How a 17-Year-Old Can Do House Flipping Without Losing Money

By Lou Vachon

This Teenager Made 12 Million Pounds from Real Estate by the Age of 19. Here's How:

Have you ever heard of Akshay Ruparelia?

The 19-year-old from Barnet, UK, sold his first property before the age of 18, and by 19, he'd become the owner of a company that generated 12 million pounds in revenue over the course of one year

• Language: English
• Publisher: ManyExpertAdvice
• Release date: Sep 27, 2020
• ISBN: 9781777377045

Book preview

Introduction

If you don’t know anything about it and you jump into it blindly… one bad deal will totally wipe you out.

Jamie Crouch

Are you a teenager or a beginner considering getting into the business or career of flipping houses? Have you found yourself asking yourself some of the following questions?

Do I need a license to flip a house?

How much money do I need to flip a house?

Can I renovate my house on my own?

How do I find the first house I will purchase?

How long will it take to sell the house?

Do I need a real estate agent to sell my house?

What are the financing options available to buy my first house?

What are the necessary renovations I need to make, and how do they differ with the nice-to-haves?

What is the best flipping option for me without having to spend so much?

What are the biggest risks in flipping houses?

Is flipping a house a good investment?

Then, the above words by Jamie Crouch fit perfectly to you and the business of flipping houses. Like in any venture, the biggest threat to your success in flipping houses is risks. What is risk? Risk is the potential to lose capital in an investment or trade. But there are ways to dwindle this risk to as low as is humanly possible, and this book will show you how to do that. If you're sitting on the fence or doubt that flipping houses are an excellent way to have a positive return on investment (ROI), then this story will show you how lucrative this business can be if done right. Let's go over the story.

After doing his homework, Matthew bought a distressed single-family house for $61,000 in Norwood, Pennsylvania. When he discovered the house, he found that the kitchen and bathroom were gutted and needed full renovations. That three-bedroom and one bathroom house featured an unfinished attic, and Matthew saw an opportunity even with this challenge. Isn't this confirmation that where there are problems, there are opportunities? Sure, it is. Having prepared himself thoroughly, Matthew was savvy enough to seek and secure a loan of $105,000 before putting an offer on the house. However, not everything went according to plan. For example, he had some cost overruns and ended up paying $44,500 for the rehab work, more than he had initially planned. Of course, this ate a bit of his projected profit.

Matthew, finally, turned the house into a beautiful and attractive four bedroom and two bath residence. He also moved the laundry from the basement to the first floor. The house went to the market at an appraisal value of $176,000 and was bought for $175,000. When all the costs were paid, Matthew turned in a neat $30,000 net profit. Isn't that great? Notice that Matthew didn't use any of his money to carry out this house flip to completion: he used a loan that covered all the costs. He had to contribute, though, was sweat equity, meaning he had to invest his time, effort, and skills. Fortunately, anyone can refocus their energy, time, and abilities, and ace a house flip. As we said, the key element for success is knowledge, which this book provides more than enough of. Throughout the book, I'll provide answers to all the above questions, and give you the knowledge you need to win with house flipping. By the end of the book, you'll understand why Matthew succeeded in the house flip.

You may think that perhaps Matthew was lucky in the flip that he did. I beg to differ. Here's why. According to ATTOM Data Solutions, in quarter one of 2019, 49,059 houses and condos flipped in the U.S., and the average gross profit was $60,000. The same report reveals that The total dollar volume of financed home flip purchases was $6.4 billion for homes flipped in the first quarter of 2019, up 35 percent from $4.7 billion in Q1 2018 to the highest (U.S. Home Flipping Rate Reaches a Nine-Year High in Q1 2019, 2019). Do you think making this amount of money can make a huge difference in your life? Just imagine making that amount of money every month or two months? Wouldn't that be wonderful? Of course, it will. So, it makes sense to learn house flipping and apply what you know. Here's what you'll learn in this book.

In Chapter 1, I'll discuss two major reasons for flipping houses. Both of these ways can make money for you, and they involve either immediately selling the residence for quick cash or renting the property for regular, monthly income. In the final analysis, you must decide whether you want a steady income or once-off cash from the flip, and the decision is up to you. Once you know your reason for entering this business, it is vital to decide the kind of flipping you want to do. There are primarily two ways to do this. The first one is called multiple investor flipping, and the second one is termed fix and flip. I'll discuss each of those options in this chapter and cover the pros and cons of each.

The key element to successful house flipping is the process you must follow to make it a success. You don't open a digital safe by simply punching in the password at random. You must follow the correct sequence of those digits. So it is with the flipping of houses. You must do the right things and in the proper order to hit the jackpot. If you mix up the steps, your risk quickly jumps up and increases the chances of failure. The steps involve:

knowing how to get the money, you need for flipping,

finding the right house, usually an ugly house,

figuring out if the house is a great deal,

following the right buying processes,

figuring out if you’ll do the fixing yourself or hire a contractor, and

selling the house. In this last step, you'll need to decide whether you'll sell the building yourself or hire a real estate agent.

In the book, you'll also find four methods of utilizing your house flips to have a positive ROI. The first method is a typical fix and flip, which is discussed in Chapter 1. Method 1 involves finding an ugly house that requires minimal repairs and preparing it for the market over a short period of time. In Chapter 2, I discuss the second method of generating ROI called wholesaling. I'll explain what wholesaling is, and the skills you need to have to make it a success. There are actually four essential skills that enable you to become a top wholesaler. Not only will I discuss the skills necessary for savvy wholesaling, but I'll also go into the details of the steps you need to follow. How to find a buyer? The kind of people that you'll find your potential flipping house from, and what to do when you find such a house immediately. There are several reasons wholesaling is such an attractive house flipping strategy, and I explain them as well.

In the same chapter, I discuss Method 3 of positive ROI generation when flipping houses. Method 3 takes advantage of federal laws to avoid paying capital gains tax. I’ll show you how to do this.

It doesn't help much only to know that you need to find houses from motivated sellers; you also need to understand the signs that tell you a property belongs to your target. Your target motivated sellers could be ordinary individuals and disgruntled landlords. There are also other motivated sellers like banks where you can find houses that they have taken back after foreclosure. The other potential source of homes is foreclosed properties that you can intercept before they land in the bank's hands. It is essential to understand your target neighborhood's real estate market trends to avoid paying too much for your target properties. Three kinds of markets may be in force when you buy a property. The housing market could be favoring the sellers, buyers, or be balanced. You need to know the kind that is favorable for flipping houses.

In Chapter 3, I'll move on to the details of rehabbing your house to get it ready to flip at the right price. Here, I'll cover all the necessary steps to renovate the buildings you want to flip. But there's a key question you must answer that will have an impact on the finance numbers of your flip. Here's the question: Are you going to do the renovations yourself, or are you going to hire contractors? Irrespective of the answer to the question, the amount of work you will still do remains virtually the same. You, therefore, still need to decide on the scope of work. It's important to realize that not all kinds of houses are cost-effective to repair. So, in this chapter, I'll reveal which homes are fit for rehab.

If you choose to hire a contractor, there are some things you’ll need to do to manage the contractor(s) so that your project succeeds. I discuss all these points and highlight selected tasks that you can actually do by yourself. However, some tasks, such as electrical work, require