Flipping Houses

Back in 2003 I flipped my first house. Flipping a house in my definition means buying a house at a deep discount, renovating it and then selling it for a profit. The above example is one of probably dozens that I did that was abandoned, had fleas, was leaning, had insufficient structural damage, insufficient wiring, no HVAC.....the list goes on and on. I guess in retrospect I was part crazy, but I look at a house like this and something clicks for me.

Unlike a lot of the TV shows you see, my motivation has never been about the final dollar profit, if it was I would do something else because it's too hard of a body of work. I look at houses as an art form and a passion. So that is my first tip for you; if you want to embark on a project like this- by all means love it. You've got to have a passion for anything you want to make a career of and mine just happens to be real estate. If you don't love it, sure you might make a few bucks but ultimately your prospective customers will notice.

The second thing I would recommend is to have help in the evaluation process before you purchase a project. One of the hardest things about renovating an older home is you never know what surprises you may encounter behind walls. I remember one time we had just got done putting a fresh coat of paint in a living room when one of my workers told me they heard a buzzing sound. We soon realized that it was coming from inside the walls. Well let's just say I found out the hard way how difficult it is to remove Africanized bees.

The third thing I would say that ties into the above is buy the house deep. I mean shoot for 50 cents on the dollar or lower. The deep discounts you buy at can help with unforeseen expenses you didn't anticipate. Guess what else, modern building codes today are different from the past. Once you get a City Inspector in to pass an inspection, his or her expectation is going to be that you bring the element of the home you are working on up to current codes. That could mean wiring, framing or plumbing- so be prepared to spend the necessary money to make it right. You want it right anyway because you want to be able to sleep at night knowing that the happy homeowner who purchased the house from you is safe in their new home.

Lastly I would strongly advise you to have more than enough money to finish the project the right way. You will need money for closing costs, holding costs and labor and materials along the way. The biggest detriment to a project can be lack of funding. Make sure you have accurate estimates up front and then anticipate about 25% extra for unforeseen things.

Also remember, the payoff for a project can be way more meaningful than money. If you are considering such an endeavor, use caution and some tips from above to help you in your decision-making process.