Has anyone in here been able to get into flipping houses without having a ton of capital?

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  • #82633 Reply

      My husband and I are going to be buying our first home to house hack (live upstairs, rent out basement) and then flip levels while we do updates for a few years. I’m in Colorado so the houses appreciate above average here. Renting is a lot cheaper than buying here so this is the only way I’d want to be a home owner here and still invest in index funds.

      I‘m an interior/architectural designer working for a builder but what I REALLY wanna do is flip houses. I would have to freelance or do contract work while flipping since I don’t have a lot of cash that’s not tied up in investments. Or is there another way? Tell me your secrets.

      #82634 Reply

        Most use hard money loans.

        #82635 Reply

          Our first home was a duplex, and we lived in one side and rented out the other. We fixed it up while living in it, but when we moved out we decided to hold onto it and rent out both sides. It didn’t require too much capital because we used an FHA loan, and the potential rent helped us qualify. We also didn’t “flip” per se. We just did small repairs and improvements, most of which we did ourselves.

          Even without a huge gut the duplex doubled in value within 4 years, so it’ll be a nice chunk of change if we ever do decide to sell. I’d use a loan for your first house or two until you make enough profit off sales to pay cash for your investments.

          #82636 Reply

            Denver is super expensive but rural Colorado is a lot cheaper. Or another marker? But I’m not a huge fan of flipping from a distance. You do need a lot more cash than the gurus tell you.

            #82637 Reply

              “Renting is a lot cheaper than buying”?! That sounds like you won’t be cash flow positive and that you’re counting only on house appreciation. I’m going to take a wild guess that you didn’t see the hordes of investors that lost everything in 2007-2009 with that same failed attempt.

              Take Corey Yeroc’s advice.

              #82638 Reply

                Buying investment property for appreciation is a terrible idea. If that is what your banking on and it’s going to be your primary residence, plan on holding it for 10 years as your worst case.

                If you really want to house hack and get into investment properties full-time most homes on the MLS don’t qualify as good investments. Start door knocking, looking for FSBO, short-sale, investors getting out of the market, etc. The money is made the day your purchase in investment properties.

                You can probably qualify for an FHA loan and only need to put 3.5% down, but don’t tell your lender you plan to flip it, move, rent rooms to make payments. To them, it’s your primary residence. The day the loan funds and you close, they won’t care anyways.

                Tenants will pull every story in the book, simply don’t fall for it. You’re not their friend. Rent is late because they lost their job, family emergency, got arrested, hours got cut, etc. NOT YOUR PROBLEM! Rent is still due, and if it’s not in on time, get them out. Its a callous business.

                Don’t buy homes w/ major issues. Foundation, flooding, condemned, etc. A bank wouldn’t qualify you for one of those anyways, but those are big ticket items.. like $30k to fix. Don’t over leverage yourself, there’s a lot of fake gurus on TikTok, YT, Instagram, and they’re all lying. If they were doing so well on real estate they wouldn’t spend their time on social media selling you on “get rich quick in real estate, follow me for more advice” schemes.

                House hacking can work if you can control lifestyle creep, do a majority of the work yourself, and either make money on the buy or plan to hold for 10 years. A once primary residence almost never makes a good investment property from a capitalization rate numbers game.

                Also, get a fixed rate loan. Don’t do an adjustable, hard money, bridge loan, etc. Creative financing isn’t the rodeo you want to be in for your first or even 2nd purchase. Interest rates suck.. if they go down then refinance to a lower rate. If they go up, then you’re locked in for the duration of your loan at your fixed rate.

                Also, hi from Denver!

                #82639 Reply

                  You can do this if you find the right deal. Biggerpockets is a great website and podcast that helps you with the numbers etc. Typically (not always) if the money you put into the house (including buying the house and fixing it up) is 75% of ARV (After Repair Value) you usually can find a bank that will give will give you a construction loan and pay interest-free payments. Now if you don’t have a history of success, you may have to bring some money to the table.

                  You run the numbers with current value not what you expect it to appreciate. When you are starting out you do one deal at a time because you never know when the market will change. Real estate isn’t just at the whims of the macro economy but more so your local economy. I would do your research before doing this and look at 100 houses before you even thought to buy one for flipping.

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