I'm new to Austin and would like some general advice on how to get started with house flipping? I went on RedFin and saw that there are very limited "fixer-uppers" and the ones that are available are very expensive. I assume that this doesn't mean there aren't any opportunities. I've been reading this blog and hearing about zoning and re-subdivisions as a play that was used which my understanding is buying land, and re-zoning it. How difficult is that process? What would be a recommended play for someone new in this industry? Any links, general advice, or how to begin my search would be greatly appreciated. I also saw that Austin Flipsters is offering a course on this but am unsure whether it is worth it.
My first bit of advice would be to not sign up for a "guru" course. I'm not familiar with "Austin Flipsters" so I can't comment on them specifically, but I would not pay a whole bunch of money for a course. Read, listen to podcasts, start attending meet-ups, and get to know other investors so you can add value to what they are doing and learn in the process.
Yes, it is hard to find deals in Austin, but there are some. In some areas of the country you can buy properties with margins from the MLS--that is very rare in this market. Early on, much of your attention will be focused on finding deals and getting to know those that are finding deals.
Glad to hear you are eager to learn! Welcome to the REI game--its a ton of fun and very rewarding!! Let us know how we can help.
My first bit of advice would be to not sign up for a "guru" course. I'm not familiar with "Austin Flipsters" so I can't comment on them specifically, but I would not pay a whole bunch of money for a course. Read, listen to podcasts, start attending meet-ups, and get to know other investors so you can add value to what they are doing and learn in the process.
Yes, it is hard to find deals in Austin, but there are some. In some areas of the country you can buy properties with margins from the MLS--that is very rare in this market. Early on, much of your attention will be focused on finding deals and getting to know those that are finding deals.
Glad to hear you are eager to learn! Welcome to the REI game--its a ton of fun and very rewarding!! Let us know how we can help.
Learn what a good deal looks like. For instance, if you see a $30,000 difference between ARV and the purchase price... do you think that is a good deal? Answer: it's not. You have to buy the property and incur closing costs. You have to close again when you sell the property. If it's a $100,000 property, just those costs alone may take $10-15,000.
Figure out how much margin you need on a deal to make it worth all the effort. For us, it’s about $50,000 (at a minimum) after repair expenses. Are those deals harder to find? Yes. Are they out there if you are patient? Usually Yes. Having a good margin gives you the ability to deal with the unexpected, whatever it may be: seller concessions, unforeseen repairs, not getting your asking price, etc.
Your rezoning play sounds complicated for a beginner. You want SIMPLE when you start out. It’s just less things to go wrong.
For us it’s as simple as this: we are looking for a house that has at least 1,000sf of space that can be purchased for about $75,000 or less, and needs minimal rehab to be a rental for at least a year (all numbers can be flexed to meet your area’s price points). Once fixed up we would hope to be able to sell it for closer to $115-$125/sf.
Why rent it , when you are looking for a flip? Because you can save 10-15% on your taxes if you hold the asset for a year... (long term versus short term capital gains).
So if you start to get the picture ... there is a coordinated strategy around how to most effectively flip a house. A lot is about buying right... but then maximizing return, minimizing expenses by not over rehabbing, and trying to save in taxes as well. Doing what work you can yourself, finding cost efficient (affordable ) contractors that will do a good job to help minimize repair expenses, etc.
Each thing ties together to optimize a deal.
Hrere's another one we just tried and it worked like a charm: we found a company that will list our property on MLS for a flat fee ($150).... it let us bypass a selling agent expense, saving us 3% in selling commissions. We still pay the buyer's agent their full commission (3%). That's a $3,000 savings per $100,000 of selling price! Not to shabby!