Please critique my gameplan when it comes to wanting to flip my first property.

[Kevin Moise]

I am 24 years old from Ft. Lauderdale, Florida and two years out of college with 80k saved with no debt looking to flip a house for the first time. So far I have contacted a decent real estate lawyer and had them recommend contractors to make sure I am not getting screwed over and the help me through the process and hired a CPA. Getting hard money lending for the property and flip but still shopping around. I tried looking to flip in Florida but everything is much more expensive here compared to anything else out of state and I know its riskier to flip out of state as well.

Before buying I need to

• See if I am buying in a good area/decent market (looking in the midwest specifically).
• Look at comps.
• See if the house is flippable or a money pit.
• Inspect home
• Termite inspection
• Foundation issues (I am only buying a house connected to the ground not with a crawl space)
• Structural issues.
• Roof issues
• Bad ceiling (uneven ceiling, popcorn ceiling)
• Window problems
• Electrical issues
• Plumbing issues
• AC issues
• Mold
• Leaks
• Might sound weird but too many crack on side walk or driveway.
• Actually have a contractor go through and see if it is flipable or not. An estimate cost.
• Do a survey
• Always run the numbers so that they make sense. I work as a financial analyst so I have my own excel sheet and also will have to communicate with my CPA so everything checks out.

Hiring a contractor

• Get a reputable contractor(within budget) from asking around. As said before I am talking to a lawyer about that.
• Get everything in writing (legal documents) before starting and have the CPA record all transactions between contractors and I. Also make them sign a lien waiver so they can not say I did not pay them.
• Set up an account with wherever materials are bought so I am charged directly and contractors dont stiff me like how they would if I gave them money directly to buy materials.
• Looking for a contractor who will not need a deposit to start as I am planning to pay in phases for labor but I have been thinking about just paying for everything once their all done (I am kind of paranoid about contractors lol)
• Hire two different inspectors to see if the house is actually good when done.
• Currently want to work on 2/3 br houses so I am trying to get flips done in 3 months.
• Prepare for unexpected costs.

Selling the house

• Maximum market exposure - MLS, zillow, etc.
• Get good realtor recommened by lawyer.
• Make sure the price makes sense and have a lot of high quality pics of the house around 50-75 pics.
• Make pontential buyer sign nonrefunable earnest money contract.
• Examine all offers

What else am I missing or should I change?

[Kevin Sobilo]

@Kevin Moise, a few things to consider:

1. If being an active investor was as easy as identifying these items you listed and hiring decent providers (contractors, agents, lawyers, etc) wouldn't everyone with some money be making money investing?

2. A successful active investor usually has something to add to the process from their own knowledge/experience. They might be an accountant, contractor, or real estate agent themselves and have expertise and experience in some aspects of the process.

3. You mention investing at a distance being more difficult, but don't seem to appreciate how much more difficult it is. Even learning a real estate market distant from you is a big task on its own!

In some markets a 40 year old house is "old" in others a 40 year old house is "pretty modern". Markets differ in the type of housing stock, building methods and requirements, buyer perception and expectations, etc etc.

4. You mention hard money loans. Many hard money lenders don't want to lend to a newbie because they evaluate "the deal" and the experience of the borrower/investor is a big part of whether a deal is likely to be successful. So, you may wish to make sure a lender will lend to you before putting in a lot of work finding a deal.

5. Have you considered a "Live-In Flip"? Buy a dated but functional home and live in it and work on it for 2 years before selling.

The advantages are getting experience in a safer deal. You can use conventional financing with low down payments and fixed interest rates because this is a primary residence. When you sell after 2 years of living there you can sell and not pay profit on the 1st $250k in profits! A nice bonus!

6. Consider seeking out local investors and learning from them. Go to local investor meetups. Maybe a local investor will offer to have to visit a project they are working on and discuss it in detail. I have done that with newbie investors a number of times.

7. Consider that you want to have some level of expertise in ALL aspects of the process. Its hard to manage a plumber when you have no clue about plumbing. You will struggle if you just listen to what your hired experts say.

Even a good contractor/plumber isn't going to give you the best advice a lot of the time. They don't have a good handle on the big picture otherwise they would be the investor themselves. 

There are also TONS AND TONS of horror stories about dealing with tradesman and they are TRUE! Plus MANY MANY more problematic situations that come up daily. You need to be able to manage those. 

8. Study project management! Every rehab you do is a "project" and while it is hugely helpful to have some knowledge of all aspects most people can't be expert in all of them. Having project management knowledge/skills will help you understand how to cope with that and manage a project to success.