for over six years. I've always been interested in trying to buy a home, fix it up, and sell it.

This week I finally went forward to make my first effort. Made a formal offer on a home that needs 5-10 worth up upgrades...mostly cosmetic upgrades and some plumbing. I think it has a nice upside and if I can get it at the right price money can be made.

The bank counted my initial offer and I have now submitted the second counter offer. IF I buy the home it will have to be at my price or I will have to pass on it.

Anybody ever tried this or have any advice ?

[Scott Campbell]

I haven't done it, but check to see how much current inventory there is at the price you expect to get once your done. And I'd probably look at a few of those homes too to make sure you'll be competitively priced.

There are some markets in the US right now where I wouldn't touch this with a 10 foot pole. Too many sellers. Not enough buyers. Rental property on the other hand is looking far more attractive, as there are so many more people now who can't qualify for a home loan.

I could see B as a slum lord, giving discounts and move in help to hot lesbos.

[Freak Out]

Be careful....but I think real estate is always a great investment. Think about renting it.

[retailguy]

Anybody ever watch this TV show ? I find it interesting.

Anybody ever tried the concept ?

Retailguy would chastise me for even attempting this......but

I've been in the Home Loan Industry for over six years. I've always been interested in trying to buy a home, fix it up, and sell it.

This week I finally went forward to make my first effort. Made a formal offer on a home that needs 5-10 worth up upgrades...mostly cosmetic upgrades and some plumbing. I think it has a nice upside and if I can get it at the right price money can be made.

The bank counted my initial offer and I have now submitted the second counter offer. IF I buy the home it will have to be at my price or I will have to pass on it.

Anybody ever tried this or have any advice ?


As long as you do it with YOUR money and at YOUR price, I think it's a good idea.

If you're borrowing the money, well don't tell me about it. Too much risk. If anything goes wrong, you just put your wife's security (her home) at risk. That's not the right way to build wealth. A pissed off woman doesn't help you one bit... :wink:

[retailguy]

Be careful....but I think real estate is always a great investment. Think about renting it.


Homes collectively appreciate at the rate of inflation over the long term. Not every home is a "great buy". Case in point - Youngstown Ohio....

On "flipping homes", the money is made a the buy, not the sale. If Bretsky has to rent to make the deal work, I'd say he paid too much.

Flipping houses is VERY VERY risky and not for the faint of heart, or the newbie. If you don't know what you're doing, you WILL lose money.

[Bretsky]

Anybody ever watch this TV show ? I find it interesting.

Anybody ever tried the concept ?

Retailguy would chastise me for even attempting this......but

I've been in the Home Loan Industry for over six years. I've always been interested in trying to buy a home, fix it up, and sell it.

This week I finally went forward to make my first effort. Made a formal offer on a home that needs 5-10 worth up upgrades...mostly cosmetic upgrades and some plumbing. I think it has a nice upside and if I can get it at the right price money can be made.

The bank counted my initial offer and I have now submitted the second counter offer. IF I buy the home it will have to be at my price or I will have to pass on it.

Anybody ever tried this or have any advice ?


As long as you do it with YOUR money and at YOUR price, I think it's a good idea.

If you're borrowing the money, well don't tell me about it. Too much risk. If anything goes wrong, you just put your wife's security (her home) at risk. That's not the right way to build wealth. A pissed off woman doesn't help you one bit... :wink:


Well, I don't think there is a person who pays cash to flip houses..well maybe a few...so I am borrowing the money with down payment to come from self.

On this particular property, I know some history and the fact that there was an accepted offer on the property six weeks ago for 15% higher than my initial offer. I do plan to upgrade the home with own money and feel that will pay for itself plus..........if I get the home at the right price. If I don't then it was not meant to be.

I think the profit upside is 20%-25% but if I have to hold the property for 9 months while making payment I'm thinking a 12% profit is more practical if home does not sell right away and I make payments for that period.

Not really going in with intention to rent.....although......with the flooding in our area I do think I could find renters w/o much of a problem if we decided to go this route.

As easy as the concept sounds, it's pretty dam detailed and not remotely easy IMO

Now on the downside the whole plan might get screwed because there is another person putting in an offer today and I'm not getting into a bidding war with anybody.

