Flipping houses?

**Buford®** · 10-10-2005, 01:00 AM

Anybody buy homes to flip and make a profit? I'm just wondering how easy it is to do this. I have a pretty good amount of money saved (about $20g's) that's good enough for a down payment. I was thinking about getting a forclosed house with an FHA or an interest only loan. Is it as easy as the concept seems? Any help would help. Thanks, guys.

**JustinSane110™** · 10-10-2005, 02:08 AM

I'm planning on getting into that within the next couple months. I know my dad was doing it in Indianapolis, and it didn't seem hard at all. He never bought houses that were in that bad of condition, just ones that needed minor things like retiling the kitchens, new fixtures, couple coats of paint, etc. Made a damn good profit on each one too. Let me know man, cuz I'm 100% set on doing this as well.

**Danny** · 10-10-2005, 11:00 AM

U need cash to buy on the courthouse steps, i have never heard of anyone gettin a loan for a forclosure, becuase you dont know exact bid price till you get there. You might be able to get somepeople to quit claim the deed over. Good luck.

**civic95** · 10-10-2005, 12:04 PM

Originally Posted by Danny

U need cash to buy on the courthouse steps

Werd!

You really need cash to flip houses too. Otherwise you'd be paying more intrest each month than the house will appreciate. In the begining hardly any of your payment is going towards principal, it's all going towards intrest.

Just as an example, my first year I made about $12K in monthly payments. Only about $1500 went toward the payoff on the house. The remainder was intrest. Now add your closing costs to that, realtor commissions, and then homeowners association fees if you live in a neighborhood. You'll be in a big hole from the beginning without cash.

**Buford®** · 10-10-2005, 11:55 AM

Thanks for the info guys. So you finally got the M3, Danny?

**Buford®** · 10-10-2005, 01:13 PM

Damn. I know it's impossible to buy a house with only 20k, so do I need to get a loan for way more than that?

**civic95** · 10-10-2005, 01:18 PM

$20K is a great downpayment, and yes you'll need a loan for the rest.

Here is a great calculator for how much you can afford.
http://www.bankrate.com/brm/calc/new...a=0&Ed=0&tEo=0

of course I wouldn't suggest buying the maximum you can afford.

**ARFNSX** · 10-10-2005, 01:48 PM

Originally Posted by Buford

Damn. I know it's impossible to buy a house with only 20k, so do I need to get a loan for way more than that?

Lets say the house you are looking at is 100k, you can put 5k down (simply 5%) and a lender /bank will give you 95% of the balance as long as you have a job. The mortgage companies want to lend money, this is how they make their money (on interest) so as long as you qualify for a few simple things, you will be a-o-k.

**civic95** · 10-10-2005, 02:47 PM

Originally Posted by ARFNSX

Lets say the house you are looking at is 100k, you can put 5k down (simply 5%) and a lender /bank will give you 95% of the balance as long as you have a job. The mortgage companies want to lend money, this is how they make their money (on interest) so as long as you qualify for a few simple things, you will be a-o-k.

Right, but how is he going to make money if he pays $8K-$10K in intrest each year? I don't think the house the will appreciate that much.

**JustinSane110™** · 10-10-2005, 03:25 PM

Originally Posted by civic95

Right, but how is he going to make money if he pays $8K-$10K in intrest each year? I don't think the house the will appreciate that much.

Flipping houses should take a couple months at the very most when you're just buying to do some cosmetic work and resell it. Flipping isn't a long term investment. I went to indy to help my dad out with one, my older brother and uncle helped out too and the 4 of us knocked it out in 2 weekends and he got a $20k profit on it.

**ARFNSX** · 10-10-2005, 05:33 PM

Originally Posted by civic95

Right, but how is he going to make money if he pays $8K-$10K in intrest each year? I don't think the house the will appreciate that much.

Interest is tax deductable....probably one of the best tax write offs you can get. It was the gov't way of getting people out there purchasing property.

**Kevykev** · 10-10-2005, 05:57 PM

Originally Posted by civic95

Right, but how is he going to make money if he pays $8K-$10K in intrest each year? I don't think the house the will appreciate that much.

You're thinking a little too long term.

If you find an area with a very quick turn time- (time it takes for a house to sell from listing to selling) maybe around 3 months or so you'll be good.

Buy the house for a bargain, maybe the family is in a desperate state or maybe the house needs some minor-major repairs. Buy it for a good price, hopefully the appraised value supports the effort. Ie: Appraised for 180k buy it for 120k sell it for 165k so on and so forth.

Get an interest only ARM loan so you only pay on the interest (no need to touch the principle) since you plan an flipping it (no need to build anymore equity).

so on and so forth...

**tony** · 10-10-2005, 01:37 PM

I tried it and got burned.. not to say I discourage it, just be careful who you hire to do work for you.

**ARFNSX** · 10-10-2005, 01:46 PM

If you have 20K that is good to do about 3-4 house. I have been doing this on the side for years and it is a great way to make extra money and build up your portfolio. And when you say flip, how how money do you need to put into it if you even need to do so? I have tons of info in my head we could do a siminar.

