First time flipping a house

Lender · Chicago · Member since 2024 · 88 posts · 24 votes

1y

Hi all,

Over the past year I have been gathering knowledge on various different types of real estate investing. In particular, I am interested in flipping homes. That being said, I have never flipped a home before, so just hoping to collect some information for anything I might have overlook or need to know before I make the jump. In particular, is there any software/tooling which is typically used to analyze & find tenants, analyze deals, and used to find a local realtor who specializes in real estate investing?

As of now, my general plan is to find a local realtor online who is experienced with real estate investing (and has investment properties of their own) to help me find a good local deal (goal is 20-25% return on ARV), get a hard money loan, aiming to rehab/repair/extend the property with my father (both have construction experience) within 4-5 months, and as for the loan exit strategy either sell or rent (depending on the deal). Lastly, hoping to do all this under an LLC. Thoughts on this approach?

Last point I would like to mention is that I am current renting, and I plan to purchase a primary residence within the next 2-3 years. Is there anything I need to consider for how my plan may impact the future (not qualify for first time home buyer incentives?, etc.).

Thank you all so so much in advance!

Hey David, this is a good strategy and one that does get you into a strong position to buy another investment property in the future if you decide to. If the money makes sense and you don't think the values will be going up at a high rate in the area you purchase, selling may be worth it as you might make the most profit. When it comes to the hard money loan you would want to go through somewhere that isn't a bank. I have a referral for you on this one if you want it.

1 Reply

Jonathan Bock

Accountant · Bryn Mawr, PA · Member since 2023 · 409 posts · 321 votes

1y

@David Neubauer

Jump in ...

Most do not get in the game

3 Reply

Alan F.

Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes

1y

Quote from @David Neubauer:

Hi all,

Over the past year I have been gathering knowledge on various different types of real estate investing. In particular, I am interested in flipping homes. That being said, I have never flipped a home before, so just hoping to collect some information for anything I might have overlook or need to know before I make the jump. In particular, is there any software/tooling which is typically used to analyze & find tenants, analyze deals, and used to find a local realtor who specializes in real estate investing?

As of now, my general plan is to find a local realtor online who is experienced with real estate investing (and has investment properties of their own) to help me find a good local deal (goal is 20-25% return on ARV), get a hard money loan, aiming to rehab/repair/extend the property with my father (both have construction experience) within 4-5 months, and as for the loan exit strategy either sell or rent (depending on the deal). Lastly, hoping to do all this under an LLC. Thoughts on this approach?

Last point I would like to mention is that I am current renting, and I plan to purchase a primary residence within the next 2-3 years. Is there anything I need to consider for how my plan may impact the future (not qualify for first time home buyer incentives?, etc.).

Thank you all so so much in advance!

Maybe consider a live in flip? Especially with your dads experience. Forced equity via fixing it up. Then use section 121 tax exclusion. You'll learn alot with a less stressful time frame. Maybe a house hack/live in flip.

I'm not aware of your markets normal appreciation though, so do take that into consideration.

2 Reply

Peter MckernanBusiness Member

Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes

1y

Quote from @David Neubauer:

Hi all,

Over the past year I have been gathering knowledge on various different types of real estate investing. In particular, I am interested in flipping homes. That being said, I have never flipped a home before, so just hoping to collect some information for anything I might have overlook or need to know before I make the jump. In particular, is there any software/tooling which is typically used to analyze & find tenants, analyze deals, and used to find a local realtor who specializes in real estate investing?

As of now, my general plan is to find a local realtor online who is experienced with real estate investing (and has investment properties of their own) to help me find a good local deal (goal is 20-25% return on ARV), get a hard money loan, aiming to rehab/repair/extend the property with my father (both have construction experience) within 4-5 months, and as for the loan exit strategy either sell or rent (depending on the deal). Lastly, hoping to do all this under an LLC. Thoughts on this approach?

Last point I would like to mention is that I am current renting, and I plan to purchase a primary residence within the next 2-3 years. Is there anything I need to consider for how my plan may impact the future (not qualify for first time home buyer incentives?, etc.).

Thank you all so so much in advance!

Yes, good agents, and good wholesalers are who you want to talk with to make deals happen.. Deal acquisition is an art, so dig in and make sure the deal is good and make sure the numbers at up to what you think is good!

