Flipping as Investment

[Accountable]

I'm thinking about getting into real estate investing. Has anyone tried house flipping - purchasing a fixer-upper, renovating it, and selling it at a profit? I'm thinking about doing this, or possibly buying a duplex and renting out one side as I live in and fix the other side.

Opinions??

[TW2005]

Originally Posted by Accountable

I'm thinking about getting into real estate investing. Has anyone tried house flipping - purchasing a fixer-upper, renovating it, and selling it at a profit? I'm thinking about doing this, or possibly buying a duplex and renting out one side as I live in and fix the other side.

Opinions??

As a former Real Estate agent, I had to deal with things like this from time to time. It can be a very good thing and it can be a very bad thing. You really have to know your stuff when it comes to homes. You really have to know market value. You have to decide if the prospective home would be worth the effort or not. You really have to do a spread sheet and know how much things are going to cost and how much profit you are going to make. Break it down to how much you would get an hour after you fix it up and rent or sell it off. In my opinion, it's more times a hassle than a great deal. But sometimes you get a really good deal and can really make some good money. Thats just been my experience throughout a few I've had.

Another option you might consider is going to a local bank or lending establishment and asking for a list of homes that are or soon to be foreclosed upon. Sit down with them and tell them you want to look into buying foreclosed upon homes and sell them. Some people see this as much of a Risk, but from my experience on this aswell, it's better. Just see what kind of info the bank will give you. If you want more info on how Forecloseures work, let me know.

[Accountable]

Originally Posted by TW2005

If you want more info on how Forecloseures work, let me know.

I'm definitely interested. Thanks
I'm equally interested in why you are a former real estate agent.

[TW2005]

Originally Posted by Accountable

I'm definitely interested. Thanks
I'm equally interested in why you are a former real estate agent.

Being that I am 21 years old now, 20 when I was agent, not only was it hard for me to get business and people taking me seriously, Real Estate agents have a very stressful job. Most people think that it's just filling out paper work and getting people to sign things. The people actually buying the house don't see what goes on "behind the scenes." I don't really want to get into that aspect of it but it is just not what I wanted to do with the rest of my life. It was fun at some points, and made good money for the year that I was active, but I wasn't happy with it truly. I'm not going to do a job for the rest of my life if I'm not happy doing the work. Too many people have jobs that they just do for the paycheck. Too many people have jobs that are very stressful as a result of not really liking it. I don't want to be one of those people. So thats pretty much the reason in a nutshell

[Accountable]

You're way too young to be so wise. Half the fun of life is making mistakes so you can have conversations years later like: "Oh you think you had it tough? let me tell ya ..."

Now, about foreclosures ... ?

[TW2005]

Originally Posted by Accountable

You're way too young to be so wise. Half the fun of life is making mistakes so you can have conversations years later like: "Oh you think you had it tough? let me tell ya ..."

Now, about foreclosures ... ?

Foreclosures are really simple in how they opperate. A little mock situation of how they work.

You have a couple, doesn't matter the age. They buy a house together and say the loan is for 200,000. They live there for 10 years of the 30 year note. They pay down the principal and note and have a loan balance of 145,000 remaining. The primary money maker loses his job. After time they run out of funds and can't find work. They can't pay house payment. They start getting letters from their bank and after about 6-12 months of not being able to pay for the house the home goes to the foreclosure process. The house is put on a list from the bank and public people have the option to make bids on the home. The bid has to be for atleast 145,000. The bank wants what is owed to them, and thats it. Say that there are 20 people that put a bid on the home. The high bidder bids 185,000 for the home. He buys the home. He can do whatever he wants to the home, live in it or sell it off at market value 200,000 and make a 15,000 profit. Thats the jist of how those work.

Now in a perfect world, if everyone knew about this sort of buying power, everyone would be doing it. Anyone and everyone can do it aslong as you have the funds. Now the thing about this is that, they don't always work out quite like this as far as the money goes. I just used those figures sot he math would be easy. Once in a while you have a home come up where the profit level is that high. But in most cases the profit is much lower. Most haomes that are foreclosed upon, happen within the 1-3 years range. A home with a 30 year note, basically as you home owners out there know, that the first 1-5 years usually you're just paying off the interest and not really principal yet. So in most Foreclosure cases, it's a long slow process and you make 2,000-3,000 and thats about it. But occasionally you run across deals like the one used in the example above and make some really great money. It just depends on how good you get in with the bank. Usually there are people already involved in the banks doing this kind of work, but if you have a neighbor that is a banker or deals with loan agencies, you can barge in and take the other guys business

Most people don't like getting into this type of business because most people are cautious about buying a foreclosed upon house. But there is nothing really wrong with them.

Anything else you want to know, I would advise calling a local bank and just asking them about the foreclosure market in your area. They would be able to tell you more than I really can. I know the jist of it and how to do the deals but when it comes down to the losgistics of the situation, every one is different. Different with bank rules and guidelines for these deals.

[Accountable]

Originally Posted by Jives

As a home-improvement nut and a general handyman, that whole "property ladder" thing sounds really fun, but be prepared to work your little fingers to the bone. I also hope you don't have any back problems, but if you don't...you will.

Been there done that, too. I really enjoy working with my hands (and back ). We just sold our first house. We'd bought it new with no landscaping. I built & installed some cabinets that actually functioned, and did all the landscaping including irrigation and a paver patio. Came out really cool. I also did a short handyman gig with a new home builder & learned a lot.

I think this is really something I will look into, even though there is some stress & risk.

[nvalleyvee]

You really have to look at the area you are buying the fixer-upper. I've done several and had to sit on a couple to turn a profit. Don't plan on doing all the renovation work yourself - so add some money in for what you cannot do. My latest was to buy a 3,000 square foot house on 3/4 acre for 90,000. I asked several contractors to give me bids - they all came in at 100,000 range. I then went to my real estate agent and asked for resale value based on renovation. The house now appraises at almost 400,000. Be sure to look at buy cost - vs -renovation - vs - resale. You can get burnt.