[MJZiggy]

Building on what Scott said, you have to not only think about the competition, but the market and the number of buyers. I live in an artificially inflated market here and still there are houses that sit for a few months before selling so you have to make sure you can afford the mortgage if that happens. Or if you're renting and your renters move out and you can't find a renter for a couple months. Remember, gay men make the best tenants....

[retailguy]

Well, I don't think there is a person who pays cash to flip houses..well maybe a few...so I am borrowing the money with down payment to come from self.

On this particular property, I know some history and the fact that there was an accepted offer on the property six weeks ago for 15% higher than my initial offer. I do plan to upgrade the home with own money and feel that will pay for itself plus..........if I get the home at the right price. If I don't then it was not meant to be.

I think the profit upside is 20%-25% but if I have to hold the property for 9 months while making payment I'm thinking a 12% profit is more practical if home does not sell right away and I make payments for that period.

Not really going in with intention to rent.....although......with the flooding in our area I do think I could find renters w/o much of a problem if we decided to go this route.

As easy as the concept sounds, it's pretty dam detailed and not remotely easy IMO

Now on the downside the whole plan might get screwed because there is another person putting in an offer today and I'm not getting into a bidding war with anybody.

B, I disagree. The successful people are using their own money. More than you can even imagine. The ones who don't.... well eventually they get burned.

Look seriously at the risk. Is it really worth it?

I know a guy, ONE guy, who does this successfully. He uses his own money, and right now, owns nothing. Isn't planning on buying anything until at least the end of the year as he believes that prices are still falling.

I know several who have tried it and lost their ass. One guy made money on the first two deals and then lost that, plus his personal house on the third.... I hand walked him through bankruptcy. He's still renting two years later, without his wife who divorced him.

It's anecdotal, take it for what it's worth....

[Tyrone Bigguns]

Ty doesn't know anything about flipping, but Ty and his ex wife's grandfather bought numerous houses with the bank's money.

Course, we were buying them for 15-30k..so, we always knew we could make the mortgage payment if they sat empty for a month or two.

Infact, ty was educated on the procedure of having second mortgages on a property through multiple banks. Amazing, at least in Fl, how little oversight there was.

ty understands R's viewpoint, but ty has always favored using other people's capital...THE TRUMP WAY!!!

[bobblehead]

Just a thought. At this point in time you are competing to sell your "flip" with the banks who are trying to dump properties.

My guess is that you will find this way more annoying than it is worth...if you wanna make 20K, get another job, it will be less work and headache.

[Zool]

The best way to make money on a flip is by putting in a ton of your own labor. You should decide what your time is worth hourly, and figure out how many hours you're willing to put in to the actual repairs. Then do some math and figure out how much you're hoping to make. Demo is the only hard work, everything else is relatively easy, but very very time consuming.

[MJZiggy]

Didn't Patler once say that he flipped houses (before it was called flipping?)

[Bretsky]

Ty doesn't know anything about flipping, but Ty and his ex wife's grandfather bought numerous houses with the bank's money.

Course, we were buying them for 15-30k..so, we always knew we could make the mortgage payment if they sat empty for a month or two.

Infact, ty was educated on the procedure of having second mortgages on a property through multiple banks. Amazing, at least in Fl, how little oversight there was.

ty understands R's viewpoint, but ty has always favored using other people's capital...THE TRUMP WAY!!!


This particular one might be comparable; six weeks ago it had an accepted offer that was 20% higher than our original offer. I also know I could make payments for a good year plus if I had to; not an expensive property. 2 story home that will get sold for between 85-90G by bank. I would pay on the lower portion of that; there is a chance I might not get it but if I do it will be at my price. Needs 8-10G of fixings and I'm confident it will sell in the 120's. In our area most homes are starting in the 130's currently and I'd price this one to sell.

