Flipping Houses: I have cash but no knowledge

Buying & Selling Real Estate
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Flipping Houses: I have cash but no knowledge

Richard Wilson
Forest Hills, NY 路 Member since 2018 路 24 posts 路 23 votes

So where do I start?

I have actually posted here prior to, but got caught up in the 9-5 family lifestyle ... Work, sports on the weekends with my little guy, and family time in general ... I want to flip houses!  I know how you read that ... This guys thinks that you can get rich quick flipping houses - because they exclamation points adds emphasis, but in realty I'm not even looking to make as much as I do from my 9-5.  I am fortunate in life, inherited some funds, an watching them barely outpace inflation, all tied up in securities.  I want to make them work ... I want to be able to spend more time with my little guy ... I want to actually be able to pick him up from school at some point.

I have zero, or very close to zero knowledge in the realm of real estate, but I know I want to buy and flip.  I don't want to be a landlord, and I do not want a mortgage.  I'll be completely transparent.  I have little over $500,000 I am willing to invest, but for my first few deals, would like to keep this close to 20% of or 40% (including rehab).  So I'd like to spend maybe no more than $200,000 altogether on a flip, and walk away with $20-30k profit (gross).  Is this asking too much?  Or is this a realistic goal?  Oh yeah, and I would like to do this, maybe three to four times a year, but three being the goal.  

I am willing to hear all.  Shared stories, I'll read them.  If you point to a book, I'll get it.  Have a seminar or meet up in NYC/NJ area, I'll get to it.  I am eager to learn, and to work with others.  One thing I have saw a lot of on this site, is partnering.  Maybe I can find someone else who has the knowledge but not the cash (?).

Thanks in advance to any who reply and enjoy your summer!  

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Luz Pagan
Flipper/Rehabber 路 Highlands County 路 Member since 2017 路 87 posts 路 33 votes
8y

@Richard Wilson.

Knowledge come with experience. Courses here and there might help you, but I do not recommend them. My humble recommendation is learn as much as you can from this site. look at every free seminar and video out there. The most important thing is do not say how much you are willing to expend to people. Find a realtor or wholesaler who is willing to walk with you the walk of your first investment. Do not give free money that you will need for your business.

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  • Michael Lee
    Investor 路 Coppell, TX 路 Member since 2008 路 2k+ posts 路 646 votes
    8y

    Hello and welcome to this site Richard!  I'm 61 years old and have much advice and I can give much of my knowledge and experience in all 3 of those areas that you are experiencing.  I held a real estate broker license in Texas for about 30 years.  I have been in construction management for about 30 years.  My daughter has one semester left before graduating college at the University of Arkansas.

    I spent much of my time raising my daughter because of my flexible schedule including softball, gymnastics, junior and high school band, daycare place, and piano lessons just to name a few.  I also graduated from college with honors in business that emphasized real estate.  We still live just outside of Dallas and own our own home with the mortgage paid off about 22 years ago.

    Unfortunately, when 54, I had some medical problems that have made me bedridden and I have plenty of spare time.  Even though I had a brain annurism then, I still have most of my brain power and would love to help you.  Your knowledge is one of the most important things.  I do not know anything about Forest Hills, New York but I will be able to help you I'm sure.

    One difference we have is dealing with cold weather because we have very little that effects our schedules.  Flipping houses is a good choice with apartments being a close second but are different.  

    When learning about your areas, consider your "back yard" as a good place to start and then possibly move out from there when you gain a little experience or your success depends on it.

    Certain things will effect that like growth and the economy that is diverse.  Things like population growth, job growth, and nearby amenities, school availability and goodness, public transportation, and retail development are all important.  Not taking any chances and doing what is average is the way to go at first.  The more you learn, the more confident you will be.

    Good luck to you!

    3Reply
  • Eric Adobo
    Member since 2018 路 509 posts 路 211 votes
    8y

    No knowledge  and willing to put up $200 K to do a deal is insane.

    Goal of $20-$30 profit on that $200k is out of this world thinking. 

    Unless you do a 180 turn in mindset your $500 K will soon be  a buck Fiftee.

    People who will connect with you are those who Want your 馃挵........ 

    3Reply
  • Thomas S.
    Member since 2016 路 13k+ posts 路 12k+ votes
    8y

    If family, work and sports have prevented you from starting you are not in a position to start. This is a high risk business investment and must take priority in order to be successful. During a flip all else must be relegated to the back shelf.

