Does anyone here flip houses?

RayH · Jun 6, 2006

( If your potential partner is a real estate wiz he should have a bunch of money to bring to the table. I have heard many real estate "partner" horror stories, if you can swing it yourself, you will probably be better off. In a short length of time you will learn the business if you really want to. IMO. I have a mutual fund through Vanguard that is into real estate and it has been paying me over 20% in earnings per year since I have had it. A 20% annual return is not too bad for a real estate investment. The fund is called a REIT.
Farwell )

Hes not so much a "wiz". Its more like he has connections. He just built a large house and is cash pour at the moment.
I will probably do this without him but I thought it was worth considering.
Actually Ive got a good bit of my 401K in real estate and its been doing pretty good. It dropped off some earlier in the year but has picked up alittle lately.

RayH · Jun 6, 2006

( If your potential partner is a real estate wiz he should have a bunch of money to bring to the table. I have heard many real estate "partner" horror stories, if you can swing it yourself, you will probably be better off. In a short length of time you will learn the business if you really want to. IMO. I have a mutual fund through Vanguard that is into real estate and it has been paying me over 20% in earnings per year since I have had it. A 20% annual return is not too bad for a real estate investment. The fund is called a REIT.
Farwell )

Hes not so much a "wiz". Its more like he has connections. He just built a large house and is cash pour at the moment.
I will probably do this without him but I thought it was worth considering.
Actually Ive got a good bit of my 401K in real estate and its been doing pretty good. It dropped off some earlier in the year but has picked up alittle lately.

Nat · Jun 6, 2006

Ray, my dad gave me a piece of advice that I still take to heart. He said " never go into halves with anyone except for some food and make sure you are hungry before then cause I know you can eat your half". later, Nat

Nat · Jun 6, 2006

Ray, my dad gave me a piece of advice that I still take to heart. He said " never go into halves with anyone except for some food and make sure you are hungry before then cause I know you can eat your half". later, Nat

Jay4200 · Jun 6, 2006

( He doesnt bring much money to the table but he does bring a healthy real estate background and he knows everyone and their brother (one of my shortcomings because Im relatively new to this area and not much of a people person). If it worked out, it could be a good deal for both of us, if it doesnt, you know how bad it could be. )

Bottom line that no one has mentioned yet, is that in order to find the "steals" that make the business viable, you HAVE to be in the real estate business, at least in this area. No home that can be turned for a profit will make it to the open market, since someone in the RE listing agency will snap it up first. That's where agents make their real money. If you can get an into the inner circle in your area, either yourself or through a partner, then you have a shot. If not, the odds are so far stacked against you, that you have a better chance of being struck by lightning than being sucessful in the flip game, IMHO - at least in a normal or healthy market. OTOH, if the RE market totally craps out and prices collapse, then places with potential will begin to become commercially available.

Jay

Jay4200 · Jun 6, 2006

( He doesnt bring much money to the table but he does bring a healthy real estate background and he knows everyone and their brother (one of my shortcomings because Im relatively new to this area and not much of a people person). If it worked out, it could be a good deal for both of us, if it doesnt, you know how bad it could be. )

Bottom line that no one has mentioned yet, is that in order to find the "steals" that make the business viable, you HAVE to be in the real estate business, at least in this area. No home that can be turned for a profit will make it to the open market, since someone in the RE listing agency will snap it up first. That's where agents make their real money. If you can get an into the inner circle in your area, either yourself or through a partner, then you have a shot. If not, the odds are so far stacked against you, that you have a better chance of being struck by lightning than being sucessful in the flip game, IMHO - at least in a normal or healthy market. OTOH, if the RE market totally craps out and prices collapse, then places with potential will begin to become commercially available.

Jay

Farmwithjunk · Jun 6, 2006

Over the years, I've "flipped" houses, tractors, trucks, unimproved real estate, or anything of significant value. I don't do it full time. Nor do I go looking for specific "objects" to flip. I let them find me. That wouldn't provide a full-time income, but does well to supliment ours.

What I've learned; 1st, not every "good deal" is a good deal. Even the best of "house flippers" get burned from time to time. Hidden damage from termites, previous renovations that don't meet codes or weren't "permitted" when they were done, even quick changes in local housing markets. Move carefully.

2nd; Most "bargains" don't stay on the market long. Be ready, cash in hand (or credit). There are people that have been flipping houses long before that trendy catch-phrase came in to being. They know how to find (and buy) the best bargains. You have serious competition.

3rd. Don't fix 'em up like you were going to live in it. Do just what it takes to get it in the price range you intend to sell at. Don't spend all your "profits" decorating a room that won't see any return on your investment. Leave some things for the next buyer to do.

4th. If you AREN'T a qualified electrician/plumber/roofer/carpenter/ect, find one that will work with you to estimate what cost you're looking at BEFORE you buy the place. Know what you're getting into before diving in head first.

