Buying and flipping foreclosures

[BigRichard]

Anyone done this before? Where is the best place to look for auctions? Anyone had any bad experiences doing this? Lost money?

[Dayze]

Everyone I know that has done this has been lucky to break even. A few friends have made small money but none of them To this day would do it again.
High risk, high reward.

My brother in law lost his ass on his attempt.

[Simply Red]

Richard - there is a ton of things you can middle/broker.

Just save your money for now and develop a plan in the meantime.

I'll never work for another person as long as I live.

I could make 100k out of 1,000 (okay that's a stretch - but I could realistically turn it into 10k) - over time - by investing and middling/reselling items.

Hell even cars - it's not hard - it's all about money mgt. along the way.

[Bugeater]

You need to have a really good line of credit, or a lot of money that you don't need right away, and you need to be able to do the bulk of the work yourself. If you hire it all out you'll never make any money in our market.

[Simply Red]

might I also suggest smaller items in the beginning and then work your account up to invest toward homes.

....???

[notorious]

You need to have a really good line of credit, or a lot of money that you don't need right away, and you need to be able to do the bulk of the work yourself. If you hire it all out you'll never make any money in our market.

This.


Think of flipping as "Buying yourself work".


I've spotted a few over the years the seem good at the beginning until you figure up what it takes to get to the finish line.

[Rain Man]

might I also suggest smaller items in the beginning and then work your account up to invest toward homes.

....???


I'm currently flipping red paper clips.

[Phobia]

I remodel homes for a living. I know what it costs in material costs and labor to rehab a house. At the price I see distressed houses sell for and the amount of work they require, I don't know how anybody makes money. That's why I don't do it. Yet, people do it successfully. I will pass. I don't believe in putting bandaids on house problems which delay a costly repair for a future homeowner.

[Iconic]

Richard - there is a ton of things you can middle/broker.

Just save your money for now and develop a plan in the meantime.

I'll never work for another person as long as I live.

I could make 100k out of 1,000 (okay that's a stretch - but I could realistically turn it into 10k) - over time - by investing and middling/reselling items.

Hell even cars - it's not hard - it's all about money mgt. along the way.

Okay I have 100 dollars teach me how to flip it into 500 pls.

[Bugeater]

Okay I have 100 dollars teach me how to flip it into 500 pls.
1. Find something worth $500
2. Buy it for $100
3. Profit

[Nirvana58]

I currently do it as a side project. You have to be picky and get the right house and the right deal. They are Hud homes and they can be a big risk because you buy as is. You really have to know what you need to look for that are deal breakers. I never get house with foundation issues or water damage. I buy the house I want and live in it for at least 2 years while I do most the remodeling my self in that time. If you keep the house 2 years you don't don't to pay the extra taxes on your profit when you sell the house. Since the goverment considers that a home and not a finance investment. My current house I bought for 74k. Put about 15-20k in and expect to get 135-140k when I sale. However, this is not normal and was a complete steal that I couldnt pass up.

[BigRichard]

Thanks for all the answers everyone. And yes I would do a lot of the work myself. Only problem with that is I am slow but I tend to do good work.

[BigRichard]

What types of things do you buy and sell SR? That's what you do for a living? Sounds like I should open a pawn shop.

[Simply Red]

I'm currently flipping red paper clips.

ha!

[Iconic]

1. Find something worth $500
2. Buy it for $100
3. Profit

Okay you are officially instated as financial overseer of Iconic Enterprises. I will give you 10% of my earnings now go find me something I can flip worth $500 pls.

[Bugeater]

Thanks for all the answers everyone. And yes I would do a lot of the work myself. Only problem with that is I am slow but I tend to do good work.
That is another problem, you need to get them on the market as quickly as possible since you are also responsible for the taxes, utilities and interest on your loan in the meantime. That shit can eat up your potential profit rather quickly. It's not something you want to do "on the side".

[Simply Red]

What types of things do you buy and sell SR?

Have you ever considered brokering freight? - coordinating pickups between customer in need and the big freight carriers? Low overhead - low start up money - all profit - middling payment between RL Carriers (say) and said customer in need of a pick up.