    In your situation I see only one possible option. You do not have the mind set yet to be taking the risk on your own. Your only option would be to provide the financing with a fully qualified flipper.

    1Reply
  • Marc Winter
    Real Estate Broker 路 Northeast PA 路 Member since 2017 路 2k+ posts 路 2k+ votes
    8y

    A quote attributed to Abe Lincoln (I believe) goes something like this:

    "If I have 4 hours to chop down a tree, I'd spend the first 3 sharpening my axe."

    IMO, you'd be better off taking $5k, 10k or 50K and investing it in EDUCATION. Go to seminars, take courses, buy books (and read them), join a local REIA group, study real estate, spend your weekends with your little guy going out and inspecting properties; but most important of all, KEEP YOUR POWDER DRY until you know what you are doing.

    "Empty the coins in your purse into your mind, and your mind will fill your purse with coins."  (unknown).

    3Reply
  • Richard Wilson
    OP
    Forest Hills, NY 路 Member since 2018 路 24 posts 路 23 votes
    8y

    @Marc Winter Thanks for the reply.  How do I find seminars that are hosted by reputable people or groups?  I am willing to invest the time and money to increase my knowledge.  Do you have any suggestions for reading material?  I am located in NYC, but looking to invest out of state, where prices aren't as egregious.  I am afraid seminars in NYC may be based on Real Estate within the Tri-State area.

    Thank you again for the response! 

    0Reply
  • Luz Pagan
    Flipper/Rehabber 路 Highlands County 路 Member since 2017 路 87 posts 路 33 votes
    8y

    @Richard Wilson.

    Knowledge come with experience. Courses here and there might help you, but I do not recommend them. My humble recommendation is learn as much as you can from this site. look at every free seminar and video out there. The most important thing is do not say how much you are willing to expend to people. Find a realtor or wholesaler who is willing to walk with you the walk of your first investment. Do not give free money that you will need for your business.

    4Reply
  • Richard Wilson
    OP
    Forest Hills, NY 路 Member since 2018 路 24 posts 路 23 votes
    8y

    @Luz Pagan

    Thank you. I feel like everyone has their own first start. Trust is definitely a big part of finding a realtor. It's weird, because a lot of videos on here, deal more with REI for rentals, or being creative with funding for your investment. I cannot locate that much information on cash deals for rehab/flips.

    I guess that is why I give off the vibe of someone looking for partnership.  Thank you again, and if you have any further insight, I'd greatly appreciate it.

    2Reply
  • Luz Pagan
    Flipper/Rehabber 路 Highlands County 路 Member since 2017 路 87 posts 路 33 votes
    8y

    @Richard Wilson

    Also, the bank is able to give a letter indicating how much cash you have for the property. Meaning, not your balance, but your available cash for the purchase. How can this be helpful? You must have a number in mind for your first investment. In Some properties the realtor will ask you for a proof of funds letter. If you are not willing to go by a certain amount of money, do not tell them how much you have in the bank, but how much you are willing to pay. This is because in their MLS system they put a range in the houses they want you to buy, the higher value the higher the commission. So if you want to buy a house make sure that you have a letter that states that exact value. NY and the Tri-State area is a very expensive place to buy. Make smart moves and consider the locations. Read the reviews about the agent and work with those who are honest and have the time to answer all of your questions.

    2Reply
  • Faysal Alam
    Real Estate Agent 路 New York City, NY 路 Member since 2017 路 150 posts 路 26 votes
    8y
    @richard what鈥檚 up man ? I鈥檓 not to far from you , I鈥檓 in briarwood . Maybe we can meet up for a cup of coffee and talk some real estate .
    1Reply
  • Rob Lee
    Rental Property Investor 路 Toronto, ON 路 Member since 2018 路 9 posts 路 8 votes
    8y
    @Richard Wilson My personal suggestion to you is twofold. First I'd recommend that before you jump into real estate you should dig further into educating yourself regarding your existing investments. If your returns are just outpacing inflation in this market because you're risk averse then flipping will not likely be for you. If your returns are low for other reasons then I'd recommend working on that before venturing into real estate. Then look at diversifying into real estate because it can be an excellent investment as well.
    1Reply
  • Andy P.
    Wood Ridge, NJ 路 Member since 2018 路 4 posts 路 1 vote
    8y

    @Rob Lee, I was just about to write this same thing.  x100.  Figure out your current investments because equity market has been fire the last many years.

