Let’s Talk About House Flipping

You may have seen many articles, blog posts, infomercials, or even TV spots about House Flipping. As with any business venture, there are many ways to deliver a product or service, and many variations in doing so.

There are also different advantages, risks, profit potentials, and effects of each type. My objective here is to first provide some definition to what House Flipping is, and to inform you about how I have gone about it successfully for the past 30 years, long before the term “house flipping” perhaps even existed.

For some traction here, let’s start with some types of House Flipping now underway.
There is the Property Bros. house flipping TV show and how they go about their business model. First and foremost, this is centered around having a substantial amount of financial resources immediately available to first purchase the target house, and then undergoing sometimes extensive, and expensive, remodeling and fix-up costs. Then once all this work is done, of course, the house needs to be sold for a profit. This model is not a reachable one for everyone, as a significant amount of dollars are needed at the core of it, particularly the homes featured on the show where major renovation is often featured. Planning, design, remodeling, and construction experience are an essential, unless you contract out for all of these, but that drives up expense, sometimes cutting deep into potential profit.

Higher risk is also involved here as typically remodeling budgets are exceeded by 25 to 50% along the way, again eating away at potential profit or even causing a loss, and before you know it, what once seemed like a good idea, now has you Out-of-Business!

You should also know, there are many Real Estate Agents who during the routine process of representing buyers and sellers in their efforts to sell and find homes for investors to flip, wind up finding a house for the investor, without ever having taken the plunge into flipping a house for themselves. As a result, the Realtor winds up getting the house flipper into a deal that the investor pays too much for. Unless you are using a “buyer’s broker” as opposed to a selling agent, the incentive for the selling agent is to represent the seller and get the seller the highest price they can for the seller. And rightfully so! Remember, the selling agents usually have a fiduciary responsibility to the seller who is the one paying the commission.

Multiple Listing Service (MLS)
When I buy a house, I usually stay away from properties that are listed on the MLS!
Why?

Because the MLS is the computer database where all the Realtor listed properties are kept. There are real estate investors that are my competition that are monitoring the MLS for each and every listing as soon as a Realtor posts it up for sale in the MLS system.
So what is a person like you who is new to this house flipping game supposed to do?

I mentioned above that I have been in this house flipping business for over 30 years.
The business of buying a house with the intention of selling it, and profiting accordingly.
I would term this “Traditional House Flipping.”

Traditional House Flipping is…….The art of YOU knowing how to find a single family house deal, estimate the repairs, make the offer, close the deal, fix it up, and sell it at a huge profit.

I should also tell you that Traditional House Flipping is NOT the only model of real estate investing that exists!

There are mainly 3 models that Real Estate Investors use. They are:

– Traditional House Flipping as described above
– Wholesaling
– Buy and Holds

But, back to Traditional House Flipping.

My favorite way for you to find a deal up front is to do your own marketing.

This we do by sending out direct mail straight to the sellers. When you market directly to the sellers, then you have little to no competition from other investors, because as we discussed earlier, most investors are relying on Realtors to find them deals and are paying too much.
I just closed a traditional fix and flip last week, where I found the house for $90,000. I closed on the deal with the seller. I got my contractor’s lined up, completed the work in 90 days, and I sold that house for $205,000. I spent $40,000 on the fix up costs, so my net profit was $75,000.
Not a bad pay day!

It’s hard to find deals with this kind of spread working with Realtors on houses that are listed on the MLS. Now, having said this……Every year I find 3 or 4 deals where a Realtor gives me a hot tip on an “off market” property. So when this happens, I’m glad for Realtors and the deals they send me, and I’m glad to pay the a full commission. But the majority of deals, I do my own marketing and find my own deals.

What the TV shows do not tell you, is the art of finding the deal.

One rule remains true in House Flipping…… “If you don’t buy it right, nothing else will fall into place”.

I’m amazed at some of the house flipping shows where they go through the entire rehab, and then at the end of the show they total up the profit after the sale, only to find they broke even on the Flip.

What? Who goes that far into a house flip to break even?

So the most important part of this House Flipping article is to be a good marketer.
Know where and how to find the deals that others don’t know how to find.
And at the same time, you will make profits that are above average in this business.

I currently coach house flipping students in every major real estate market in this country, so I get to see first hand what is working, and where. If you would like more free information on house flipping from me and know how to profit from this business where you live, then visit my website for more tips and tricks to make money by real estate investing.

Click Here if you want to find more information and receive a copy of my New eBook

Enjoy the Journey!

Tom Nardone
“Millionaire Mailman”