Get yourself a GOOD accountant/tax consultant. The first house I did, I gave Uncle Sam 2/3rds of what I THOUGHT I'd be making. (That applies to ANY business venture)

And be ready to be a nervous wreck until your first house sells. I know I was.

Farmwithjunk · Jun 6, 2006

Over the years, I've "flipped" houses, tractors, trucks, unimproved real estate, or anything of significant value. I don't do it full time. Nor do I go looking for specific "objects" to flip. I let them find me. That wouldn't provide a full-time income, but does well to supliment ours.

What I've learned; 1st, not every "good deal" is a good deal. Even the best of "house flippers" get burned from time to time. Hidden damage from termites, previous renovations that don't meet codes or weren't "permitted" when they were done, even quick changes in local housing markets. Move carefully.

2nd; Most "bargains" don't stay on the market long. Be ready, cash in hand (or credit). There are people that have been flipping houses long before that trendy catch-phrase came in to being. They know how to find (and buy) the best bargains. You have serious competition.

3rd. Don't fix 'em up like you were going to live in it. Do just what it takes to get it in the price range you intend to sell at. Don't spend all your "profits" decorating a room that won't see any return on your investment. Leave some things for the next buyer to do.

4th. If you AREN'T a qualified electrician/plumber/roofer/carpenter/ect, find one that will work with you to estimate what cost you're looking at BEFORE you buy the place. Know what you're getting into before diving in head first.

Get yourself a GOOD accountant/tax consultant. The first house I did, I gave Uncle Sam 2/3rds of what I THOUGHT I'd be making. (That applies to ANY business venture)

And be ready to be a nervous wreck until your first house sells. I know I was.

RayH · Jun 6, 2006

( ( He doesnt bring much money to the table but he does bring a healthy real estate background and he knows everyone and their brother (one of my shortcomings because Im relatively new to this area and not much of a people person). If it worked out, it could be a good deal for both of us, if it doesnt, you know how bad it could be. )

Bottom line that no one has mentioned yet, is that in order to find the "steals" that make the business viable, you HAVE to be in the real estate business, at least in this area. No home that can be turned for a profit will make it to the open market, since someone in the RE listing agency will snap it up first. That's where agents make their real money. If you can get an into the inner circle in your area, either yourself or through a partner, then you have a shot. If not, the odds are so far stacked against you, that you have a better chance of being struck by lightning than being sucessful in the flip game, IMHO - at least in a normal or healthy market. OTOH, if the RE market totally craps out and prices collapse, then places with potential will begin to become commercially available.

Jay )

Im not sure I agree with that, at least not in my area. Around here most RE agents are too busy with listings to worry with flipping. I think most of them try it once or twice is the opportunity arises but they dont make a habit of flipping. I would think that as the market slows, you will I see more agents investing because they will have more time on their hands.

RayH · Jun 6, 2006

( ( He doesnt bring much money to the table but he does bring a healthy real estate background and he knows everyone and their brother (one of my shortcomings because Im relatively new to this area and not much of a people person). If it worked out, it could be a good deal for both of us, if it doesnt, you know how bad it could be. )

Bottom line that no one has mentioned yet, is that in order to find the "steals" that make the business viable, you HAVE to be in the real estate business, at least in this area. No home that can be turned for a profit will make it to the open market, since someone in the RE listing agency will snap it up first. That's where agents make their real money. If you can get an into the inner circle in your area, either yourself or through a partner, then you have a shot. If not, the odds are so far stacked against you, that you have a better chance of being struck by lightning than being sucessful in the flip game, IMHO - at least in a normal or healthy market. OTOH, if the RE market totally craps out and prices collapse, then places with potential will begin to become commercially available.

Jay )

Im not sure I agree with that, at least not in my area. Around here most RE agents are too busy with listings to worry with flipping. I think most of them try it once or twice is the opportunity arises but they dont make a habit of flipping. I would think that as the market slows, you will I see more agents investing because they will have more time on their hands.

Farmwithjunk · Jun 6, 2006

( There is a disclosure that an agent must legally pass on to and have signed by a perspective buyer that insures the buyer knows that the selling agent is also the owner of the property.
Its true there could be some ethical issues with an agent selling their own property but its generally not a problem. Ideally, a sellers agent must always work in the sellers best interest but is also legally obligated to disclose known defects to the buyers. So there are certain ethical standards that you must meet as a licensed agent that you wouldnt have to worry about if you didnt have a license. With that in mind, all you guys that are avoiding buying from licensed agents, It may be worth considering that buying from an agent is safer than buying a FSBO. If theres something wrong with the house, they had better tell you about it or face legal recourse. )

