How hard is it really to "flip" a house?

Question

ok i love watching those house flipping shows on TLC, but i must admit... i watch with envy. lol. i was just wondering how hard is it to flip an old house? dont you have to have either cash or good credit to do so. a normal joe (or jane in my case) cant just go flipping right....? any advise or answers even would help! thanks.!

Answer 1

Plenty of cash, extremely good credit, knowledge of housing structure, a great contractor and crew, but most important how to stay on budget.

Answer 2

Flipping a home is not an easy task. Yes you need to have money because as you are flipping you need to be paying the mortgage for the home. Also, remember only a small percentge of the mortgage payment initially goes towards the principle balance (ie, if you have a $1000 mortgage approx $150 goes towards your loan, the rest goes towards the interest payment, taxes, insurance... the longer you own the home the less goes towards interest). If you don't have good credit, you will get an even higher interest rate, therefore your payments will be even higher than expected, and you will still only be chipping away at a small portion of the principle balance. Projects take a lot longer than you imagine, because usually each project opens a can of worms.

My advice to you, would be to make sure you study flipping house before you get into it. Remember, if you purchase a house, you have so many months to purchase another house after you sell the first one, or you will be taxed on the money you make on the first home. It will tie you into the business pretty deep.

Good luck!

Answer 3

With the current situation of the real estate market, this would not be the best time to flip a house! Wait till everything goes back to normal. (If it ever does).

Answer 4

You need cash and credit and some degree of knowledge of both construction and the area that the house is in.  You need a batch of reliable tradespeople or a general contractor who has them.  You might need an architect, you surely will need permits.

The house next to me is being "flipped".  Bought very cheaply for this area and the guy did a lot of work himself with one helper and apparently good work, took about a year.  Then it was "staged" with a lot of fancy rented furniture.  It's been on the market for months in a area that isn't having a melt down and I'm sure between the taxes, utilities, insurance and furniture rental it is costing him about 2000 per month plus the mortgage payment which at interest only would run over 1500 per month.   I figure he's out about 15,000 so far just  while marketing.  You can see it takes deep pockets to get in this game.

This guy made his biggest mistake by not knowing the area.  He's trying to get 20% over the average by putting a ultra yuppie place in a family area.  He will be lucky not to lose money on this venture.

Answer 5

It is harder than it looks.  The trick right now is to be able to sell the house right away after the work is done, and you have to price it under the current market prices to do that.

I wonder how many of the flippers on TV really make money. Check out this link about an A&E flipper in Atlanta

http://www.tvsquad.com/2007/06/06/aande-...

Answer 6

It can be quite a task.  I do it for a living and the market is down right now.  That means you have to find a better deal with more profit potential that you would have a couple years ago.  Buy lower and sell lower.  You must account for all expenses including purchase and sales and holding costs including utilities and more.  Always over estimate your budget and leave room for the unexpected.  It is purely a numbers game and it must be approached with great caution.  Contractors a difficult to deal with and can make or break your deal so proceed with great caution.  Consider finding a short sale house for your first flip.  Get more info at http://www.shortsaleway.com about the real estate short sale which is a great way to find a deal in this market.

Answer 7

You need to know about home repairs and have a knack for design.  I think it would be extremely stressful.

Answer 8

My parents got into that and I wouldn't recommend it right now.  The way the market is....not a wise choice.