Today you can get into several investment properties with little to no money down. I word of thumb to become sucessful is to always use other peoples money whenever possible.....keep all of your liquid money liquid for better use.

**Danny** · 10-10-2005, 09:14 PM

Originally Posted by ARFNSX

If you have 20K that is good to do about 3-4 house. I have been doing this on the side for years and it is a great way to make extra money and build up your portfolio. And when you say flip, how how money do you need to put into it if you even need to do so? I have tons of info in my head we could do a siminar.

Today you can get into several investment properties with little to no money down. I word of thumb to become sucessful is to always use other peoples money whenever possible.....keep all of your liquid money liquid for better use.

yes. keep as much liquidity as possible, you might need it. BUt you mentioned buying at the court house steps, they require you to have cash for that! but, if you get it from a private seller you could do an Option ARM loan, becareful, make sure u understand how that works befor signing papers

there are pleny of other routes if you buy from anywhere but the courthouse steps. and yes, 20K is enough to start a few small projects. I am not sure how the banks like the ROI on these small projects your talkin about. But all the ones i deal with, banks love the 30% ROI range

(food for thought) thats how i usually judge the inital potential of a project. good luck. oh and for the most part "use other peoples money" like the person i quoted said But like anything, rules are ment to be broken, so dont take that to heart.

lamar, your thinking way to long term. if he was to do an Option ARM loan, yes he would even come close to touching the principle. BUT, he ROI should be much great than his investment + intrest. And if your only planning for 10% ROI, that just seems crappy and unsafe, but then agian, i dont do these types of projects, i do land development.

I hope the above made sense, i have been working all day and then had a night class, so my brain is a little fried and my spelling and grammer are probably not up to par. sorry.

**Buford®** · 10-10-2005, 03:57 PM

Not bad. How expensive was the house?

**JustinSane110™** · 10-10-2005, 04:05 PM

Originally Posted by Buford

Not bad. How expensive was the house?

I think he said it was $88k, paid cash for it and flipped it for just over $105k. How soon you planning on starting with this?

**PIprez** · 10-10-2005, 04:24 PM

you can't use FHA loans for flipping, they have some rules set into it to prevent it. cash is the best way to do it.

**Buford®** · 10-10-2005, 04:47 PM

Originally Posted by JustinSane110

I think he said it was $88k, paid cash for it and flipped it for just over $105k. How soon you planning on starting with this?

In November. Nice turnaround.

Originally Posted by PIprezyou

can't use FHA loans for flipping, they have some rules set into it to prevent it. cash is the best way to do it.

Yeah, my mom's in realestate, she said the same thing today when I asked her about that. She told me yesterday that I can use an FHA to roll in the costs of repairs and stuff. She forgot to say that I can't flip it.

**ARFNSX** · 10-10-2005, 05:36 PM

Originally Posted by Buford

In November. Nice turnaround.

Yeah, my mom's in realestate, she said the same thing today when I asked her about that. She told me yesterday that I can use an FHA to roll in the costs of repairs and stuff. She forgot to say that I can't flip it.

FHA is a government program use to help people who wouldnt/couldnt necessary get financing for property. FHAs rules are not as strict....just more paperwork. Since it is FHA, they figure you shouldnt be purchasing investment property anyway with assistance. FHA is more more assistance with down payments or first time home buyers.

(No I am not a real estate agent or mortgage broker, I just purchase a lot property and land)

**The Ren** · 10-10-2005, 05:35 PM

My sister bought her house almost a year ago in the new Reunion Subdivison in Braselton for $120+K... The same style house now is selling for a bit over $280K

**Buford®** · 10-10-2005, 07:07 PM

Can't you get me one of those loans, Kevvvy?

**Kevykev** · 10-10-2005, 07:11 PM

pm me mayne!

**Ex_Vtec_Girl** · 10-10-2005, 08:32 PM

technically, "flipping" houses is illegal, but buying & reselling for investment purposes is legal

**Danny** · 10-10-2005, 08:59 PM

Originally Posted by Ex_Vtec_Girl

technically, "flipping" houses is illegal, but buying & reselling for investment purposes is legal

link me to a .gov site with a defanition of "flipping" and the code that says its illegal... This rings a bell like i have heard it befor, but never provided proof. thanks.

**Ex_Vtec_Girl** · 10-11-2005, 05:43 AM

Originally Posted by Danny

link me to a .gov site with a defanition of "flipping" and the code that says its illegal... This rings a bell like i have heard it befor, but never provided proof. thanks.

i'll talk to my boss today & find out where i might be able to find it online & i'll try to post it tonight

**Danny** · 10-10-2005, 09:26 PM

yes ryan, i got a m3

finally

**john_stamos** · 10-11-2005, 09:39 AM

You can infact finanace a foreclosed property. You do not have to buy " from the courthouse steps" But be carefule of the term Flip! It is not 100% legal to flip a property fo profit within a short period of time, unless the you self it for market value and dont try to inflate the price...

IF you want to know more info.. PM ME! I can get you set up with the right contacts to start buying.. And i personally can finance for you.. let me know man and good luck with it!

