The Fastest Way to Get Started Flipping Houses Comments31 Comments

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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

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By : Adam | 24 Jan 2013
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31 thoughts on “The Fastest Way to Get Started Flipping Houses

  1. Michelle

    I have a friend who flips houses and he makes good money from it. A whole block of houses in the city were pretty run down, so he bought the whole block and redid the whole thing. Looks nice now!

    Reply
    1. Mike LaCava

      Flipping houses – when you do it as a buy, rehab and then sell can be a great way to transform an entire neighborhood, create affordable clean houseing for people and make a nice profit for yourself for sure. So glad to hear they are doing some great things there. In what city is this? Thanks, Mike

      Reply
    1. Mike LaCava

      True there is stress. When you think about it, house flipping is one of the least risky types of real estate investing there is. When you buy right, do a good job on the rehab, stick to your budget and put an end product on the market that shows beautifully and is priced right, you will make a profit flipping houses. Stress is with any kind of business, but I find in flipping, its the least amount. Curious what kind of stress you are referring to? thanks for the comment! Mike

      Reply
  2. Rhea P

    My husband and I are interested in eventually renting our house out, then perhaps doing it again with a future house. We haven’t considered flipping homes–hard to do with kids. We did go to look at a house that looked great in pictures online, but when we got up close we realized the house was being flipped and the people who did the renovations rushed and the work was shoddy. So I would suggest if you are flipping to at least put the time in to ensure the work is solid so that you attract serious buyers.

    Reply
    1. Mike LaCava

      Absolutely, putting the time in is essential. We in some cases completely rehab and gut our homes to make them more attractive to the end buyer. Like you, I have kids and do this full time, but I started with younger kids (some in college now) doing it part time and made some good money. It can be done, its just a matter of how much you want to get after it and how flexible your schedule may be. Thanks! Mike

      Reply
  3. Jason @ WorkSaveLive

    I’m totally with Sean in that I LOVE watching the shows but it’s not something I plan on getting into in the near future. It does seem really stressful and you have to know how to do a lot of the repairs yourself (and I’m not handy in the least bit).

    Great info on the wholesales though; I’d never heard of them before and didn’t realize there was such a middle-man in the real estate world.

    Reply
    1. Mike LaCava

      hey Jason, I have not done any of the work myself in years. I have my contractors do it all. So if youre not handy, it can be done without question. Some of my students dont even know the right side to hit the nail with a hammer (Im joking lol) and have still made a good amount of money doing it. Its all about gettting a great team and sticking to the numbers. Where are you thinking of investing?

      Reply
  4. Grayson @ Debt Roundup

    I used to contemplate house flipping, but now that the housing market is so volatile, I don’t think I would ever jump in. I think that the costs could get out of hand and the profits will be super low. Materials aren’t cheaper, but houses are.

    Reply
    1. Mike LaCava

      Ill say this again, when you think about it, house flipping is one of the least risky types of real estate investing there is. When you buy right, do a good job on the rehab, stick to your budget and put an end product on the market that shows beautifully and is priced right, you will make a profit flipping houses.

      Contrary to what many people think, rapidly appreciating markets are not a necessary ingredient for house flipping success. As long as you stick to a disciplined set of rules, as big if not bigger profits can be made in slower markets as well. House flipping, because it is such a short term type of real estate investing, is largely immune to extreme market fluctuations. And as a result, successful house flipping can be done under any kind of prevailing market conditions.

      Hope that helps Grayson? Let me know if it doesnt. Mike

      Reply
  5. John @ Fearless Men

    Very informative article! I never knew about wholesalers and often wondered how flipping houses worked. I always thought you find a house and do the work on your own. $5k seems comparitively small to your $50k profit. Thanks for sharing this info!

    Reply
    1. Mike LaCava

      Hey John, thanks for the compliment. Wholesaling is a great way to get started house flipping, you are flipping contracts and not houses, in essence. Yes, $5K is small, but if you are just starting, its a nice sum to get for in theory, just sourcing a house to an investor. Let me know if you have any other questions, because I am a big believer in wholesaling as an entry point to the traditional buy, rehab and sell kind of house flipping. Mike

      Reply
  6. Canadianbudgetbinder

    I was speaking to an agent today while at an open house and he told me that he flips houses with a partner. He also said to start out small and work your way up and around because too many people get caught up in it and start making mistakes. It’s a good way to make money if you know what you are doing and research he said. Great tips.

    Reply
    1. Mike LaCava

      Agreed. Good advice from your friend. One great way to get started flipping houses if you don’t have the money to do it all on your own is to find a joint venture partner or partners who have money to invest. Splitting your first house flip profits with other partners is a great way to start, while building some momentum and getting your first house flip under your belt. Sure, you’ll have to split profits, but it’s far better to get 50% of something than 100% of nothing. Where are you thinking about flipping?

