House flipping for "easy" money

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amother

Plum

Thu, Oct 18 2018, 2:36 pm

Dh has head about house flipping as a way to earn extra money, easily.
He knows 1 person who does this and claims to make a living; and another who invests in longer term real estate who is willing to help DH invest in flipping.

I am very very unsure.
We know zero about house flipping, would need to learn where to buy cheaply but that will grow, and we know nothing about construction so we will need to find an honest person to oversee that.

Is this really a good way to earn money?
Dh has a full time job, I'm very sick and can't work. We have a lot of expenses bec of sn kids getting older and needing more than we can pay for.

Does anyone have experience with this?
(I'm in the us if that makes a difference.)

Iymnok

Thu, Oct 18 2018, 2:42 pm

You need a large amount of money to start. You need to either be competent in home repair or know others who are and be knowledgeable enough to know that they are doing a decent job. You have to know how to see value in a property, including structure, location and appeal. You need reserves if it doesn’t sell within your timeframe.

I’m assuming you will be doing fix and flips, not just flipping.

mha3484

Thu, Oct 18 2018, 2:45 pm

It is only easy if you can get the house super cheap, do the labor yourself or find someone else to do it cheap. and price it realistically. There were a bunch of houses that were bought and rehabbed in my area in the past few years most are still for sale. The owners may have made the house very nice inside but they are asking for way way to much money for whats it worth and no one will go for it. They may have spent a lot on renovating and want to recoup their expenses but its not working for them.

amother

Aqua

Thu, Oct 18 2018, 2:51 pm

Before you even consider it, do you have several hundred thousand in cash lying around so that you can put down payments on a few houses and fix them up?

Rappel

Thu, Oct 18 2018, 2:59 pm

My brother is in the field. He works hard, well into the night. It's not really easy money, unless you already have the cash to go big. It's definitely not fast money.

On the scale of single houses, with no experience in the market, I'd say don't do it. You may end up obligating yourself in a contract for a house you don't want and can't pay for.

If you ever have a lot of savings you want to play around with, then that's the time to try it.

FranticFrummie

Thu, Oct 18 2018, 3:21 pm

Frantic Frummie, Former Flipper. Say that five times really fast!

The first thing you need to do is consult with several real estate brokers. Not just one! Find out what the market is like. If the market is not favorable, you are dead in the water before you start.

How is your credit score? It had better be absolutely amazing, and like others have said, you need to have a lot in reserves.

Get yourself a restoration crew. Find plumbers, painters, electricians, etc. and keep them busy working for you. Ask them to refer friends from the construction business. They will be loyal and do a better job than if you have to keep finding new people. If the work is steady, they'll probably charge you less, too.

Know the difference between a cosmetic flaw, and a major structural flaw. This is crucial. I can't repeat this enough. A structural flaw that is really bad could cost you a fortune and keep the house off the market indefinitely.

Before signing anything, pay for an extra thorough inspection. You don't want any surprises going in, although I can promise you that there will be plenty of other surprises along the way. If you are lucky, they will be easy fixes.

Let me tell you about the time I found a bit of bad paint up in a corner. I ended up with black mold, needing a whole new roof, replacing an entire wall, and while the wall was open we realized that the electricity was not up to code, so we had to run all new wires. That's the short version.

I'd tell you the story about the house with the leaky faucet, but you'd have to buy me a drink first. Let's just say that 4 months and $3,000 later, the faucet still dripped.

Easy money? No such thing. It's all sweat, worry, and the roll of the dice. I made a ton of money in 10 years, and then lost all of it on my last house when the market crashed. In 6 months I lost over $100,000 in equity, and went into foreclosure. (Gorgeous duplex with rental potential, in great neighborhood.)

My credit has never recovered.

amother

Plum

Thu, Oct 18 2018, 3:22 pm

Thank you these were all of my concerns too.
The person in long term real estate said he will invest & can get others to do it too.
But I'm afraid to play with someone else's money. And we know nothing of how to evaluate homes and locations, how to set prices or even gauge if a contractor is doing a good job or just ripping us off.
We have none of our own money to invest.

amother

Plum

Thu, Oct 18 2018, 3:26 pm

Eta, ff how do we even know if something is cosmetic or structural?

The thing is my relative does this and claims he makes great $ and is willing to show dh the ropes.
I'm very skeptical, and based on this thread my concerns are not unfounded.

amother

Teal

Thu, Oct 18 2018, 3:27 pm

amother wrote:

Get an engineer's inspection.

Amarante

Thu, Oct 18 2018, 4:29 pm

If you have to ask these questions, you shouldn’t flip to make money.

I know a few people who flipped houses but they had real estate licenses so they knew a lot about property values and what was on the market.

You make money on a flip when you buy the house. You have to get a house that is undervalued for the area.

You also need to know a lot about construction as well as what is desirable. As others have stated, you should already know people in the trades and have a good knowledge of construction.

This is not a great time to try to hire construction people because they are all incredibly busy and if you don’t have a relationship with them, they aren’t interested and/or you will pay top dollar for their services.

There is no such thing as easy money

amother

Plum

Thu, Oct 18 2018, 4:29 pm

I know when we bought our own house and had a standard inspection how many issues were missed.
An engineer inspection sounds like a good idea.
But I see all the time on these HGTV shows how many issues are uncovered once they start doing construction & it makes me worried that even w an inspection, you really just don't know.

Amarante

Thu, Oct 18 2018, 4:31 pm

No you don’t know because once you open up walls, there are issues often.

And once you start remodeling, you need to bring things up to Code which can be costly.

amother

Indigo

Thu, Oct 18 2018, 4:35 pm

I agree with other posters.
From our experience, it’s not easy money, and so far where we invested, no money at all...

amother

Plum

Thu, Oct 18 2018, 5:20 pm

Thank you all for the input

amother

Teal

Thu, Oct 18 2018, 5:34 pm

Amarante wrote:

No you don’t know because once you open up walls, there are issues often.

And once you start remodeling, you need to bring things up to Code which can be costly.

I don't have this knowledge. But there are people with good instincts and experience.

Miri7

Thu, Oct 18 2018, 6:16 pm

The people who I know who are successful flippers are contractors or people otherwise already in the construction business.

I think that’s because they know what they are doing, how to look for and avoid major problems, know how to run a renovation efficiently, and have access to cheaper labor. The subs work for them for less because they’re generating a lot of work. And they don’t pay a percentage for managing the job.

I would not get into this high risk business without the know how and some serious capital.

Amarante

Thu, Oct 18 2018, 6:18 pm

amother wrote:

I don't have this knowledge. But there are people with good instincts and experience.

This what leads one to believe you don’t understand the process and the pitfalls.

Experienced contractors don’t know what they might discover when walks or open in an old home.

The whole process is more expensive and time consuming.

Have you ever maintained an older home.

Have you ever remodeled a kitchen or bath.

If you don’t have the experience you have to pay for that experience. The people I know who did it and made money knew real estate values and also acted as their own GC because they had the experience to do thst

das

Thu, Oct 18 2018, 6:22 pm

If you don't have the money to invest or the knowledge, why would people give you their money to invest? Something is off.

oneofakind

Thu, Oct 18 2018, 6:25 pm

Trust your gut. When DH comes home with "easy money", "get rich quick", run the other way. There is no such animal. If you have money, you could invest in rental houses that other people own and manage. That's very different.

bestme

Thu, Oct 18 2018, 6:45 pm

It is not possible to get a mortgage on a run down house. People that flip houses have money saved up for house flipping.

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