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John Mason

Member since 2024 · 1k+ posts · 351 votes

1y

If you have a solid reserve and lose a bit of money (like about 2000) still it would be worth to get the experience and network with first flip.. or first flip see if you can do a joint venture with a successful and very experienced investor or flipper

1 Reply

Gabe R. Gonzalez

Property Manager · Chicago · Member since 2021 · 61 posts · 32 votes

1y

@David Neubauer - I'd recommend an owner occupied flip. Live in one and flip the other.

I'd look in the Bridgeport neighborhood. I increased the equity by $200K on mine by freshening up the lower unit and fixing some systems in the building.

Rents have gone up $200-$300 in last two years in the neighborhood. Get in before it gets too expensive! Reach out if you have any questions.

1 Reply

Marie ThomasBusiness Member

Real Estate Agent · Mystic, CT · Member since 2024 · 22 posts · 7 votes

1y

Live in flip is the way to go, that's what I did in CT. That way you can give up your rent (aka paying someone else's mortgage). Open a cc with a good point/interest rate/perks dedicated to the LLC, it will make it so much cleaner for taxes and you will receive points rather than using debit card with no add value. There is also an app called Keeper that can help you categorize expenses. I'm not familiar with your market but the faster you can start paying your own mortgage rather than someone else's you're one step closer to the long-term goal of financial freedom.

Yes, it will be exhausting, you will learn a lot, Youtube will be your best friend but don't give up. Best of luck!!

1 Reply

Quentin Ambrose

Real Estate Agent · Chicago IL, USA · Member since 2024 · 22 posts · 10 votes

1y

Hey David, as long as you flip the property it shouldn't affect your future purchase if for some reason you have to carry a loan on the property then that will affect your DTI which could potentially affect your future purchase.

As for flipping, I think you are in a good spot because you and your Dad can do the work yourself, one of the hardest parts of investing in Real Estate is finding quality vendors and contractors. Lastly, make sure you are meticulous when doing your Due Diligence a lot of investors bought properties to flip at the end of the hot COVID market but now those homes are sitting on the market or were forced to rent them. Always have multiple exit strategies!

1 Reply

Ashish AcharyaBusiness Member

CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes

1y

@David Neubauer Forming an LLC is smart for liability but can save you taxes if get an S-corp. Cost-benefit analysis needs to be done. Lastly, flipping under an LLC shouldn't affect first-time homebuyer status, but personal ownership of flips might disqualify you from those incentives.

*This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

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1 Reply

Peter Hoff

Lender · Springfield, MO · Member since 2024 · 3 posts · 3 votes

1y

Quote from @David Neubauer:

Hi all,

Over the past year I have been gathering knowledge on various different types of real estate investing. In particular, I am interested in flipping homes. That being said, I have never flipped a home before, so just hoping to collect some information for anything I might have overlook or need to know before I make the jump. In particular, is there any software/tooling which is typically used to analyze & find tenants, analyze deals, and used to find a local realtor who specializes in real estate investing?

As of now, my general plan is to find a local realtor online who is experienced with real estate investing (and has investment properties of their own) to help me find a good local deal (goal is 20-25% return on ARV), get a hard money loan, aiming to rehab/repair/extend the property with my father (both have construction experience) within 4-5 months, and as for the loan exit strategy either sell or rent (depending on the deal). Lastly, hoping to do all this under an LLC. Thoughts on this approach?

Last point I would like to mention is that I am current renting, and I plan to purchase a primary residence within the next 2-3 years. Is there anything I need to consider for how my plan may impact the future (not qualify for first time home buyer incentives?, etc.).

Thank you all so so much in advance!

Smart to want to have a real estate agent on board with you. The advice I give to my clients who are first-time borrowers is to have three people alongside you as you start your path with fix and flips: a realtor, a general contractor, and a lender. The bottom line is making sure your scope of work to the property does force enough appreciation so you have a nice profit margin. Depending on how large that profit margin is determines if it makes more sense to rent and refi or sell and take the quick cash.