[Simply Red]

What types of things do you buy and sell SR? That's what you do for a living? Sounds like I should open a pawn shop.

somewhat - I'm more like a junkyard for laptops.

[Pablo]

If you're very handy and quick you can do alright. It's really about finding a steal that doesn't need all that much work and getting in and out of it quickly.

Don't think it's something you're going to do on the weekends and make bank at though.

[ChiefsCountry]

I would say unless you are in the construction business or a real estate agent I would say stay away.

[Simply Red]

Okay you are officially instated as financial overseer of Iconic Enterprises. I will give you 10% of my earnings now go find me something I can flip worth $500 pls.


Start slow - have a path/plan/product (or target product) - brainstorm - they're out there. Cars - I could make 100k per year middling cars as an independent broker.

[Saul Good]

I'm currently flipping red paper clips.

I would be interested in purchasing one for twice the price you purchased it.

[Simply Red]

Find a source - find a way to buy SOMEthing cheap - find a target audience - it's about that simple. People fear the dive more than the landing.

[Demonpenz]

Be prepared to invest lots of time and money to make it work. Flipping houses is really tough and it can be devastating to your bank account. Prepared to take a loss until you figure out what you are doing. I would also plan on working 14-16 hour days. The people I know who make it work work a regular job then flip houses as a second job. As in anything in life you get out what you put in. So if you work harder and smarter you can expect success.

[Simply Red]

Richard I'll go ahead and tell you what is decent demand and not many suppliers. This is insider info. You ready?

[Demonpenz]

I would also be aware of the location. It sounds simple but lots of people will not buy houses just because of airports,trains, or hwy's

[Simply Red]

Thermal/receipt printer parts - when you go to Chili's to eat - the receipt - THOSE printers - well their parts are in demand and they are only about six places in the country that offer their parts.

It's something I thought about getting into.

[Demonpenz]

It is not as easy as it looks on T.V. the attention to detail and the grinding nature of the work kills some people. You really have to hire great people to work with. Highly skilled motivated people are not cheap. Also know that most likely you are going to deal with people who are comfortable with life and aren't willing to put in the long hours it takes to make it a success.

[Demonpenz]

Time management is important as well. Lots of times I will make sure every second of my day is accounted for. Wake up eat breakfast. Something to really fuel success. Make sure you have a plan for your day and make sure you are always streamlining the process.

[BigRichard]

Thermal/receipt printer parts - when you go to Chili's to eat - the receipt - THOSE printers - well their parts are in demand and they are only about six places in the country that offer their parts.

It's something I thought about getting into.

Interesting

[Demonpenz]

You can forget about vacations as well LMAO. I don't even now what those are anymore. It is a trade off though. Some people like working their 8 hours, but I know for myself I just rather work more to have the freedom.

[Saul Good]

I made a quarter mill last year by getting reservations at popular restaurants and then selling them. I can teach you.

[Simply Red]

Interesting

you would need to disassemble them - do other things such as download breakdowns of said machines - via Epson or Panasonic or IBM's site or whatever. But really anything - cars may seem to be a stretch for the large start up required but there are ways around that through financing the start ups and paying that off.

I mean really you could do it with other things - boat parts? - appliance parts - hell a junkyard - SO many ways to make money from a junkyard, used tires, etc etc.... metal, weekly sales to used tires salespeople/shop owners.

[Bowser]

My neighborhood has gone straight to shit. Next door neighbors just up and left their place last spring, and the house has sat empty going on now a year. I would love it if one of you enterprising types would come flip that place and sell it. :D

[Simply Red]

My main gripe with owning a junkyard would be the land required.

[Simply Red]

My neighborhood has gone straight to shit. Next door neighbors just up and left their place last spring, and the house has sat empty going on now a year. I would love it if one of you enterprising types would come flip that place and sell it. :D

place is loaded w/ squirrels by now.

[Bowser]

place is loaded w/ squirrels by now.

Or worse....

