What steps should be take when flipping a property for a roi?

Question

Hello Everyone,

My wife and I are new to this network. We are very interested in Real Estate Investing. We would like to flip our first property as soon as possible. We would also love to establish a network of people with common interest. What should be our initial steps towards acquiring our goals and navigating this site. Suggestions?

Andrew Syrios · Answer

Check out the forums and also read The Ultimate Beginner's Guide to Real Estate Investing; https://www.biggerpockets.com/real-estate-investing and J. Scott's book on flipping houses: https://www.biggerpockets.com/store/flipping-physical. Also start attending your local REIA meetings and building your network (contractors, realtors, lawyer, etc.)

Vernell D Watson · Answer

@Jody Schnurrenberger That's awesome Jody. It sounds like you're on your way to bigger and better things in the realm of REI. I really like the way you did your financing to acquire your properties. I wish you continued success in the future. Thanks for sharing your story :-)

Jody Schnurrenberger · Answer

@Vernell D Watson, I can't say exactly how many properties a bank will allow you to finance.  I hear rumor that by law it's 10, but that's also if you have the income to support that plan.  My first property was simply my house I got with a traditional mortgage.  I paid it off in 12 1/2 yrs.  During that time I acquired 2 sets of duplexes, but I did those through a line of credit on my stock market account.  That's how I also bought my newest house, but I plan to refinance it to a regular mortgage in order to free up that line of credit for future quick cash type purchases.  I only did that for my new house because the sellers wanted cash and a quick closing in order to agree to my low offer.  So, as you can see, I can't really tell you about what banks will let you do, but I'm sure a high paying job will let you do a lot more than me just living on my VA disability check.  ;-)

Vernell D Watson · Answer

@Jody Schnurrenberger Thanks Jody!! I will definitely identify my strengths and weaknesses along with my wife's. I will also take heed to all of your other suggestions. Question...When you acquired your rental properties how many homes would each bank finance you for before they decided that you were at your limit? Will one bank finance 10 properties for example?

Jody Schnurrenberger · Answer

Welcome to BP!  Another thing I'd like to add is to know your strengths and weaknesses when it comes to your niche.  For me, I wanted long-term income to provide for me when I'm elderly since I have no kids to help out.  I decided on rentals, but I quickly discovered I'm a horrible property manager.  I'm entirely too nice and folks get away with murder when I'm in charge.  Now, when I'm looking at a property, I include the property management fees when I do my calculations to be sure the house is still a good investment if I give away 8% of the money every month.  I say, "Life isn't about being perfect.  It's about working around your imperfections."  Know what you're good at and what you're not and consider those when you're deciding what and how to work your real estate plans.  :-)

As for what steps to take for flipping to make a good ROI, be sure to know the neighborhood.  Not all areas are a good flipping area.  Also, if you put granite counters in a neighborhood where no one else has them, unless you got them for a steal, you probably won't make back that money.  Know what's an appropriate upgrade for the neighborhood.  Hopefully your agent and contractor can help with this part.  In flipping, time is money, so if you know you're going to be going away for vacation, but you had planned to do a lot of the work yourself, schedule your closing for after the vacation so that you don't waste time not working (unless you have a trusted contractor who can do work while you are away).  On the flip side (pun intended), if you have upcoming vacation time you were going to spend locally just hanging out in your pjs, and planned to do the work yourself, try to schedule the closing (or your vacation) so that you can work on the house while on vacation.

As for contractors, don't pay them ahead of time, even for materials.  If they need materials, ask them for a list of what they need or go with them to pick them out, then have them delivered (or take them yourself) to the job site (inside).  There are a LOT of stories on here about folks forking out money at the beginning of a job, only to never see the guy again.  You can pay in installments if he's doing a lot of work.  For example, you can pay him for completed work on the counters before he starts on the floors.  But don't pay him until he's totally 100% done, even with clean up.  Once he's been paid, why would he bother to clean up?  Good luck!

Vernell D Watson · Answer

Thanks everyone :-)

Vernell D Watson · Answer

@Carol Conlin - Wow, I like this site already. Carol, thanks for the information and fast reply. You are correct REI is definitely a huge area with lots of niches. We, however, are very interested in wholesaling and flipping to get started. Thanks for the advice about establishing a connection with a guru. When we find one, I will definitely inquire about him or her within this site. We're also hoping that we can find a group right away that's close to the Cherry Hill, NJ area. I know how important these groups can be, we can't wait to join. We will also take the time to find out our own answers to questions that arise prior to asking and wasting time. Thanks again Carol!! :-)

What steps should be take when flipping a property for a roi?

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