All of the views on this are interesting; I do think Patler did this a while back

[Oscar]

I don't know if this applies but I'll share anyway. The home I own now I bought as a repo at the court house steps. I paid $8,000.00 for this run down two story 4 bedroom farm house. It's located a couple blocks from a hospital on a corner lot so the location is good. I did all the work myself. New sheet rock though out, bathroom, refinished the kitchen cabinets, everything. I also installed a new furnace and A/C unit as well. Paid to have the system charged however..The home did have a new roof and newer vinyl siding so I didn't have to do much there. Just added new storm windows. All said and done I was up to $26,500.00 with the home ready to move into. It appraised at $75,500.00. Since the appraisal I've done a lot of land scape work and added new side walks. I did almost all the work so there was no cost there. I've thought about trying to figure up what it would have cost had I paid for all the work to be done. A bunch I'd say. I have no real interest in selling the house but I'd strongly consider buying another one just like it if I had the chance. I also realize the numbers I'm throwing out are small compared to bigger cities but I'm happy with my investment. :)

[Deputy Nutz]

My father and I flipped a house a couple of years ago. We got the house at a decent price, actually a good price. We made some mistakes though.

First, we put too much money into the house in remodeling costs. My dad is used to putting in the highest quality material in his customer's homes, so he has found brands of material over the years that he really likes, so we used those even though they were more expensive than other materials we could have used.

Second, we out priced the neighborhood. The house was really, really nice. Worth every penny we put into it, but it was too nice for the area and size of the house.

We did make money, but not at the sale. We paid ourselves as the contractors throughout the process. We broke even on the sale with material and other hidden costs.

So my advice, be careful right now. The market is really tough on the midranged and higher priced homes. Unless you can get a really good deal on a forclosure or something and still sell the house for thousands undermarket then fine, but really look at getting really good deals on what I would consider starter homes, homes for the first time home buyer or for families that are looking to down size.

My wife and I are actually looking at purchasing mobile homes right now and then selling those on notes.

[retailguy]

ty understands R's viewpoint, but ty has always favored using other people's capital...THE TRUMP WAY!!!

I agree, except there is a problem. Bretsky, afaik, is not Donald Trump.

Trump has hundreds of millions of business assets that could be liquidated if he lost money in a business deal. His personal assets and his personal residence are not likely "at risk" any longer. (If you recall, even Trump went bankrupt many years ago)

So, lets just say that Bretsky has investments that total the $90k that he wants to borrow. If he wants to risk those assets, I have no problem with that, because if the deal goes bad, he won't be living in an apartment. However, if the majority of the assets he has are either tied up in a 401k plan or in equity in his home, why risk that for $20k? The risk is just too great.

Hell, you can make half of that $20k or more in a year by delivering pizzas in the evening 4 days a week.

[retailguy]

This particular one might be comparable; six weeks ago it had an accepted offer that was 20% higher than our original offer. I also know I could make payments for a good year plus if I had to; not an expensive property. 2 story home that will get sold for between 85-90G by bank. I would pay on the lower portion of that; there is a chance I might not get it but if I do it will be at my price. Needs 8-10G of fixings and I'm confident it will sell in the 120's. In our area most homes are starting in the 130's currently and I'd price this one to sell.

All of the views on this are interesting; I do think Patler did this a while back


My biggest question to you is WHY did the house have an accepted offer but didn't close?

If there really was an accepted offer someone willingly walked away from earnest money. Why did they do that? There are many reasons for that, a few of which have nothing to do with the actual value of the home, but many that do have to do with the value of the home.

How many other properties in the neighborhood are for sale? How many by banks? What is the local economy like? Any pending factory closures? Any businesses moving out of town? Any new development on the fringes of town? Which way is the town growing?

All of these things are considerations.

How long will it take to do the work? Where does the money come from for materials? Can you do all the work?

What are the average days on the market for properties for sale in your area? What is the "average" selling price in the neighborhood? How does the home compare to the "average" home in the neighborhood? Bigger? Smaller? How about amenities? One bath or two? Two bedrooms or three? Single car garage or double?

Have you had the home inspected? Does it have clear title? Why did the previous owners lose it? Is it in the "right" school district? How much are the taxes? Any unpermitted additions?

B, I love real estate. It's a great way to make money if it's done right. If you are putting yourself in a position to "risk" the equity in your home if this deal goes bad, I can't support that. It's simply too much risk for me. There are other ways to make $20k in reasonable amounts of time that do not risk your personal assets.

I'd recommend that you find an old book that's probably out of print now, but very good. It's called The Millionaire Next Door and the authors are Thomas J. Stanley and William D. Danko.

