Good News If You Are Flipping Homes

Good News If You Are Flipping Homes

The good news part of this article is about reducing your competition due to articles that scare people away from flipping. If you’re not already flipping and the information in the USNews article doesn’t scare you, that’s also good news. Here’s the first sentence from an article titled “What You Should Know Before Dipping Into Home Flipping”:
Don’t expect to make a quick and easy buck buying, overhauling and then reselling houses.
There’s no argument with the fact that it isn’t easy, as few things that are rewarding ever are. We also know that the flipping TV “reality” shows are not as “real” as many believe. In the course of an hour-long show, homes are located, purchased, renovated and sold at six figure profits in many cases. We wish them well and hope that some of that great luck and skill will rub off on us plain folks.
According to RealtyTrac, investors flipped 156,682 single-family homes in 2013. RealtyTrac defines a flip as a home bought and sold twice within six months. This number of flips represented an increase of 16 percent over 2012, and up 114 percent from 2011. According to the RealtyTrac information, the average difference between the first sales price and the second was $58,081. That’s not profit if any work was done, just the difference in sold prices.
In a bit of the obvious, the article gives us four challenges faced by flippers:
1. Locating homes at deep enough discounts to do the work and sell at a profit.
2. Finding reliable and economical quality contractors to do the work.
3. Financing the deal.
4. Selling at enough of a markup to pay expenses and justify the time and effort.
Some wannabe flippers underestimate the cost of rehabilitation of the properties, and far more of them underestimate holding and financing costs. Another frequent pitfall is overestimating the ARV, After Repair Value or missing the market. Hard money and transaction lenders are soliciting business, but the costs are significant. High fees and interest rates add a significant percentage to the deal’s cost basis.
Generally, anyone thinking of flipping, and with little prior knowledge, could be pretty discouraged by this article. We’re back to the good news for investors who want to flip houses or are already involved. Articles like this keep the inexperienced away, particularly those who may overpay and take otherwise viable properties away from us.

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DGl-Member

I would be happy if I could just do my first deal.

regards,
Hector

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H.Rod


Good stuff DG MOD

Yea I agree if you know what you are doing then you can make great profits. I am confident that I could flip now I just want & need to build up my cash reserves, but I can totally flip & I know that I would get a hm that I know would be priced right on the purchase & get solit contractors etc & make sure of the ARV.

Hector-work it man! You will have your first deal.

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Tony Escobedo

Too blessed to be Stressed!


Wow thats encouraging

Wow, thanx for advising that "us" newbies would leave viable props to those that are in the know, very encouraging

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You miss 100% of the shots you don't take! Wayne Gretzky


Flipping houses

I like DG Mod’s point that articles like this can discourage investors from venturing into the rehab business which is good for those of us who are already in it. Everything in the article sited was true and knowing that information is important to knowing what is necessary to be successful at rehabbing and flipping property. All those additional cost do need to be taken into consideration in analyzing what to offer on a property. Finding property for the right price is the key to making a profit. Finding a good, trustworthy, reasonably priced contractor is essential to producing a marketable property for a profitable price. Determining the right ARV is critically important, as well as not over building the neighborhood and creating an ascetically pleasing design scheme that attracts buyers to your project. Rehabbing is a business and takes talent, knowledge, guts, resources, hard work and even a little luck. I have been doing it for 40 years and would not have it any other way, otherwise it wouldn’t be so rewarding when the combination of proper planning, smart analysis, good design, suburb negotiating and great management skill creates a successful project that profits you more than a salaried person makes in five years. Good luck to all of you who are will to “Go For It”.


Good article...

I think that anyone with little or no experience flipping houses should not jump in on their own. If a new investor wants to flip houses (for a profit), I suggest they partner with another investor who has experience flipping houses, so that they can learn first...

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Valerie

“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss

"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown

My journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/59110/...


great info

Thanks coach and everyone else,much appreciated,Jim

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jbischoff


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