By Mike Baird
Over the past few years, I’ve flipped over 1,000 houses. If you’ve ever caught an episode of Flip Men on Spike TV, you’ve seen how much I love this business and how much fun it can be. Every flip has its own challenges, but when it comes down to it, they’re all pretty simple. I can boil flipping houses down to a seven-step formula:
Find leads on houses.
Contact motivated sellers and make offers.
Buy a house.
Sell your flip house.
Pretty simple, right? So why isn’t everyone doing it? If it’s that easy, the market should be filled to capacity with flippers, and it should be almost impossible to find flip houses, right? Well, not exactly. Honestly, a lot of people shy away from flipping houses because they just don’t believe that it’s this easy.
Granted, you do need some education, and you’re going to make some mistakes starting out. That said, if you have an entrepreneur’s drive and spirit and the right tools, you can make house flipping a seriously profitable business in very little time.
In general, people avoid flipping because they buy into one of several myths about real estate investment that just aren’t true. Fortunately for you, I’m here to debunk those myths.
They Think They Need to Use Their Own Money
This is probably the biggest reason people don’t get into flipping houses. They think that they need to pour their life savings into their flips. A lot of would-be real estate investors just don’t have the cash on hand to buy a whole house, even at wholesale or below-market pricing. They think, “Well, maybe if I win the lottery or if I save enough money one day…”
The thing is, though, they’re completely wrong. Just ask Greg; half the fun of flipping houses for a lot of real estate investors is finding the money. You have a lot of options open to you, and they all have their advantages and disadvantages.
You could partner with an investor who’ll put in their capital while you put in your sweat equity. Then, when the house sells, you split the profits down the middle. You could borrow money from a private lender or take out a hard money loan on a fast flip and pay it off before it has a chance to accrue much interest. The possibilities are endless when you know a little bit about the industry and you know how to network with other investors and money people (like Greg).
They Think It’s All About Luck
A lot of people also abandon the idea of investing in flip houses because they think that it’s all about lucking into that one property that you get for an amazing deal, that won’t need much rehab, and that you sell immediately as soon as the renovations are done.
It really baffles me that so many people think that real estate investment is a game of chance. Just like any investment, it does come with some risks, but they’re easily calculated. I don’t sit around waiting to get lucky on a property. When I’m looking for flips, I comb the MLS, drive around neighborhoods where I want to buy, gather leads, and follow up on them.
Furthermore, I don’t just look for houses that won’t need a lot of rehab, either. Sometimes, the worst looking properties get you the best deals and turn into the best flips, too. When you buy houses at auction, you’re not always going to get to look at them first, so you might think, “Man, I hope I get lucky on this!” but, in reality, if you run the numbers right and take calculated risks with your purchases, you’ll always be lucky.
They Think They Need to Be Realtors
Now, it definitely pays to know a thing or two about real estate when you go into house flipping. And you’re definitely going to learn a lot along the way if you stick with this business. However, saying that you have to be a licensed realtor to be a successful flipper is like saying that you have to be a general contractor, plumber, and professional landscaper to be a successful house flipper.
Of course, a lot of flippers take the time and money to get their realtor licenses, but most of them don’t do this as a first step. That’s because, as an investor, you can get a realtor on your team to help you get the best deals and buy and sell your properties quickly. If you’re more interested in coordinating your flip deals, finding money, and getting everyone together to get the job done, then you can save a lot of time, effort, and money by working with an expert realtor instead of trying to become one, yourself.
They’re Afraid of Failure
Finally, this isn’t really a myth about flipping, but it’s definitely a reason that people don’t do it. As much as they might hate their jobs or yearn to be their own bosses, a lot of people are too comfortable working 9:00-to-5:00 jobs with steady paychecks to venture into the world of real estate investing. They know that being your own boss means a lot of freedom, but it also means that you’re not guaranteed anything. You have to do it all yourself, and if you don’t stay on top of leads, sellers, contractors, and buyers, you’re not going to make any money.
People get scared when they don’t have a safety net or a structure to fall back on, but that’s part of the fun and excitement of flipping. You get to work on something you’re passionate about. You get to see actual transformations, and you get to help people out by relieving them of properties that had become burdens. House flipping is pretty simple, if you have the right education and motivation. Check out one of our Property Bank seminars and see how Greg and I make it happen over and over again.