Sunday, August 26, 2018
How to flip a house for fun and profit
In today's housing market it is super easy to make a ton of money flipping houses. I should know! My wife and I are just completing our first house flipping and as soon as someone buys it instead of saying "Cute house, but not for us." we will be just shoving money into our bank accounts.
You want in on all this sweet action but don't know how? Worry not amigo, I have all the experience and knowledge at my fingertips, and I don't mind sharing. There is plenty to go around!
Buy a half wrecked house.
We did. It was "As is" in a hot market. Tiny, 90 year old house, old water heater, peeling paint, gaping holes in crumbling walls and cracked plaster everywhere, hideous linoleum and industrial carpeting covering the floors, ancient, corroded pipes, 60 year old gravity furnace, asbestos, no appliances you wouldn't want to burn in The Cracks of Doom and would be willing to lose a finger in order to do so, moldy junk everywhere, no functional windows and doors hardly more functional than that, and a wide variety of "minor" code violations we would have to take responsibility for.
This is just the kind of house you're looking for. These problems are your savings.
Get to work.
We got to work. We got others to work. We worked. And we also worked to pay others to work. We bought things, we repaired things, we stripped things, we smashed things, we dumped things, we rebuilt things, we patched things, we invented things, we replaced things, and we fixed things. We had no idea what we were doing half the time, but we did it anyway. It was hard, but we did it anyway.
And after a mere sixteen years our house was quite cute and relatively functional, considering its age and limitations. The worst was over and the cash is just around the corner. Ka-ching!
We are in a hot real estate market once again. So many people come to look at our house every day that we can no longer spend any time there. They all think it's a "cute" four out of five, but not for them because of reasons. But, and I say BUT, any day now, any day now, someone will hit go and then we will be rolling in it. Let's just look at the dollar figures even if it makes you turn green with envy ("green", get it?):
Mortgage, taxes, and Insurance, 16 years:
Improvements and Rehabs:
Replacements and Repairs:
(Prospective) sale of home minus agent fees, remaining amount owed, and miscellaneous costs:
Okay. I know that negative $160,475 might not seem like a huge profit to the prospective home flipper.
One might even suggest that it is a loss of a significant amount of money.
But you are forgetting about the intangibles.
Value of living in house for free for 16 years, several of those years with the house being in pretty good shape:
Greatly increased knowledge of Plumbing, Carpentry, Electrical, and Landscaping, value of Trade School Education equivalent (roughly 8 years):
Which means that our total profit is:
Real Total Profit:
For a mere 16 years of near constant pleasant but grueling labor.
So get to it house flippers!
The money waits!
And the clock it ticks!