(no squatters yet. I think)

[Simply Red]

discontinued items fetch big money on Ebay I tend to notice. I'm on Ebay all of the time. I sell on Ebay unfortunately. No it's not that bad, but there is definitely a bad apple in there from time to time.

[Simply Red]

I also think if you could get the right customer/collector channel - you could do well selling pawn star type of items - but that's an awfully risky business IMO - I think I'd have my customers lined up - prior to my hunt.

Discontinued clothing items get some serious bread - for example - right now - ebay up 'Adidas vintage trefoil tee' - then observe their price (in most cases) - very expensive.

Edit: I'm seeing a lot of fakes for cheap - but normally the retro version fetches around $50 (routinely)

[Hootie]

You should pm inmem, he's great at flipping but admittedly, you'll probably flop

[Simply Red]

You should pm inmem, he's great at flipping but admittedly, you'll probably flop

He flip flopped after the Seattle game - I'll never forget - so did Clay'nal.

[Ming the Merciless]

Flipping foreclosures can be rough, and sometimes you need the entire amount in cash (100%)

AND you have to know how to esitimate all the costs properly AND predict the market if its going up or down....

There is a way where you dont have to take any of those risks....and it might be a better option....,

It may be better (depending on where you live) to look for beat up duplex or rental units (like 2-4 unit small buildings) with bad tenants or where the landlord wants to sell but is hanging on and where the rents are low.

You can buy the unit with 30% down, get a standard 30 year fixed loan at a very low interest rate (as long as it is 4 units or less)

You can kick out the bad tenants, remodel them 1 at a time, and raise the rents up to market....and either make money every month & pay down your principal and write off a shit load of depreciation...

Or sell it for a profit once you have fixed it all up and raised the rents and made it look nice.

Flipping is a little more risky...

I have bought places on auction and I have bought places on short sale and via regular purchase....

Theres no 'quick' way to make 'easy' money IMO.

The best investment (real estate wise) can be figured out fairly easily:

1) if it costs less to buy it right now, than you could build it for....its probably a good deal.

2) if you can put down 30% and market rents (after a fix up) cover your bills and put a little money in your pocket even...its probably a good deal

3) theres other ways too like comps....GRM (is the GRM 10 or less).....CAP rate (is the cap rate decent)....cash-on-cash return....etc

but basically if you run all these numbers and you get a lot of yesses...its probably a good deal... if you get a couple no's , then maybe not.

This is my area of expertise...not so much SFR but multi unit residential

[MahiMike]

I have done several and am currently working two deals. First thing to do is assemble a team:

A private money lender
1 or more good realtors that have worked for investors
General contractor or set of handymen

Deals are harder to come by than couple years ago. That's where the realtors come in.

I look for properties in the $70k range that need $30k rehab and sell for $140k.

Farm areas that go for your end price and see how quick they are selling. Stay away from areas that have no sales in last 6 months.

Be prepared to refi out to long term financing in case it doesn't sell. Make sure it will cash flow or come close when rented.

[Dave Lane]

Anyone done this before? Where is the best place to look for auctions? Anyone had any bad experiences doing this? Lost money?

I lost 7 figures+ in 2008. Still stings.

[Coochie liquor]

Takes a lot of research to make it work. You really need to have your numbers for materials etc in order when you're looking at properties. Research the areas. My old boss stays buying houses in a large 55+ community. He knows almost exactly how much for materials etc as he's done a lot of homes in there. Gotta have your shot together or you will likely lose.

[lewdog]

Watch Flip or Flop on HGTV and do it like they do. They seem to make good money. Get a hot blonde wife like that guy too.

[Brock]

It's a tough gig to make money on now. I made a lot doing it in the 2000s, because it was easy to do with other people's money. It's hard to make the numbers work out presently.

[Jimmya]

I'll be honest. We make quite a bit of money so my dumbass thought flipping houses would make us big time rich. Lost an ass load of money... Over 100 grand...... Very happy never to do that again. Like somebody said.... Materials are crazy high and we were using our own labor plus cheap labor.

[Hog's Gone Fishin]

A better investment right now would be to sink a shitload of money in USO

[jspchief]

Watch Flip or Flop on HGTV and do it like they do. They seem to make good money. Get a hot blonde wife like that guy too.
California housing prices... 40k in renovations gets you 60k in home value. Do the same shit in the midwest and you'll be lucky to get 43k out of that 40k.
But I agree on the blonde part.

[2bikemike]

I have purchased a couple of Foreclosed Single Family homes. I bought them with the idea of keeping them long term. My goal was to rent them with a 10% ROI after expenses. This has worked well for me. Any increase in equity of the home is gravy on top of the 10% ROI. I bought them at or near the bottom of the market.

I also bought a duplex on a short sale, that is a cash cow. It has averaged approx 25% ROI. Again the equity increases are just gravy.

My situation was being in the right place at the right time with the finances to take advantage of the crashing market.

[Valiant]

somewhat - I'm more like a junkyard for laptops.

Do you smelt and recycle them?

[Iowanian]

I've done 3, did pretty well on the first 2, lost my ass on the 3rd.

Pick carefully for location, don't overbuild..that's what I did wrong on the 3rd.
If I do it again, It will likely be lower end, small houses to fix, but it will be a while before I get a strong enough urge, or a true bargain has to come along that just needs some polish.

Enter with caution.

[Valiant]

California housing prices... 40k in renovations gets you 60k in home value. Do the same shit in the midwest and you'll be lucky to get 43k out of that 40k.
But I agree on the blonde part.

True...

The key here is to secure almost the entire neighborhood. Have a friend trying to do this to a certain part of KC. Basically reverse white flight, it is funny. People got pissed when all the white people left. Now they are buying the homes in droves, they are pissed they are coming back. I told him once he secures enough of them, and gets the others on board to gate the community. Should sky rocket values considering some of the houses sold for 500-3000 dollars.

Me personally, I would just bulldoze most of them. That is the easiest way to increase value. Bulldoze all those old shit homes, basically Obamas cash for clunkers but for houses.

[lewdog]

California housing prices... 40k in renovations gets you 60k in home value. Do the same shit in the midwest and you'll be lucky to get 43k out of that 40k.
But I agree on the blonde part.

Definitely. And I think that show was filmed rather recently but saw them buy a dump 1300 sq/ft house in Long Beach, completely gutted for 500k. 120k in renovations and sold for over 700k. Even for Long Beach, that market seems a bit high and tells me why I don't live in Cali.

[notorious]

Cali market is build on blue sky demand. The bubble can fist just as easily as it gives.

[Rain Man]

My main gripe with owning a junkyard would be the land required.

My dad owned a junkyard for many years. I don't know how well it worked for him when he was active; it was okay, perhaps, but not a big moneymaker.

His challenge was that once he slowed down and didn't have someone out there every day, bad things happened and he didn't know about it. Thieves ran wild and other people started dumping stuff.

His yard was out in the country and at some point a housing development popped up on the hill overlooking his property. They decided that they could kick him out, so they got the city or county or someone to shut him down. By that point he was pretty much out of the business anyway, so he didn't fight it. He figured he could crush all the cars out there and sell the land. But when he showed up, many of the cars were gone and in their place was old mattresses, piles of trash, and other stuff. He then had to pay to clean the place up.

And with that, my dreams of a junk inheritance came to an end.

[B_Ambuehl]

The key to flipping houses is getting a good enough discount off fair market value. Purchase price + rehab total needs to be no more than 70% of average fair market value (sites like eppraisal.com can give you a pretty good idea what the property is worth). If you pay more than 70% the closing costs, realtors fees, utilities, property taxes etc will eat you up. So if you figure a house will sell for 100k and it needs 20k worth of rehab you likely won't make money if you pay more than 50k for it.

Also most of the TV shows on flipping houses don't disclose many of the expenses that go into it.

[Rain Man]

I hate fix and flips. The people who do them usually just put junk in - the cheapest countertops, the cheapest fixtures, etc. Any legitimate homeowner is going to have to rip all that stuff out anyway to do it right, so it's just a a big waste of money to do the "fix" part. I would never even consider buying a fix and flip.

I also think that if you're going to own real estate, the best way to make money is to keep it and rent it out. You just have to be patient because it'll take 20 years to get your money back, but then you start rolling around in big piles of money.

I've been considering buying a condo to rent out, but I'm not following my own advice. I look at the numbers and realize that in 20 years it'll start printing money for me, but the challenge is that I'll lost money for 10 years and then break even for 10 years before that happens, and I'm lazy.

[Valiant]

I hate fix and flips. The people who do them usually just put junk in - the cheapest countertops, the cheapest fixtures, etc. Any legitimate homeowner is going to have to rip all that stuff out anyway to do it right, so it's just a a big waste of money to do the "fix" part. I would never even consider buying a fix and flip.

I also think that if you're going to own real estate, the best way to make money is to keep it and rent it out. You just have to be patient because it'll take 20 years to get your money back, but then you start rolling around in big piles of money.

I've been considering buying a condo to rent out, but I'm not following my own advice. I look at the numbers and realize that in 20 years it'll start printing money for me, but the challenge is that I'll lost money for 10 years and then break even for 10 years before that happens, and I'm lazy.


Yeah 2012 I was trying to buy this house in Gladstone. Finally got to where it was in my price point to fix up and live in. Gone in a half a day, asshole flipper. Asshole because somehow he fixed everything in 5 days and relisted the property 50k more than its dropped sale price.

I went and looked at the work he did. Paint, some new windows, not even all of them. New front door. and mulch all around the house with a few plants. Also threw up some sheet rock in the basement and freebreeze and the standard new/cheap carpet.

I feel sorry for the people that bought that house. The reason why I was waiting for it to drop was some cracks in the foundation and mildew smell in the basement. He did not do shit. Not even a new roof.

There was another house I found in Gladstone. Perfect home for me, in ground pool, all brick, just needed work as the previous owners destroyed it. Went to make an offer on the listing for the 80k... Somehow they decided to do a cash auction that was not listed for cash only. Think that was a inside job from the realtor.

You should do a flip like you want to live in it yourself.

[R8RFAN]

Am I mean when I say I love to see people lose their assses doing shit like this?

[lewdog]

Am I mean when I say I love to see people lose their assses doing shit like this?

No because part of me agrees with you. Our friends bought a newly remodeled "older" house that looked pretty good to the eye but was clearly bought and flipped quick. But the bones of the house like plumbing, electrical and other things were not touched and just covered over with new aesthetics. They had a major flood and some electrical problems they have lost them thousands. Many of these quick flips are just adding in touches that look good but not actually "fixing" the house.

[Mr. Laz]

Anyone done this before? Where is the best place to look for auctions? Anyone had any bad experiences doing this? Lost money?

no offence meant, if you have to ask these questions then you probably aren't ready to do it.

Maybe you can help someone else do it first


I worked construction for a couple of guys who did it for a living. They would buy a house and the live in it while doing all the renovations. They use teenagers(me) as labor because we were cheap. I'm surprised we didn't get killed because we were doing all sorts of crazy shit.

They gave a friend of mine rubber gloves and wired cutters and told him there as a short in the wall and to just start cutting the connections. Every so often he would hit a live wire and it would literally weld the cutters together. They would just give him a new pair and tell he to keep going. smh.

Taking down a chimney off a roof. Putting the bricks in a wheel barrel on the roof and rolling it across 4 inch boards to dump it off the side of the building.

Doing this all in jean shorts and tennis shoes. No safety equipment, no shirt, no nothing. lol

[ghak99]

Am I mean when I say I love to see people lose their assses doing shit like this?

No, I hope for it all the time on land deals.

Some investor comes in and buys a piece of ground, does a few odds and ends to clean it up and quickly prices it above market. They hardly ever sell, but while it's listed the rent and purchase prices on pieces of ground around it get inflated. Eventually the investor realizes he got fucked or finds a better place to put his money and dumps it. The rent and purchase prices on the surrounding pieces are much slower to come back to reality though.