Flipping Homes for Beginners

[Christian Esparza]

Good Morning Everyone,

I am interested in flipping home and would like to know if anyone has any tips regarding what I can do to make this possible. I am attempting to do this with the minimum capital required. I have looked into wholesaling homes which  I am open to. I recently started working in mortgages so I have somewhat of an understanding of how flipping works, but would like to get info from some seasoned veterans on here. Thank you all for any feedback you may be able to provide.

[Maurice Smith]

@Christian Esparza Here are a few quick tips: 

1) Read "Flipping Houses for Dummies" it's a good basic run through of the process. There are other books out there, but I have personally read this one. 

2) Understand that Wholesaling is really just an exit strategy amongst a number, so depending on the particulars of a deal (project) you may want to limit your risk exposure by selling your interest in the deal to another investor. Putting on my Project Management hat, we'd call that transferring risk. Essentially, exit quickly for a fee, versus tying your money and time up into a rehab.

3) As far as capital, money follows a good deal. If you are truly looking to fix and flip properties, start attending your local REIA and get to know the Hard Money Lenders. Leverage can be your best friend, but understand what carrying costs are and how to structure that into your numbers. You'll also need some skin in the game with this approach too, so if you have some funds that's good. Learn how much of the deal they'll fund, both acquisition and rehab, how they handle draws, etc.

4) As you build a track record, learn about Private Money and get to a point where you can access that to close deals and fund projects.

5) If you go the wholesaling route (primarily), consider strategically balancing the number of assignments and double-closings you close, and depending on your average spread per deal, every 7-10 properties, either hold it or fix-and-flip it yourself. I kind of look it as similar to diversification on the market. Don't put all your eggs in one basket, spread your money and risk out.

6) Lastly, everything mentioned above has various legal and tax implications, so talk to some professionals and gain a decent  understanding of those factors.

Happy Investing!