Would You Flip for Flipping? Secrets, Scams, and Success

The path to success in real estate investing can be a short, straight one or a long, winding one. A lot depends on the individual.

As real estate and home improvement television shows become more popular, more people are considering house-flipping as a lifestyle. In addition to questions about my hair and my bracelets, viewers have a lot of questions about the actual business of flipping. Is it as easy as it looks? How can I avoid a scam? Where should I begin?

I wanted to provide answers to some of the most common questions, which will hopefully give a behind-the-scenes look at flipping.

Is flipping a good career move for me?

This is the first question every potential real estate entrepreneur needs to ask. You have to be absolutely sure before you start that flipping is a path you are going to want to continue on. It has to suit your personality and work style.

I think two major characteristics can predict whether someone is a good match for the flipping lifestyle. You need to be:

1. Self-motivated and entrepreneurial. I thrive when I can manage my own schedule and decide how and when I’m going to work. I love being my own boss. But being your own boss doesn't mean there is no boss. It means you have to be the boss. My husband Tarek and I have a full-time flipping business where we flip multiple houses at the same time. Newbie real estate investors will probably still keep their day jobs. Being prepared to work at the flipping business before and after your regular job - and on weekends - is a huge mental and emotional commitment. Every call you make won't be answered. Every bid won't be accepted. Every project won't be completed on time. If you don’t have the internal drive and the ability to self-start, flipping is going to be difficult.
2. Passionate about helping others. Every aspect of house flipping goes back to helping people in some way or another, and if you love that, you will be motivated to do the work required. You’re helping the previous owners by purchasing the house, the local contractors you hire to work on it, the neighborhood where your newly beautified property is located, and the new home seekers who will eventually buy the house. You’ve got to get satisfaction from that!

Think it over and be 100 percent convinced it’s the right move to make before starting on your first house. The huge time investment and potential financial risk you are making shouldn’t be taken lightly, and you don’t want to have second thoughts once you’re already locked in.

Can I flip houses with no money down?

I am asked this question all the time, and with good cause - houses are expensive. Obviously, the lower the initial investment you make in a property, the lower the barrier to getting started on your flipping business. The good news is that you don’t need a lot of savings set aside to get going on your first house.

In order to be competitive you're still going to pay for each house upfront and in cash, but you're going to be using funding from an investor instead of your own money.

This truly is the best way to flip a house, especially the first time. You don't have to be independently wealthy; anyone can get started in the business if you know where to look for funding and how to approach potential investors. The main consideration is weighing the difference between private money lenders, hard money lenders, and partners.

You don’t need a lot of savings set aside to get started with your first flip.

How risky is house flipping?

This is probably the most common question I hear from students, readers, and viewers. Everyone wants to know how much risk they’re signing up for when they start flipping houses. My honest answer is that it can vary depending on the house, the area, and the current real estate economy. In my experience, no two flips are alike, so it can be difficult to predict exactly what kind of risk you’re taking on with each property.

You might not be able to get into the house before you buy it. There might be unexpected structural damage. The market might not be what you'd hoped when you started. However, all of these difficulties can be overcome, and you can still make a profitable flip if you are able to make the tough decisions. To be a successful flipper, you absolutely need to be willing to take risks. Any entrepreneurial venture involves some degree of risk, and flipping is no exception.

Are there any secrets to flipping?

If you watch our TV show, you probably realize you aren’t getting all the nitty-gritty details of the flipping process. We can't show all the steps to buying, renovating and listing a home within 30 minutes. We try to show as much as possible, but some aspects would not be interesting, and some would be confusing to viewers.

I address behind-the-scenes secrets on my blog. Some of the less-than-glamorous aspects of flipping that you don't see include doing your footwork to find good deals, looking through all the property documentation (a little boring but essential!), and knowing when to call in outside help from contractors and specialists.

Flipping is a real commitment. You have to take the time to learn how to do it properly, and while some knowledge can only come from experience, getting an education does save time and hassle.

How can I avoid being scammed?

It’s an unfortunate fact of the real estate world that there are some less-than-honest people out there, and you need to steer clear of scammers. Scams are a continuous problem in our industry, and can range from slightly shady practices to flat-out fraud. However, if you pay attention, there are ways to avoid becoming the victim of a scam.

The first thing to do is familiarize yourself with the sorts of common scams you can encounter in the real estate business. Then learn your rights and responsibilities with regard to buying and selling homes, which can vary by state or locality. This is one topic that really can take you a long time to learn about, so I recommend starting with Tarek’s article on common scams and continuing to research from there.

I really hope that my answers to these five common questions have given you some insight into what’s involved in becoming a flipper. I can’t stress enough the importance of educating yourself on all the aspects of real estate investment. Hopefully you’re inspired to continue learning more about flipping, and figuring out how to make it work for you.

Related:

• The Highs and Lows of Flipping Houses
• 5 Common Misconceptions About Real Estate
• Pros and Cons of Buying a Foreclosed Home

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

from Zillow Porchlight | Real Estate News, Advice and Inspiration http://www.zillow.com/blog/would-you-flip-for-flipping-194275/
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