Quote from brownsfan019:
My significant other is really interested in learning more about flipping houses, since we seem to watch Flip this, Flip That, Property Ladder, Watch how easy this is, etc. on TLC. TLC is very good at showing how well things go and how easy it is.
So, I have a few questions that I am hoping some fellow ET members can help me with since I do not know anything about flipping houses.
> Where would you recommend to start to learn about this? I've seen the infomercials, gone to 'special seminars in your area', etc. and I really don't feel like buying a whole bunch of stuff and hoping she reads it.
> What is the good AND bad about flipping? We are not interested in renovating and then becoming landlords, just a quick flip and move on.
> Is this a viable 'job' for someone if they got serious about it?
Anyways, I'd appreciate any feedback, especially from those that have tried - successfully or not - as I want to make sure I can provide a realistic view of this to her and not what we simply see on TLC.
I have had experience in flipping houses in the late '70's - early '90's and I have learned, the hard way, the ins and outs of what to do and not to do. Maybe I can save you some grief. This is what I have learned.
I read a book in 1978 on buying, fixing up then selling or refinancing apartments and homes. I was green enough to think the book gave me all I needed to go out and make these kinds of deals work. I ran into one brick wall after another. After reading other simular books I discovered that these authors all say the same thing, "Don't worry about the details of the transactions, just go with the "basic idea" and the details will fall into place." Wrong! My not knowing the details made me feel and look like the world's biggest idiot. Not knowing the details can kill you.
Another problem I had was negative thinking brokers and realtors. They are mainly concerned about their commissions. Their favorite kind of deals are: 20% down, you qualify for a new loan, you go through a lengthy escrow, you pay points and fees, you close escrow and move into the house with your wife and 2.3 kids and live happily ever after. This is not the way Investors work and that is what is so hard for many agents to get through their heads. The first thing they look for is, "where is my commission coming from?"
If they see a creative transaction that they have no experience in dealing with, they will shoot your plans out of the water. I have had agents look at my offers and laugh at me from across their desk and even call in their fellow agents to look at my "stupid" offer and join in a good laugh at my expense. What they were really telling me was that they had no experience with creative offers and did not want to look like they knew less then their client so they try to steer me back toward the "normal" way of buying a property so they could maintain their "I'm an expert" facade. Normal deals are safe for them. Some agents are very creative and worth their weight in gold.
It took me a while but I began to realize that the books I was reading were accurate and these deals do work but they were not as easy as implied.
Before doing any deals:
1. Study books and tape sets on creative real estate transactions. Get to know this stuff inside and out. Don't brag to any one what you are going to do. Keep quite. People love to pull others down.
2. Go to the Law library and get copies of all of the forms you will need to make various types of transactions work and study them with a fine tooth comb.
3. Go to a real estate lawyer and have him walk you through the various steps that you will encounter in each type of transaction. Do the same with an Escrow agent. Pay them some money to teach you. These pros may not be "creative doers" and may try to discourage you but they do know what can and cannot be done leagally. Remember, it is technical info you are looking for.
4. Learn all you can about "Subject to..." clauses. These can help you back out of a bad deal if you have to without losing a penny. Talk with a lawyer about these.
5. Learn good communication skills. Listen to the other person. Understand where they are coming from. Always think "win-win." Look people in the eye when you talk with them and when shaking hands. Be firm but pleasant. Talk "with" the person, not "to" the person. Study books on poise, self-confidence, body language, voice, dressing for success, etc. But, don't over do it.
6. Find several cash investors who are serious about properties and can move like lightening when the time comes. You want serious investors only. No foot draggers! Get to know them and their needs and ideas. Let them know what you do and make sure they know that you work at your own pace. Don't let them push you. Having serious cash investors in the wings can work miracles for you, both for the transaction and for your self-confidence! Stay in the driver's seat.
Most good deals will not be found through Realtors at first. They sniff out these deals long before you ever see one. I have dealt with some very good agents but I must have dealt with some of the worst to. But, if you have to deal with an agent here is what I suggest:
A. Look and behave like you know what you are doing. If you buy a fancy solid gold writing pen to impress the pros, learn how to use it before you get there. Look and act professional but don't over do it.
B. Tell the agent up front that you are an investor, not a home buyer. You buy to re-sell, not to live in. Tell him that you don't use your own money. In other words, be upfront and honest with the agent. If he dosen't like what you do in any way shape or form, look them in the eye, shake their hand, smile, thank them for their time and walk out! Don't let them mold you!
C. Don't "grandstand." Be honest. Don't make comments or promises that you may not be able to keep. Don't drop names of people you don't know. Forget the, "Aristotle Onassis and I put that deal together..." if it is not true. If it is true, a subtle hint works better. Don't make yourself appear to be someone you are not. I bring this up because I had dealings with a guy pulling this crap on me. It made me want to puke.
Now, straight from the shoulder -
A good solid education in real estate transactions is the most important thing a person can develop. Not only will you be more successful in closing deals but you will also be able to find deals where others can't, including today's market. Looking like a professional and behaving like a professional is extreamly important but if you do not have the knowledge, there are pros out there who will see right through you and the doors will slam in your face. I have been chewed up many times in my early days. You have got to know what you are doing. You don't strap on skates for the first time and then take on Peggy Fleming. She will eat your lunch, big time!
If I had to start over again, I would follow these ideas. They would have saved me so much grief, time, money and some hair. I hope this help's you.
-1bigsteve (o:
