The short and only correct answer is “No, it is not. Not even close.” But it can be done, and yes, you can make money doing it. Just be ready to work. Like, a lot. If you have any delusions about being the next Chip and Joanna and playing around all day while focusing on what color pillows and types of plants to buy, forget it. This is not a game. Here’s my story…
By 2013, I had been working in the residential construction trades for all of my adult life. I can pretty much do it all when it comes to remodeling, and I can manage the things I’m not licensed for. My wife was licensed as a realtor at the time and we decided to give flipping a shot. After flipping multiple homes for the next few years, we did actually get it down to a system. But it was never, ever easy. I will run you quickly through a project, and describe what you will need to address as you flip your houses.
1. Find a house at the right price.
We usually did and believe me it was never pretty. Yes, they like to say “ Buy low, sell high, get paid” and it’s true. Just remember that the low price reflects the damage you will have to fix. If you don’t calculate for all of that ahead of time, and figure it into your purchase and renovation costs, things will get ugly fast. Remember to be as accurate as you can be on your acquisition costs, your renovation costs, your after repair value (ARV) estimate, your selling costs, and your taxes.
2. The Cost of Money
Unless you have a pile of cash on hand, you will need to get financing. Forget about banks. They don’t want to know you. There are other ways to borrow, such as home equity, credit lines, hard money(private lenders) etc. All are expensive. We used hard money and worked fast and efficiently to get the projects done and pay off the loans. They charge points up front and loan at higher interest rates, so be prepared. It’s a risky game for them and for you. And YOU pay to play.
3. Permits and inspections.
You need them. Get them. If you don’t, you could end up tearing out what you’ve already done, get fined, or worse. Also, as a flipper, inspectors automatically don’t like you. They will be hard on you and your contractors. It’s just the way it is. You’re intruding in their world and they don’t like it.
Get it. You need it. End of story.
5. Expect the unexpected.
There WILL be surprises that come up and that means extra expense. Be ready for them. plumbing, electrical, sewers, water damage, pests, and much more. Contractors can sometimes be flaky, and some will try to rip you off. Be diligent, get everything in writing, and NEVER pay them up front. Pay as they get work done, or upon completion. Make sure they are licensed and insured.
6. Buying and Selling costs
Realtors earn their fees. They work hard to find homes for you and then to market yours once you’re ready. Unless you’re like us and one of your team is licensed, be sure to budget for them as well as for closing costs.
If any of this scares you, then that’s good. You have wisdom. But doing these projects can be very rewarding. You are bringing a house back to life. You’re helping your community. You’re making a safe and beautiful home for somebody. And hopefully, you’re making some money along the way. Good luck and Happy Flipping!