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When you say 'net' does that include a salary for you?
That's what I've made after all the expenses and taxes were paid. Quite a nice living if you have the stomach for it. For many years I stayed awake at night worrying about paying bills and getting houses sold but it gets easier each one we do.
That's what I've made after all the expenses and taxes were paid. Quite a nice living if you have the stomach for it. For many years I stayed awake at night worrying about paying bills and getting houses sold but it gets easier each one we do.
Thanks for the clarification. I am sure that some were easier or had a better margin than others.
My point was simply that many people (not necessarily you) fail to account for the personal labor invested. If you were to calculate 40 or 50 dollars an hour for your time it may still be a good way to make a living, but not the highly profitable windfall that some present.
We have bought an sold 3 homes. We always buy fixers. We live in them for 2-4 years while fixing them up. This is what we have made in the last 10 years of doing this.
Our first home we made $67,000
Our second home we made $55,000
Our third home we made $180,000 approx.
Our current home is a a cosmetic fixer and only needs minor things compared to our last that we pretty much gutted. But we also made the most money on that one!
There are two things the "House Flip" shows do not tell you
First, they never take out the Realty fees and transfer costs (title, taxes, etc) when they show the profit... they come out to roughly 8-10% of the sale price, depending on the state. On the average house that is about a $35,000 bite of the profit.
The second thing is that to make money, you have to have a house that is FAR below market value.... and those are not that common and are snapped up by other "house flippers" when they do show up. It doesn't do any good to put $100,000 in upgrades to a house that will then be $80,000 above similar houses in the market....
It is still possible, but it is not nearly as easy as it looks on TV, and it's kinda scary since you are betting hundreds of thousands of dollars on the outcome!
First, they never take out the Realty fees and transfer costs (title, taxes, etc) when they show the profit... they come out to roughly 8-10% of the sale price, depending on the state. On the average house that is about a $35,000 bite of the profit.
The second thing is that to make money, you have to have a house that is FAR below market value.... and those are not that common and are snapped up by other "house flippers" when they do show up. It doesn't do any good to put $100,000 in upgrades to a house that will then be $80,000 above similar houses in the market....
It is still possible, but it is not nearly as easy as it looks on TV, and it's kinda scary since you are betting hundreds of thousands of dollars on the outcome!
Most of these better house flippers are really contractor types who have banded together with a bunch of buddies to be able to do all trades. That was the type that bought my old house and tried it. Actually that entire group which was a plumber, plasterer, painter and maybe a few others were really front men for the big buck lawyer type who did the financing and closings. They paid all the costs in my case.
I doubt it works like they try to show on TV. You can not hire out the work and make much and yes, they do have to find a real good deal on the inital price. In my case, I think they really got way, way to greedy even if they did have some cost control on the skilled trades side. The "Finders" were probably getting paid a percent, they may have actually snookered the money man. Not like you see on TV.
The better flippers will be contractors with lots of experience in construction and cost control. To include a network of peeps who can handle the paperwork and selling details well below costs.
If it sounds to good to be true it probably is.
Like with most things you ask who makes money. Banks and insurance companies for sure, throw in brokers, contractors, hired help, supply houses, tax man, permits man, all the other men. All the rest the flipper gets to keep.
Being the management type, idea guy or broker type is definitely the wrong type to do much in the way of flipping. You need to be able to get dirty and do it all real, real, cheap. More like a long time contractor with a lot of illegal labor who is well experienced in an area, that gets together with a bunch of subs to make the sure killing. Well maybe in the hot dazes of the market past. Might still be some opportunities but it is all getting a bit thin. A lot depended on the market having a lot of appreciation and upward velocity.
Anyone ever flipped a home? I am absolutely hooked on that show on TLC. I dream of finding a house and then making a small boatload of money. I think it takes a knowledge of the market and moreso the neighborhood to know how much to sink into a home. Maybe one day I can find the right home and situation to do so.
Study the market. Every area is different. It can be done.
I have recently had bad experiences with houses that have been "flipped". Seems idiots with no taste or scruples are doing the work.
On Saturday, I looked at three houses that were listed for sale and all three had been renovated. Not only were they terribly overpriced for what they were, but I would have had to re-renovate them and remove the doodads and geegaws these folks added to make the properties look cuter. Plus, I have no way to tell what's under the new flooring and other additions and masks without actually removing pieces to see what's been done. (Why would I need to look? One pristine-looking place had dead german cockroaches lying all over the floor and the inside of the cabinet under the sink was black with filth.)
Essentially I have no faith in renovators who did not live in the properties themselves for awhile before trying to sell. Buyer beware.
That particular realtor now has specific instructions to only show me unrenovated homes.
I have recently had bad experiences with houses that have been "flipped". Seems idiots with no taste or scruples are doing the work.
On Saturday, I looked at three houses that were listed for sale and all three had been renovated. Not only were they terribly overpriced for what they were, but I would have had to re-renovate them and remove the doodads and geegaws these folks added to make the properties look cuter. Plus, I have no way to tell what's under the new flooring and other additions and masks without actually removing pieces to see what's been done. (Why would I need to look? One pristine-looking place had dead german cockroaches lying all over the floor and the inside of the cabinet under the sink was black with filth.)
Essentially I have no faith in renovators who did not live in the properties themselves for awhile before trying to sell. Buyer beware.
That particular realtor now has specific instructions to only show me unrenovated homes.
They try to figure out what has eye appeal, instead of what makes it livable. The sad part is it actually works way too many times. Name of the game is jack the price to where there is zero left in value for the buyer. How did you know the cockroaches were German? If the place killed those it must be pretty toxic.
Simple things like bathrooms with no access panels for plumbing repairs are more important than some doodad stuff somewhere. It is amazing how few peeps actually know how to tour a house if looking to buy. Looking at pretty is definitely the wrong way and for damn sure ignore that baking bread smell and all them flowers in the window box.
I would far rather see a well done electrical upgrade or new roof than some fancy paint or carpet job. Quality of the windows and doors and amounts / types of insulation should be high on the list. This entire flipping crap has become something that needs some type of regulation. Not that it will solve anything.
I would think it should be clearly disclosed that the house was purchased for resale as a business venture type thing should be added. There should have to be a summary of purchase costs, work done with costs and a time line of how it was accomplished. Then let the buyer judge if value was added for the pumped up selling price. Not all flips might be bad if the necessary work was done and a fair profit should be expected, way to many are probably just eye wash.
Is it a certain time frame that makes a house a flip? I know they make it look like it takes about 6 weeks on TV.
I've remodeled homes for years. I buy a home in a good area, move in, and work on the remodeling part time for several years. We usually live in the home for at least 5 years.
With the way the market is right now, I wouldn't recommend anyone start out in this business today. There's just no wiggle room for mistakes. There are some deals out there but most of the best ones are snatched up by the realtors before they even hit the MLS. I've always thought a lot of the flippers were RE agents who flipped on the side.
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There are two things the "House Flip" shows do not tell you