I'm not sure of specific wording, but in Kentucky, a REal Estate Agent can sell a house THAT THEY OWN, as if they weren't a licensed agent, so long as they explain that before hand. That allows them some leeway on the disclosure of faults with the house. (Daughter just bought a home from a licensed realtor. That realtor explained the disclosure laws before closing. She kept it a secret that the vacant property next to the house in question was sold and re-zoned light industrial)

Farmwithjunk · Jun 6, 2006

( There is a disclosure that an agent must legally pass on to and have signed by a perspective buyer that insures the buyer knows that the selling agent is also the owner of the property.
Its true there could be some ethical issues with an agent selling their own property but its generally not a problem. Ideally, a sellers agent must always work in the sellers best interest but is also legally obligated to disclose known defects to the buyers. So there are certain ethical standards that you must meet as a licensed agent that you wouldnt have to worry about if you didnt have a license. With that in mind, all you guys that are avoiding buying from licensed agents, It may be worth considering that buying from an agent is safer than buying a FSBO. If theres something wrong with the house, they had better tell you about it or face legal recourse. )

I'm not sure of specific wording, but in Kentucky, a REal Estate Agent can sell a house THAT THEY OWN, as if they weren't a licensed agent, so long as they explain that before hand. That allows them some leeway on the disclosure of faults with the house. (Daughter just bought a home from a licensed realtor. That realtor explained the disclosure laws before closing. She kept it a secret that the vacant property next to the house in question was sold and re-zoned light industrial)

h2onut · Jun 6, 2006

Buy a house buy a job. I would only buy if I could pay someone to fix it up and still come out with 20% profit. Too much risk. Rather than watch the late night get rich quick in the house flipping industry why not try network marketing? I started with a great company a 10 months and have built up a $2,500 a month with no investment or risk ever.

h2onut · Jun 6, 2006

Buy a house buy a job. I would only buy if I could pay someone to fix it up and still come out with 20% profit. Too much risk. Rather than watch the late night get rich quick in the house flipping industry why not try network marketing? I started with a great company a 10 months and have built up a $2,500 a month with no investment or risk ever.

RayH · Jun 6, 2006

( Buy a house buy a job. I would only buy if I could pay someone to fix it up and still come out with 20% profit. Too much risk. Rather than watch the late night get rich quick in the house flipping industry why not try network marketing? I started with a great company a 10 months and have built up a $2,500 a month with no investment or risk ever. )

I really wish I could do something like marketing, I just dont have the personality for it. Thats why I stunk at being a realtor.
Its fine if iflipping turns into a job, thats my goal. If I could turn it into a full time job, I would be all up in that. If I could net $30000/year after taxes and expenses I would be happy as a pig in shi---mud.

RayH · Jun 6, 2006

( Buy a house buy a job. I would only buy if I could pay someone to fix it up and still come out with 20% profit. Too much risk. Rather than watch the late night get rich quick in the house flipping industry why not try network marketing? I started with a great company a 10 months and have built up a $2,500 a month with no investment or risk ever. )

I really wish I could do something like marketing, I just dont have the personality for it. Thats why I stunk at being a realtor.
Its fine if iflipping turns into a job, thats my goal. If I could turn it into a full time job, I would be all up in that. If I could net $30000/year after taxes and expenses I would be happy as a pig in shi---mud.

CurlyDave · Jun 6, 2006

Huh? I've alwas considered my rentals as owner-managed and therefor active. I thought passive was used only for a limited partner or other situation where somebody else risks losing money before the taxpayer is at risk. What am I missing here?

Far be it from me to give tax advice, but unless the rules have changed recently, real estate investment is a passive activity by IRS rule, unless you are a licensed agent.

The difference is that if your adjusted gross income exceeds a given amount, losses can no longer be deducted from income, but must be "carried forward" to offset future real estate income. Consult your tax preparer.

CurlyDave · Jun 6, 2006

Huh? I've alwas considered my rentals as owner-managed and therefor active. I thought passive was used only for a limited partner or other situation where somebody else risks losing money before the taxpayer is at risk. What am I missing here?

Far be it from me to give tax advice, but unless the rules have changed recently, real estate investment is a passive activity by IRS rule, unless you are a licensed agent.

The difference is that if your adjusted gross income exceeds a given amount, losses can no longer be deducted from income, but must be "carried forward" to offset future real estate income. Consult your tax preparer.

California · Jun 6, 2006

( What am I missing here?

The difference is... )

Ok, that makes sense. What I'm missing is numbers (AGI, r.e. losses) high enough for the carryforward rule to make much difference. I did encounter that with y2k stock losses a while back.

I can see it would be important for someone whose primary income comes from r.e. transactions.

California · Jun 6, 2006

( What am I missing here?

The difference is... )

Ok, that makes sense. What I'm missing is numbers (AGI, r.e. losses) high enough for the carryforward rule to make much difference. I did encounter that with y2k stock losses a while back.

I can see it would be important for someone whose primary income comes from r.e. transactions.

Does anyone here flip houses?

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