      Reply
    1. Mike LaCava

      Agreed on this as well. We dont sell every “flip” we buy. Many are such good passive income streams that we just hold onto them for income. I have buy and holds and I have flips I do, the combination is a good one for me, but it all depends on your personality as well. Thanks for the comment! Mike

      Reply
  7. KK@Student Debt Survivor

    I know there were a ton of folks doing this a few years back, I also used to love all those shows. I don’t know enough about construction to be able to do the work inexpensively, but for folks who do, or have contacts who can, this seems like a pretty lucrative business.

    Reply
    1. Mike LaCava

      I had no contacts when I started and just went out and met them at the local REIA meetings in my area. Is house flipping as easy as people say? No way. But there are ways you can shorten your learning curve and avoid the major pitfalls, and still come out with a nice profit. And of course, the more you do it; just like anything in life, the better you get at it. Just like any other endeavor, experience after all, is the greatest teacher. Alot of my success has to do with building relationships and meeting the right people on my team and that just involves getting out there and seeing people in person. Thanks for your comment! Mike

      Reply
  8. Kim@Eyesonthedollar

    House flipping is obviously interesting or there wouldn’t be so many shows about it. I think you’d have to get a very good price and then not go overboard on upgrades or things you might like to have. I love the idea of taking a wreck of a house and making it nice again. If you can make money doing it, even better.

    Reply
    1. Mike LaCava

      It is very satisfying to turn an eyesore into a beautiful home, no question. Some people call house flipping when you just buy a peice of crap at a discount then “flip” it in the same condition. We dont do that. When you buy a distressed property, make no real improvements, then quickly sell it to a buyer, you really don’t add a whole lot of value to the end user. But when you buy distressed properties, beautifully renovate and then sell it, you are not only adding real value, but you’re adding even greater profit potential. And that is the kind of house flipping that not only provides excellent living spaces for families and individuals, but also helps to continue to strengthen the emerging housing recovery. That is far more satisfying! Thanks, Mike

      Reply
  9. Brick By Brick Investing | Marvin

    I have always wanted to get into real estate investing but the houses in my area going for approximately $600k and that’s on the low end. I make fairly decent money and know that real estate is one of the fastest ways to wealth if done right. However, I have also heard that you want to start out in your own community. With this said, what do you recommend an individual in my situation does when the home prices in his or her area are astronomical?

    Reply
  10. Mike LaCava

    Its a common question. For example, in my town, there are streets in my town that are million dollar homes, then a few streets over they are $200K or less. If you don’t see these in your town, then start to draw concentric circles out from your center to find homes that are more in your price range. Sometimes you may find them within the town like in my case and in some cases it may be 20-30 miles away.

    Let me give you an example. This past summer, I flipped a house that was located in a notoriously “tough” sub-section of a Massachusetts town. This small area of town has multiple run-down homes and has somewhat of a “seedy” element. Additionally, it’s very depressed economically.

    I found this property on the Internet, surprisingly. I knew the neighborhood fairly well and I knew it had a real tough reputation.

    Suffice to say, I didn’t know that there were some streets in this neighborhood that were better than others. Some, in fact had views of the ocean. The listing online didn’t reveal any of this information.

    When I visited this neighborhood, I also discovered that one of the streets I had never been on before had absolutely spectacular water views. The difference from one street to the next in this neighborhood was enormous. Because of the water views and proximity to a small beach, the home values on this one particular street were appreciably higher than the surrounding real estate…but the listing price did not reflect it.

    I knew I had found a real diamond in the rough and I ended up making over $56K on that flip. Sometimes you just have to dig a bit deeper.

    Hope that helps. Mike

    Reply
  11. Tara

    That’s absolutely amazing! I can’t believe that those homes were just sitting there with ocean views….

    So I guess in the end – it pays to really know your area well and to “think outside the box” as it were – “digging” as you call it – to find homes that are worth more than they are being listed for.

    Reply
    1. Calgary Custom Built Homes

      Absolutely, “digging” is the best way to find a deal, and the only real way to dig is to be on the ins with the local real estate market. Keep up with local real estate papers and mags, and try to make a friend in real estate.

      Reply
  12. Tommy

    I want to flip houses and I have been doing a lot of research lately, my issue is lack of funds and credit. I am very handy and can basically build a house from the ground up. I also have 16 years of interior design and architecture under my belt. I recently found an investor, but I am having a problem finding the house to flip. I also have a little bit of fear in me. Besides finding a house, what should my next steps be?

    Reply
    1. Jeremy

      I’m not sure if Mike is getting notifications of new comments here still. You might want to try e-mailing him through his website about that. I’ve never flipped a house myself, but it sounds like you need to address the issue you have fear about. Perhaps get in touch with various house flippers for some tips. I’d think the most important part is finding a suitable house that will increase in value from your work and will sell easily enough. If it’s your first house flipping experience, perhaps also plan out what you want to do and try to estimate how much that will all cost.

      Reply
  13. Thomas | Your Daily Finance

    I just looked into wholesaling and its a lot of work and people dont realize it. Most people who wholesale homes or try fail. I am looking at getting a mentor to show me the ropes. I like that you are putting a spin on it from what I used to hear. More people talk about being the wholesaler and you suggest using them. I think thats great since they already did the leg work and now you can just come in and get the property. Very informative post.

    Reply

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