I meet many people who have lots of interest and 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.
Sure, many of us want to make bucket loads of money quickly. Then, we can retire to a quiet beach and sip on cocktails with tiny 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 Timothy 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 would work for a few years, build up the portfolio, then retire, all until I read that passage. Ferris ruined this dream for me.
How to Get Started Flipping Houses
How does that passage add up with regards to house flipping? Once I started doing the flips, I realized that the process of flipping a house is actually the fun part.
The result, which is the potential to earn a large sum of money, is fun for sure. It is fabulous to sell a flip in one day after putting in six months of work and repairs, and walk away with a big fat cheque. That’s a very satisfying 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: to get started flipping houses, you have to start with your very first house flip.
Wholesalers are Good Source for New House Flippers
When just getting started flipping houses, it’s best not to bite off more than you can chew. So, start small, but get going quickly. I’ve found that the best way to do this is by using wholesalers.
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, before becoming a full-time house flipper, many of them were wholesalers.
So if you really want to get started flipping properties quickly, get to know your local wholesaler agents. They are an excellent source for house flips.
As with everything else involved in flipping homes, with wholesalers, you get the good offers with the bad ones. However, 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.
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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.
However, if the numbers work according to your 70% Rule, even with his fee, you can make money as well. One of the most successful flips that I’ve ever done was when I made over $56,000 in net profit, I used a wholesaler to find that deal. It was in such bad shape, and it turned off every other real estate investor in the area. Despite his $5,000 finder’s fee, I still made a very healthy profit.
There are plenty of good deals to be had with wholesale contractors, but only as long as the numbers work. Make sure your projections are accurate. Don’t use any “eraser math” in those financial projections. Have a good real estate broker who knows the market, and knows exactly how much you can sell the property for.
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Wholesalers are Great Sources to Get Started Flipping Houses
Remember that many people begin investing in real estate as a wholesaler. Unfortunately, because they are usually new and inexperienced, what they think is “an awesome deal” is actually pretty lousy. Many wholesalers take the perfect deals for themselves and pawn off the leftovers to other real estate investors. So beware.
Like I said before, many would use real estate wholesalers for a bit until they can fund a full-on house flip on their own. They are waiting for their chance to have enough money, grow their reputation, and cast aside their fears to get started flipping houses on their own.
They are merely 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?
Wholesalers are very easy to find. 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 meetups. You can 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.
The Next Steps to Get You Started with Flipping Houses
Since finding the perfect house is one of the hardest parts of this process, and using your wholesaler will help make the find easier, you’ll be ready to move on in the house flipping process.
Remember, as you begin the flip, you want to do things that will add value to the overall house while not breaking the bank. There’s a fine line between renovating the existing house that will increase the value and increase your profit, and going overboard with your renovations like this is your dream home. As you get started with flipping houses, you’ll want to separate what you want in your dream house from the business of flipping. They should be two separate things.
Why? For starters, if you treat your flip as your dream home, you’ll never want to leave the place and won’t make any money. Not only that, you’ll splurge on items that won’t increase the value enough to make the biggest profit.
It’s all about the numbers.
Buying and selling houses is a risky business. However, if done right, it can be gratifying and profitable too. If you want to get started flipping houses quickly, whether or not you wish to retire to the beach or keep flipping and make more money, wholesalers are a great way to get you started quickly. Of course, knowledge is power. So keep on reading more house flipping articles to prepare yourself for this venture.
For more help to get started flipping houses check out these great books on flipping houses.
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 on 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.