New to House Flipping

[Aimee Piacentino]

Hey there, thank you to those who provide your knowledge and expertise in the area of house flipping. So, last year I did get into the wholesaling side of RE, I work full time still and have recently become interested in house flipping. I work in the construction industry and have that covered for renovations and cost. 

I have done research on it and I have heard now is still a good time to get in on the flipping side of things because there are still buyers out there searching and inventory is still low. I am all for it and want to jump in, but with the interests rates still climbing and prices are still coming down on homes; my question is, how do you predict a sale of a home 3, 4 or 6 months down the road when I am ready to sell, and still be able to make a profit, if home prices are coming down? Yes, possibly I could refinance and rent. 

From what I am gathering and have been hearing is to always prepare for the worst and find strategies to get around those hurdles. It sounds like a good idea, but being the first flip ever how do you know what hurdles to prepare for? 

Is there anyone that could help guide me in the right direction? Is it best to go through a private lender, or hard money lender? How could I possibly get this 100% funded, if that is even possible? In the REI world of terms what is the "spread" that I need to look for if housing prices are coming down?

Again thank you to those who provide their knowledge. Really appreciate it. 

[William Harvey]

@Aimee Piacentino You really won't start learning until you get into your first deal. All the "textbook" learning from reading forums, going to meetups, etc. is good. BUT, experience certainly trumps everything so I wouldn't try to have all the answers at this stage. Once you do your first flip you will likely look back and realize how little you knew prior to that!

The best option would likely be some kind of private hard money where there are less hoops to jump through compared to Kiavi or Fund That Flip. We've always gone the private route for this reason. You are also more likely to get 100% financing or even 100% + reno funds with a private lender. But, this really depends on how good the deal is that you find and how well you buy it. If you are buying a property for 50 cents on the dollar (ARV) then there isn't a ton of risk from a lending standpoint and doing a 100% loan isn't out of the question.

In terms of your last question, we generally shoot for the higher of $40,000 profit or 10% of the ARV. But this is subjective and everyone might be higher or lower than this. Flips are a lot of risk and work and we want to be compensated accordingly.

One last thing to add, is to be laser-focused on the ARV when doing your numbers prior to making an offer. This is the one thing that can make or break a deal if you get it wrong. And this is true ESPECIALLY in the current market we are in. If in doubt at all about the ARV and where it'll be a few months from now, drop it lower. Way better to miss out on a deal because you offered a low price than to be caught with a deal that loses money or breaks even. On the first deal I did, everything went wrong and we made tons of mistakes, but the one thing we didn't mess up is the ARV and how we bought it. We still ended up walking away with almost $50k despite all our errors. Be ultra-conservative on the ARV!