Do I Need a Team To Flip?

Question

Hello,

I have a cousin who attempted to be a landlord. And my mom tried flipping. My cousin went in thinking it would be easy and bailed after her 2nd tenant who destroyed her house. She sold it and ended up losing money in the end. She lasted maybe a year. My mom on the other hand was working full-time and trying to raise a family when she attempted to start flipping houses. She didn't have a lot of support and was practically a single mom, but says that if she would've had more support she would've been able to do it.

Before I get started myself, I'd like to know how I can surround myself with the support I'm going to need when I get started. Where do I find people? How did you find your people? I'm sure I'll need a list of contractors which I'm already working on gathering. Who else do I need on my team? I imagine I'll need a courageous person who can deal with the tenants that won't leave or don't want to pay. Any advice would be appreciated.

Thanks,

The (future) Flipping Momma

Account Closed · Answer

Join a REIA ( Real Estate Investing Group ) in your area. NationalREIA.org The one I belong to costs $15 per month. Don't join those $5,000 to $20,000 groups. You don't get anything extra for the large expense.

The average flip, according to NAR takes about 6 months and nets about $15,000 after paying everybody.

A flip involves: the money provider, everything from a handyman to a contractor depending on the scope of work, a plumber, an electrician, a painter, a sheetrock guy, a landscaper, a flooring guy, the ability to guess what a particuar property will sell for, a finish carpenter, a window guy, a roofer, an HVAC guy, a cleaning company, an exterminator, a real estate agent, an appraiser, a title company, an escrow company, brick & concrete guy, garage door guy, an inspection guy, an insulation guy, etc. Everybody gets paid. So, have lots and lots of money.

Are you ready? I have no idea. Depending on the city, the location, the weather, the time of year, how damaged the property is, how many issues with title you have, it all varies. HGTV makes it look like it's a lot of fun and takes 42 minutes of show time to make $60,000. That $60,000 is before they pay off everybody and don't believe it takes only 42 minutes to rehab a house. It takes a little longer than you plan for and then there are the surprises that make it take even longer.

But, it is fun. HGTV got that part right.

I've done flips for over 25 years and I've seen it all. ;-)

Oh, and then don't forget your Uncle Sam. The tax on flipping income is the highest tax in real estate investing. That reduces your $15,000 profit for 6 months of work, by quite a bit.

Eric James · Answer

You don't need support. You need to know what you're doing.

Jim Kalish · Answer

Not to be disagreeable to some of the other responses but if you want to be successful the simple answer is YES!  This is not a business you do by yourself.  And this is a business.  There is a really good book by David Green titles "Buy, Rehab, Rent, Refinance, Repeat" that has a section on this very topic.  You can get from Audible or from BPs.  But the bottom line is you need people around you to support you.  Contractor, realtor, lawyer, accountant to just name a few.  And as for tenants don't jump at the first one that comes along.  Check the laws in your state to see what you can require and what kind of background check you can do.  But requiring a certain level of verifiable income for the 12-24 months as well as verifiable rental history (not with someone's relative) for at least 12 months with no evictions is perfectly reasonable.  Tenants are not your best friends.  Don't treat them like they are.  Treat them with respect and take care of their needs as quickly as possible.  But don't let them slide and don't get too close.  Remember, a lease is a legal and binding document.  Treat it that way.

Most importantly, education is key.  Read everything you can.  BPs has great webinars and books.  The webinars are free.  When you are ready join as a pro member.  And as Account Closed said join your local REIA if there is one.  I belong to one in Charlotte, NC.  I think a single membership is about $200.00/year.  If you are in a larger city they should have one as well.  And they usually have smaller group meetings you can attend for free if you are a member.  Go to the meetings and network.

Best of luck!

Michael Plante · Answer

I don’t understand what do you mean when you say you want to surround yourself with support?

Do I Need a Team To Flip?

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