1 Reply

Logan Lambert

Lender · Kingsville, MD · Member since 2023 · 103 posts · 35 votes

1y

Quote from @David Neubauer:

Hi all,

Over the past year I have been gathering knowledge on various different types of real estate investing. In particular, I am interested in flipping homes. That being said, I have never flipped a home before, so just hoping to collect some information for anything I might have overlook or need to know before I make the jump. In particular, is there any software/tooling which is typically used to analyze & find tenants, analyze deals, and used to find a local realtor who specializes in real estate investing?

As of now, my general plan is to find a local realtor online who is experienced with real estate investing (and has investment properties of their own) to help me find a good local deal (goal is 20-25% return on ARV), get a hard money loan, aiming to rehab/repair/extend the property with my father (both have construction experience) within 4-5 months, and as for the loan exit strategy either sell or rent (depending on the deal). Lastly, hoping to do all this under an LLC. Thoughts on this approach?

Last point I would like to mention is that I am current renting, and I plan to purchase a primary residence within the next 2-3 years. Is there anything I need to consider for how my plan may impact the future (not qualify for first time home buyer incentives?, etc.).

Thank you all so so much in advance!

Hey David,

Great questions here. Regarding finding an agent that is local and works with investors, I would go to local real estate Facebook groups and on here and post what area you are looking for one in and I am sure you will get help. What area are you looking in?

Wholesalers, driving for dollars, zillow and redfin, propwire, are all great resources for finding deals.

I am a loan originator on the DSCR and Hard money side. Most lenders you work with will require to close in an LLC, especially for hard money. Working close with a lender is always beneficial so you can get deals analyzed from the lending end very quickly. One thing to keep in mind, most lenders will require that you have owned a property for 12 months, and have two active trade lines on your credit for 2 years or more. With certain banks, they can count your 12 months of rent, as long as they can source it. This info is based on DSCR and Hard money loans, not FHA, VA, or conventional. Hope this helps!

1 Reply

Shannon MogilinskiPro Member

Investor · Chicago Suburbs · Member since 2021 · 46 posts · 37 votes

1y

Hi David--I flip full time in the burbs and I have been a GC for 15 years--now only working for myself. I'll DM you if you want to chat.

2 Reply

Marcus Gonzalez

New to Real Estate · Las Vegas, NV · Member since 2023 · 13 posts · 2 votes

1y

Quote from @Logan Lambert:

Quote from @David Neubauer:

Hi all,

Over the past year I have been gathering knowledge on various different types of real estate investing. In particular, I am interested in flipping homes. That being said, I have never flipped a home before, so just hoping to collect some information for anything I might have overlook or need to know before I make the jump. In particular, is there any software/tooling which is typically used to analyze & find tenants, analyze deals, and used to find a local realtor who specializes in real estate investing?

As of now, my general plan is to find a local realtor online who is experienced with real estate investing (and has investment properties of their own) to help me find a good local deal (goal is 20-25% return on ARV), get a hard money loan, aiming to rehab/repair/extend the property with my father (both have construction experience) within 4-5 months, and as for the loan exit strategy either sell or rent (depending on the deal). Lastly, hoping to do all this under an LLC. Thoughts on this approach?

Last point I would like to mention is that I am current renting, and I plan to purchase a primary residence within the next 2-3 years. Is there anything I need to consider for how my plan may impact the future (not qualify for first time home buyer incentives?, etc.).

Thank you all so so much in advance!

Hey David,

Great questions here. Regarding finding an agent that is local and works with investors, I would go to local real estate Facebook groups and on here and post what area you are looking for one in and I am sure you will get help. What area are you looking in?

Wholesalers, driving for dollars, zillow and redfin, propwire, are all great resources for finding deals.

I am a loan originator on the DSCR and Hard money side. Most lenders you work with will require to close in an LLC, especially for hard money. Working close with a lender is always beneficial so you can get deals analyzed from the lending end very quickly. One thing to keep in mind, most lenders will require that you have owned a property for 12 months, and have two active trade lines on your credit for 2 years or more. With certain banks, they can count your 12 months of rent, as long as they can source it. This info is based on DSCR and Hard money loans, not FHA, VA, or conventional. Hope this helps!

This is great information!

0 Reply

First time flipping a house - Need to knows

First time flipping a house - Need to knows

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