Photo: 401(K) 2013
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I meet many people who want to learn how to get started flipping houses. Many of them seem to want to do their twelfth house flip before they’ve even done their first one.
Although I think the ambition is great, it may not be the right way to start off.
Sure, many of us want to make bucket loads of money quickly, then retire to a quiet beach and drink some cold adult beverages with umbrellas in them. As much as that sounds like a great thing to be shooting for, I wrote a book a few years ago that kind of blew that for me.
As Ferris said in his book, The 4-Hour Workweek:
“You will reach a spot after which absolutely cannot stomach another Pina Colada and that’s when you realize that you will have to start doing something meaningful with your life…”
At one point in time in my life, I imagined that sitting on the beach not doing anything would be awesome. I work for a few years, build up the portfolio, then retire. Until I read that passage by Ferris…Tim ruined it for me.
How does this add up with regards to house flipping? Once I started actually doing the flips, I realized that the process of flipping a house is actually the fun part.
The end result is fun for sure. I mean it is fabulous to sell a flip in one day after putting in six months of work and walking away with a nice chunk of change…that is a very good feeling.
However it’s the process of flipping a house that gets me all amped up. So when I meet people that just want to aim for the end result, I tell them the same thing: you have to start with your very first house flip first.
Wholesalers are Good Source for New House Flippers
When just getting started flipping houses, it’s best to start small and not bite off more than you can chew. So start small, but get started quickly. In the best way to do this and I have found is by using wholesalers.
In fact, when I go to real estate investment meetings and meet other successful real estate investors, especially ones who flip houses, they tell me the same thing: they started with wholesalers as well. In fact, many of them prior to becoming a full-time house flippers, were wholesalers.
So if you really want to get started flipping houses quickly, and get to know your local wholesalers because they are a great source for house flips.
Like anything in flipping houses, with wholesalers, you get the good with the bad. But like any other profession, you have to sift through the bad ones to get to the good ones.
What Is A Wholesaler?
Wholesalers will put a house flip deal under contract and then turn the deal over to an investor or house flipper for a fee. This is one of the many reasons why it attracts so many new real estate investors.
It sometimes helps to think of a wholesaler as a house flip broker. He makes money because he presents you with a good house flipping deal.
But if the numbers work according to your 70% Rule, even with his fee, you can make money as well. In fact, one of the most successful flips that I’ve ever done where I made over $56,000 in net profit, I used a wholesaler to find that deal. It was in such bad shape, it turned off every other real estate investor in the area. And despite his $5000 finders fee, I still made a very healthy profit
There are plenty of good deals to be had with wholesalers, but only as long as the numbers work. Make sure your projections are accurate, you don’t use any “eraser math” in those financial projections and you have a good real estate broker who knows the market, and does exactly how much you can sell the property for.
Wholesalers are a Great Source for New House Flip Deals
Be sure to remember that a lot of people begin investing in real estate as a wholesaler, so sometimes because of the fact that they are new and inexperienced, what they think is “an awesome deal” is actually a lousy deal. Many wholesalers take the really good deals for themselves and pawn off the leftovers to other real estate investors. So beware.
Like I said before, many would be real estate investors wholesale for a little bit until they can fund a full on house flip on their own. They are waiting for their chance to have enough money, reputation or chutzpah to get started flipping houses on their own.
They are simply taking care of the first step in the house flipping process – which is to find the deal.
Are there experienced and seasoned wholesalers out there?
Of course there are. Certain people just want to find the deal and pass it off to a house flipper. There are plenty of rookies, but also plenty of veterans.
Where Do I Find Wholesalers?
You can find these kinds of house flipping sources everywhere. These are the “I buy houses” and “we pay cash for houses” signs you may see around town. I’ve also met plenty of them at local Real Estate Investment Association (or REIA) meetings, chambers of commerce and other real estate meet ups. You can also find their ads in the local newspapers under “houses wanted,” or “we buy ugly houses”. Just keep your eyes open and all of a sudden you’ll see lots of signs like these all around your town.
Despite any reservations many house flippers might have on wholesalers, if the numbers make sense, then it’s worth it for both of you. It’s a win-win situation when done well.
It is you want to get started flipping houses quickly, whether or not you want to retire to the beach or just keep flipping and making more and more money, wholesalers are a great way to get you started quickly.
Author Bio: Mike LaCava is a full time real estate investor, real estate investment coach and the President of Hold Em Realty located in Wareham, MA. Mike specializes in flipping houses with no money and runs the website House Flipping School to teach new real estate investors how to flip houses. He has also authored the book “How to Flip a House In 5 Simple Steps” available for Free at his website at http://www.houseflippingschool.com