Remember that flip that took us 8 months to complete??? Well it’s finally gone (woot woot!!!). We officially sold it on Monday and made a cool $27,400. The papers are signed, the transaction took place, and the money was quickly delivered to the bank (staying warm for our next purchase, an old farm house with acreage :)). So how did we really do it? How did we make thousands with a flip house? And can you do it too?
The short answers:
- Simple, buy low, fix it up, sell high, and
- Yup, anyone can do this stuff!
The longer answer…have a gander below. 😉
We Sold The Flip House! How to Make Thousands With a Flip House
We finished the house on Tuesday, May 29th and listed it two days later. Over the span of 7 days we had 24 showings and an open house that added another 20 or so viewings. All these lookers…and we had no offer… womp wommmm….
Since we wanted to sell quickly, we dropped the price $5,000, from $139,900 to $134,900. One day later, we had an offer…for $126,000 under an FHA loan.
It was an offer, but that was about it. It wouldn’t have given us nearly the profits we were hoping for (and from what I hear, FHA loans are horrendous to work with when it comes to the inspection). Since we had a couple days to think about it, our realtor decided to spread the word and let all the other realtors and their clients know that there was an offer on the table.
This worked beautifully. Within 24 hours, we had another offer. Full asking price with cash.
What whaaaatttt????? BOOM! We didn’t even counter. We accepted immediately.
The inspection came back with a few things – they wanted $1,200 knocked off the price to help share the imminant costs. Yup, makes sense, signed those papers too. In the end, they paid $133,700 for a fine house (after all, I put most it together myself, so you know it’s going to last forever, right?? :)), and after taxes, closing costs, and realtor fees, we got a check for $122,400.
- Net House Sale: $122,400
- Total Expenses: $95,000
- Profits: $27,400
Not too shabby for a side hustle! Now we’ve got $122,400 sitting in the bank ready for our next adventure!
How to Make Thousands With a Flip House
Flipping houses isn’t for everyone, but if you love:
- looking at real estate,
- finding a good deal,
- putting in some sweat equity, and
- making tens of thousands of dollars…
…then flipping houses might just be for you.
So what do you need to know to go from the house search to the sale?
1) Find a Deal
You’ll probably have to look at a couple hundred houses online and walk through at least a couple dozen before you find a screaming deal that’s actually worth your time. With so many people interested in houses right now, how can you possibly find a deal that’ll earn you tens of thousands of dollars? (ie. how can you make thousands with a flip house??)
Here’s some solid ideas for you:
- Watch the house prices online. If they drop the price quickly and by a large margin, they’re hot to sell. Chances are you could offer far less than asking and still get a signed contract.
- Network with realtors, people at work, neighbors, people at church — pretty much anyone you can talk to — about your interest in a flip house. Somebody always seems to have an uncle with a friend that has a boss that’s selling a property, which might mean a screaming deal for you.
- Find an ugly house that no one else wants. It smells, it has ugly carpet, the walls are painted hot pink, and the landscape is just one huge bush that covers up the house (this was basically our last house project – not just one of these things, but all of them). Ideally, most of the repairs are cosmetic and are fairly easy to repair. While others are plugging their nose and running out of the house, you’re smiling because you smell a deal. 🙂
Beyond this, I also suggest point #2…
2) Pay With Cash
Yes, I’m serious, and yes, it’s possible. You CAN buy a house with cash.
All you have to do is pay off all your consumer debt, pay off your house, and then save up for like, 2 years to buy a $100,000 house with crisp $1 bills (hahaha, or you know, a cashier’s check).
You next question is probably, “Why the heck would you do this? Isn’t it smarter to use other people’s money to get rich?” That’s what they say…but who are “they” anyway? Banks? People that want to make a buck off you with their books (think about it – how many people would buy books about buying houses with cash vs. zero money down? I would think the audience would be much larger for the latter these days…)? Your broke brother-in-law?