    1Reply
  • Steve Babiak
    Real Estate Investor 路 Audubon, PA 路 Member since 2009 路 13k+ posts 路 8k+ votes
    8y

    @Darren Sager is located in that general area; he can probably give some guidance as to training from those who are reputable, so look him up if he doesn't post something in this thread. 

    2Reply
  • Russell Holmes
    Real Estate Broker 路 Apopka, FL 路 Member since 2017 路 492 posts 路 528 votes
    8y
    @Richard Wilson I agree with others to hang on to your capital while you educate. Bigger Pockets is a gold mine. The key to "safe flipping" if there is such a thing, is to have the quick sale not be your ONLY exit, even if the preferred one. Make sure you could rent it a year or three at a positive cash flow. Maybe run numbers to see if it would be a good BRRRR property to refi your capital back out (if you're not familiar with BRRRR search the forums and blogs,it's a great method for redeploying capital without a sale). If you know you're ok to hold it, there's not as much risk. Also, many flips are funded by hard money loans with 10-12% interest and 12 month terms. 12% means every month it sits, the money costs 1% which can quickly kill profit. A hard money funded flip is tighter timing and tighter margins. With cash, your holding costs are MUCH lower so a delay isn't as costly. Most flippers aim for purchase rehab and holding to come in at 70% of ARV. You're going in with cash so your holding cost is much lower and you're just aiming for 10-15% profit on $200k. I think that is very reasonable with proper analysis. However, educate yourself at least enough to know the concepts before deploying your money. If you do partner, spend a bit of money on a real estate attorney as you want a good legally binding agreement. Many people can sound really experienced and give you a firm handshake for your capital.... distrust anyone who wants your money and doesn't have a fully analyzed deal they are searching to fund. I have knowledge and lack the funds but if I were local wouldn't be asking you for it unless I saw a way you'd be able to benefit more than me by deploying it. Vice versa sends up red flags when you (the money guy) are solicited for funding a "no money" guy. Better would be if you sought a partner to bring the skill to a deal you help find. Utilize the BP calculators and find a reputable general contractor who has done several flips. May cost you $100 to have him walk a potential property to quote rehab, but you'll get over $100 worth of knowledge looking at the estimate, even if it makes the property a bad deal. Take your time and 10-15% profits in 4-month flips should be doable.
    1Reply
  • Russell Holmes
    Real Estate Broker 路 Apopka, FL 路 Member since 2017 路 492 posts 路 528 votes
    8y
    And I realize your holding costs are the opportunity costs of lost gains in current securities, but if you compared to risk withhard money borrowed funds, you are in much better shape!
    1Reply
  • Russell Holmes
    Real Estate Broker 路 Apopka, FL 路 Member since 2017 路 492 posts 路 528 votes
    8y
    @Richard Wilson I would also recommend looking at what is available within an hour or so of you. Prices where you live may be high, but there is likely a cheaper market within an hour or two. Find a good investor friendly realtor there to help you analyze deals. Their analysis of the after repair value and desirability of the area will be invaluable if you don't live there. If you do your first flip at a distance you have to fly to, it makes it very difficult to manage. In my local market, similar 3/2 houses 2 miles apart can be the difference between a quick sale at $180k and a $110k sale that takes a few months and several price reductions to close. I know the area and difference in value, but from out of state it would be hard to tell for sure.
    1Reply
  • Frandy Blain
    Holliswood, NY 路 Member since 2017 路 49 posts 路 10 votes
    8y
    @Richard Wilson get the knowledge don鈥檛 make the mistakes most people do it will cost you ignorance is a big BILL
    2Reply
  • Ramsin Jacob
    Realtor 路 San Jose, CA 路 Member since 2018 路 184 posts 路 71 votes
    8y
    @Richard Wilson sent you a message. Thanks.
    0Reply
  • Richard Wilson
    OP
    Forest Hills, NY 路 Member since 2018 路 24 posts 路 23 votes
    8y

    @Russell Holmes

    Hey Russell ... Thank you for all the useful information.  I am definitely not considering trying this in the NYC market - it is just too expensive of a market.  I browsed through Bigger Pockets podcast, and majority of the subjects are on how to finance your deal, and rental properties.  I am going to begin with how to analyze a deal. I'll hopefully pick up some quality  reading material, and start absorbing information from there.  

    Your responses were greatly appreciated. I really like the idea of partnering up, but tough to find quality, trustworthy, like minded people, who are not looking for shortcuts or a huge pay day. Like I said, I just really want to change my lifestyle around, and I think REI can really be the tool to get me there.

    Thanks again.

    0Reply
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