I’ve been flipping homes in Denver for over 12 years. It can be a very profitable business, but it can also be frustrating, stressful, and hard work. Probably because of the perceived high profits on flipping houses, a lot of people show an interest and want to know how to get into the business. So, I thought I’d share a few of my tips, successes, and fails.
One of the first things you should be aware of is that house flipping requires money – lots of money. If you have a great credit score you can get a home loan, for which it’s best to have a very friendly mortgage broker, though even the best of friends has to follow lending requirements. You’ll still need plenty of cash for the down payment.
I am fortunate in that I’ve always been in a position to pay 100% cash for each property, except for a couple of occasions where I was flipping multiple properties simultaneously. I normally try to avoid this, but sometimes I run into a situation where an elderly person wants to move to a retirement community, but doesn’t want to sell immediately. In these cases I’ll make a cash offer for the home, but allow them to pick the closing date.
I think the second most important piece of advice is to get help. Do not think that you can just jump into this business and make money. Back in 2005, when I started, I was fortunate enough to be able to work with a friend who had already been in the business for almost 20 years. Without their help, I doubt I would have been able to get the first house to market, let alone sell it for a profit.
Along the same lines, do not try to do everything yourself. My father is a home inspector, so I’ve grown up with a good idea of how to assess a home, and how to fix things about the home. When I first started flipping solo, I thought it would be a great idea to maximize profits by doing everything myself.
Hey, I can fix plumbing, sort out the draughty windows, lay new hardwood floors, etc. Oh, no, I can’t! That was the worst idea and I still remember the long hours and sleepless nights. I ended up hiring contractors to come in and do the jobs, fixing my mistakes, and barely broke even on the house sale. Stick to what you’re good at, both when flipping and with any personal home improvement projects. In my case, that’s the purchase, concept, organization, and sale. I now hire contractors to do the work. Over time, I’ll share some of their details with you. I’ve found the very best in Denver and they deserve a shout out.
Be prepared to work long and unusual hours. If you don’t enjoy renovating houses, do not start. Yes, the profits can be good if you work hard and know what you’re doing. But, I don’t advise anybody starting in this business just for the money. I have had my problems, but over the years I’ve come to love my work, taking a badly maintained property and turning into a dream house that usually sells very quickly. The latter is also important; otherwise you cannot get the money out to start the next project.
I could go on and on, and I’ll probably blog about flipping more in the future, but it’s time to round up today’s post. Hopefully, this was educational and has maybe encouraged some people to check out the industry. I hope it’s also warned others to stay well away – it’s a great job, but only if you’re truly passionate about the work.