I say ignore the masses and go with the common sense approach. By using cash, you:
- Save hundreds of thousands in interest that you would have otherwise forked over to the bank
- Save $350 on the appraisal that you don’t really care about (that’s the cost the bank pushes on you to make sure the investment is wise for them)
- Avoid all the other closing cost crap (admin fees, loan application fee, credit report fee, blah blah blah…my closing costs are usually $800 or less, not $3,000+)
- Get a better buy – sellers would rather sell the house to you, the sure buyer, for $100,000 vs. the FHA, zero-percent down schmoes that offered $105,000
- Gain simplicity – no mortgage payments, no escrow, no hassles when you want to switch insurance companies – life is just so much better when you take banks out of the equation
- Get Peace of Mind – no matter what happens with your job or your health, you own your house, not the bank. They can’t take it from you if you’re suddenly short on cash.
If you want to make thousands with a flip house, start with cash.
3) Do Much of the Work Yourself
You know how you make a huge margin on a house flip? Do as much of the work as you possibly can. Sure, it’s going to take your time, but what were you going to do with that time anyway? Watch 82 more episodes of Survivor?
Fixing up a house isn’t that hard, and to be honest with you, it doesn’t take that much skill. Believe me…my major is in Finance…which is about the furthest degree from carpentry you can get. I learned how to fix a few things here and there from my Dad, and a few more things from my father-in-law…Oh yeah, and some from my buddy Jon, Mr. Knows-How-to-Do-Everything. Mainly though, my teacher has been YouTube – a friend everyone can call in a time of need.
So what projects can you tackle yourself to save a HUGE amount of money?
- Drywall – no sweat – just cut rectangles and screw them into the wood boards in the wall.
- Flooring – not a big deal – just cut and click together laminate, sand the hardwood, or stick tile into some mud that you can buy pre-mixed. Sure, things can go wrong here, but everything can be repaired – even botched DIY jobs. 😉
- Trim – piece of cake – just learn how to cut 45 degree angles and have a blast with that nail gun
- Crown molding – DO NOT TRY THIS! Lol. I don’t pay anyone to do it – I just avoid it at all costs. 🙂
By doing the work myself in this last house, I saved $5,000 on the drywall, $2,000 on the garage roof, and probably another $3,000 on the laminate hardwood flooring. Instead of $27,000 in profits, we would have only made $17,000!!
4) Use a Realtor to Sell It
Alright, now I might have you scratching your head. I’ve been preaching to you about saving money with cash, finding an extreme deal, and then doing the majority of the work yourself…and now I want you to blow your profits on a realtor?
Sure, it costs money to have a realtor sell your house, but here’s what they can do for you:
- Provide up-to-date information on the market to determine a reasonable asking price
- Show you the terms and conditions of competing properties
- Develop a marketing plan that could include repair suggestions, open houses, advertising, etc.
- Provide security for your home when it is being shown to strangers
- Negotiate the best price for your home
- Monitor the sale process, renegotiate as needed, and resolve issues prior to closing
During our home sale, our realtor proved her worth by:
- Pointing out 4-5 issues with the house that I wouldn’t have noticed prior to the open house. I fixed them all and they became a non-issue.
- Rounding up all the realtors and clients and telling them we had an offer…which yielded a much higher offer
- Sharing the feedback from every single walk-through via a handy app that all the realtors use in my area
- Informing us that our smoke detector certificate was out of date early in the closing process. We got this re-evaluated and certified in time to keep the close date on schedule.
- Walking us through all the paperwork and legal non-sense that I would have had no clue about
In the end, I paid her $4,000 and the buyer’s realtor $4,000. If I didn’t have a realtor, I probably would have had half the walk-throughs and no solid offers – the house would still be on the market.
Stop thinking that you can save thousands by listing the house yourself. By putting up a “For Sale By Owner” sign, the buyers automatically think they’re going to get a deal and you think you’re going to save all the money you would have spent on the realtor. One of you is wrong…and it’s you…
Are You Ready to Make Thousands with a Flip House?
If you can buy a house for cheap, fix it up, and make 30% on your total investment, then it might just be worth it to flip that house. On the other hand, if it’s going to take you 8 months and your spouse is going to start hating you for it…then you might want to think twice about it (or three or four times…just don’t do it).
The key is to communicate and have a common goal. If you and your spouse and family would love for you quit your job that leaves you lifeless at the end of the day and flipping a few houses will let you escape, then do it! Or, these couple of house flips will get you back on track for your goals to retire in the Bahamas, then start swinging that hammer!
Should you try to make thousands with a flip house? It’s not as much about your skill level as it is about your ‘why’.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.