Flipping houses

If you don't already know what you're doing and have a ton and I mean a ton of contacts this is something you shouldn't even consider.

I hope you get some good realistic answers. I think what the other posters have said, though, hold some water. You're going to need a ton of money to enable you to move fast and keep up/stay ahead of other flippers. I think the problem is there's a ton of people that saw it on hgtv and try to do it (prepare or unprepared) so you've got your legit guys and your guys winging it for the first time. It appears to be a VERY competitive business that might be hard to just go balls deep into without some prior experience.

A friend/client does this, one at a time. He'll have four nice profits in a row, and then the 5th will be a disaster that he loses most of the money he made from the first four. But it's almost a hobby to him.

He's to the point now where he can do this all in cash. He also does a large amount of the work himself. He is a fireman, so on his days off, this is what he does.

Well, there's two things that can kill you:
Underestimating your repair budget.
Time it takes to get out of the property.

Unless you're in an extremely hot market, your margin for error will be small. Every extra repair you have to make or every extra month you have to hold the property is money down the drain. Plus taxes need to be taken into account.

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I'm of the belief that its part of the show so they can create drama with "issues" that crop up.

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No doubt.

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Being a real estate agent feels like a requirement to avoid those costs and have access to all of the data sources.

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Its a big part IMO. The wife and I looked at doing this on a couple of properties and it really cuts into your margins. We've done a couple "live in flips" as we like to remodel ourselves and that has gone well. From my research this has been the biggest things

1) Ideally you'd want enough cash to put 20% down and be able to pay for the budget of the flip. There are other ways but it just makes the whole process a lot smoother and quicker. Ideally you can pan in cash one day and close super fast.
2)Time is so critical, you want to move fast so you are buying and selling generally in the same market
3) Start small, don't buy a complete gut remodel on your first one
4) I think this is definitely a business that has economies of scale because you will get some pretty ridiculous quotes from contractors if you aren't a steady stream of business.
5) Be prepared to rent the house if necessary, this goes back to ideally you are ok having the capital tied up for a while.
6) Be prepared to walk away. I can't say that enough. We walked away from two deals that we really wanted to do, but things just went south in negotiating and inspection. Then oil really started to slide and we put it on the back burner as I really don't want to get caught with a house when the Houston real estate market takes a dive.

I have a friend that does it, and he's kind of an idiot so if he can be successful then it can't be that hard. He was sort of in the real estate business when he got into it, and comes from a ton of money so that helped. He also knew a lot of contractors beforehand. He seems to have found a niche in buying homes where the owner recently passed, sinking $20k-$50k into it, and flipping it. I don't think he makes enough to survive doing this, but he doesn't have the stress of having to rely on it to survive. Pretty sure he has an 8 figure trust fund.


I'd say you need $500k to start if you're talking cash. Or access to an investor or line of credit.

That entire approach sounds absurdly dangerous financially.

Agreed. Very risky but so is putting up your own cash. My first flip the mortgage was $550 and credit card bill was $400ish. I used the credit card for the down payment and the reno. Held the property for 5 months before it sold.