You might surprise yourself at just how many people are investing with their own money. An interesting side tidbit - You know I used to do taxes for a living, right? Well, 90% of the schedule D's that I did were for people LOSING money. By my math, that makes that "typical". And that's not just in this bad economy either....

Be careful!

[Bretsky]

[quote=Bretsky]
This particular one might be comparable; six weeks ago it had an accepted offer that was 20% higher than our original offer. I also know I could make payments for a good year plus if I had to; not an expensive property. 2 story home that will get sold for between 85-90G by bank. I would pay on the lower portion of that; there is a chance I might not get it but if I do it will be at my price. Needs 8-10G of fixings and I'm confident it will sell in the 120's. In our area most homes are starting in the 130's currently and I'd price this one to sell.

All of the views on this are interesting; I do think Patler did this a while back


My biggest question to you is WHY did the house have an accepted offer but didn't close?

Financing was denied

If there really was an accepted offer someone willingly walked away from earnest money. Why did they do that?

Again, the loan was turned down as it was an unapprovable buyer

How many other properties in the neighborhood are for sale?

Approximately 125

What is the local economy like?

Stable, but on the week side

Any pending factory closures? Any businesses moving out of town?

No Any new development on the fringes of town?

How long will it take to do the work? Where does the money come from for materials? Can you do all the work?

4-6 weeks; money comes from reserves; I can do some of the work but half will get paid out to plumbers and for drywall

What are the average days on the market for properties for sale in your area? What is the "average" selling price in the neighborhood?

4-6 months
125-140G

How does the home compare to the "average" home in the neighborhood? Bigger? Smaller? How about amenities? One bath or two? Two bedrooms or three? Single car garage or double?

3 Bed, 2 Bath, 2 Car Garage
I would have it inspected if offer is accepted
Owners lost it because they stopped making payments
Clear Title
Average for neighborhood

Have you had the home inspected? Does it have clear title? Why did the previous owners lose it? Is it in the "right" school district? How much are the taxes? Any unpermitted additions?

Clear Title
Within a mile from middle school in average area
Taxes 2700 with 127G assessment
No

B, I love real estate. It's a great way to make money if it's done right. If you are putting yourself in a position to "risk" the equity in your home if this deal goes bad, I can't support that. It's simply too much risk for me. There are other ways to make $20k in reasonable amounts of time that do not risk your personal assets.

I'd recommend that you find an old book that's probably out of print now, but very good. It's called The Millionaire Next Door and the authors are Thomas J. Stanley and William D. Danko.

I'll look it up and read that

You might surprise yourself at just how many people are investing with their own money. An interesting side tidbit - You know I used to do taxes for a living, right? Well, 90% of the schedule D's that I did were for people LOSING money. By my math, that makes that "typical". And that's not just in this bad economy either....

That does not surprise me; too many people doing this w/o much of a clue.
It actually looks like another buyer may be swooping in on me and outbidding me for the home.

Which sucks....if it happens........but life will go on if it occurs[/b]

[Bretsky]

It appears that my attempt to Flip that House has been rebuffed

Before we made our first offer my wife and I decided 87G was the top $$ we'd pay. As I had noted there was an accepted offer on the home well above that a few weeks ago. We figured we had to put in 10G at most to make this a very nice home to sell, and factored in the chance that we might either have to make payment for six to nine months if it did not sell.

We wanted to have no more than 100G into it before the payments started and figured after all the work was done 8 weeks from now we'd list the home at 128,000 with expected sale between 120-125G. At worst case if we had to rent our total payment would have been less than 700 with taxes and we could have easily rented it for 8-850 range with the location.

Home was listed at 92,900.

Our first offer was 84G
Got a counter at 89,900
We countered right down the middle at 86,500

I was pretty confident that offer was going to get accepted the following day

But then a snake in the grass entered at the last minute and kicked my ass on the bid. I don't know what the exact price was (I will in a few weeks) but from the sounds of it they are going to occupy it and their bid was well above ours.

Unless their financing falls apart, they get the home.

Kind of bummed; would not do anything different but at same time I'm not sure I learned much or would do any more due diligence than what I did.