**civic95** · 10-11-2005, 09:53 AM

Keep us updated on what happens. I just can't see it being that profitable. Like I said earlier without a real estate license you have to pay 5-6% commision when you sell it. Maybe I'm thinking too long term.. You can't always sell a house in 30 days, be prepaired for it to take up to 6 months. Also if its not your residence and you sell it before having it for 2 yrs, you have to pay taxes on your profit.

**Danny** · 10-11-2005, 10:20 AM

thanks EX girl, i have heard of the word FLIP being illegal befor, but i forgot to look into the exact meaning. thanks alot

lamar, yea, commision will bite you. but thats all part of the game, you have to have a viable project, and take all that into consideration.

john, personally, i dont work with forclosures much, thats not my side of the bussiness. But, the people i have talked to make it seem like you can only pay cash at the steps. But are you talkin about somehow buying befor the bank puts it up for auction? more info would be great, thanks man.

**john_stamos** · 10-11-2005, 10:56 AM

Originally Posted by Danny

thanks EX girl, i have heard of the word FLIP being illegal befor, but i forgot to look into the exact meaning. thanks alot

lamar, yea, commision will bite you. but thats all part of the game, you have to have a viable project, and take all that into consideration.

john, personally, i dont work with forclosures much, thats not my side of the bussiness. But, the people i have talked to make it seem like you can only pay cash at the steps. But are you talkin about somehow buying befor the bank puts it up for auction? more info would be great, thanks man.

well when you got to auction, you must be a cash buyer.. but there are several companies that list and sell foreclosed homes like anyother house. Ive done quite a bit of foreclosure financing in my days. The cash deals are always the way to go.. but just because you dont have $120,000 sitting in the bank doesnt mean you still cant play the game.

one of my agents does nothing but foreclosed sales.. and I get all those loans. The only time it is an issue is when the subject property has alot of deferred maintenance.. because the bank wont loan money on a fucked up home.. Th other catch is Since the bank is selling it themselves, they will not provide a termite letter or treat any active infestations. And as you know this is a requirement of all lenders. So if your house has a termite problem, you may have to pay to treat it before you even own the house.. But other than that.. its just like anyother transaction.

**djdetox** · 10-11-2005, 12:42 PM

"...keep all of your liquid money liquid for better use..."

amen!!

**Jaimecbr900** · 10-11-2005, 02:41 PM

Foreclosure properties aren't always "bank owned" too.

As Mr. Stamos stated, the loan for a "foreclosure" property is as any other. The only difference is that most of those loans are investor loans and not owner occ. loans, therefore down payment and qualification requirements are different.

If you are going to sell the property quickly, really the details of the loan are not as important as the real meat and potatoes of the whole deal. How much can you get it for, How much are you gonna have to spend fixing it, How quick can you sell it, and more importantly for How MUCH is far more important than if you pay a few hundred dollars more in interest or not.

If you are going to KEEP the property for rental purposes (I know this wasn't the original topic, but many people have morphed it into this), then is when you have to take into consideration long term costs. Until then, they are simply passed on or absorbed by your earnings.

If you buy a house and in 6 mos you made $20k in profit, would you care that you didn't make $20,500 because you nickeled and dimed somewhere? To me, $500 is far less than the amount of money I'd lose wasting my time nickel and diming a situation to death.

**Buford®** · 10-12-2005, 06:06 PM

Thank you for your help, guys. It's greatly appreciated. Any more advice?

**chmura** · 10-17-2005, 11:58 PM

Originally Posted by Buford

Thank you for your help, guys. It's greatly appreciated. Any more advice?

I play with RE for a living...... if u want more info we can do a coffee sometime.........

a few peeps on here can back me up on it...... i have done well so far.......

there is tons of options........ it all depends on what u can do yourself.....

there is also peeps on here that can help with all the steps...... agents, lenders, lawyers (assistants)..... etc....

if u dont have the balls to do it yourself, or have 2 left hands and cannot rehab, u can always loan cash at a nice interst........

**Kevykev** · 10-18-2005, 08:46 AM

^ word, Cloud does his damn thing Nah Mean?

**E46//M3** · 10-27-2005, 11:40 PM

Buford,
If you need any help finding a house you can call me man.i work for keller williams, we are the third fastes growing real state company in the country. if you need help with a lender we can provide you one as well, but if you have anyone who can help with the loan, i can still provide you some really good information and most likely you will need an agent. You really dont need to get a forclosure .Usually, when you get into forclosures things can get a little ugly. They really are a pain in the ass sometimes, i had one a couple months ago and i was not too happy about it because it had to be done with a certain closing attorney and that took for ever. anyways, if you want to start getting into investment you dont really have to put all that money down. The lender that i submitt all my loans through can get you an FHA loan with a great program called "zebra Poyect " this program was created to provide with a down payment assistance. if you need more info about i can get it for you. Another option could be an interest only, you dont need to worry about paying th principal since you are notgoing to have the property for too long. I really hope you can get started because if you do it right it can be very profitable. Call me man, I am really glad you are doing so well.
Lucas

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