How to Start Flipping Houses for a Living

How to Start Flipping Houses for a Living

In recent years there has been a trend of increasing interest in buying and flipping property for a living, or as a secondary source of income. If you watch any HGTV, you’ve certainly seen one of several shows which feature individuals who have gotten into the house flipping boom and are making big profits.

But is it as easy as it looks on TV? Well, sometimes yes, sometimes no. What it really depends on is the level of experience of the property investor. While it is true that many of the TV show flippers got their start by just rolling up their sleeves and jumping in, there is a lot more to flipping a house than what occurs in a 40 minute television episode. If you aren’t experienced, you can quickly lose a lot of money when flipping a house. That’s why we decided to put together some tips for beginners, on how to get into flipping houses, and avoid the hurdles and pitfalls that many beginners make.

A couple obstacles you will need to hurdle when you are new to house flipping are:

  • Finding the deals
  • Proving your availability of funds to the seller, just to have them look at the offer
  • Hiring and running contractors and all that goes along with that
  • Holding the property (mostly the cost of this) while renovating and selling

One of the biggest “Myths” in the flipping industry is you buy a house, renovate it, then sell it for a profit. Which is the “buy low, sell high” strategy. In other words, create instant equity by buying at a low enough price to be able to sell for a profit. This can be hard to do when trying to buy at 50%, 60%, 70% of what the house is worth.

What I found is these deals are out there. Although if you are not in the “inner” circle you probably won’t find the really good deals. Especially when you first start out.

So how do you become a player that others respect and accept? Especially when passing deals around to purchase. How do you get one of these deals?

The first major lesson is to understand a major marketing LAW. Match your message to the market and you’ll strike gold.

Suppose you had a crowd of people whom hadn’t eaten in three days. If you started selling hamburgers, do you think you would have trouble with what toppings it had, or if is grass fed or organic? No, right? Why? Because you have the perfect message for the perfect crowd. Do you see how this would strike gold quickly?

Knowing this one LAW, if I had to start over, here is what I would do . . .

  1. Look for a motivated seller, rather than an ideal property
  2. Get your foot in the door by being their solution
  3. Find out enough details about their problem so you can find a solution to it before you make any offers
  4. Use the technology of Dealology (deal structuring) to make an offer that the seller will accept

Looks kind of simple right? Well don’t let this fool you. After doing over 100 deals I feel the strategies that made me the most money and stuck the longest were the simplest ones.

Lets go through each step so you understand . . .

1. Look for a motivated seller, do NOT look for a property

One thing I learned early on is DO NOT go out searching for property! I never did a deal where the house signed my documents at the closing. It was always a person signing those documents. If you look for people in a situation (or problems) caused by a house you will have a much better and quicker chance of succeeding. Because if you help them solve the problem, you will get the house.

If you spend all of your time searching the MLS (Multiple Listing Service that Realtors use) you will find motivated houses (ugly houses) that need help. But like I said, that house isn’t going to sign your closing docs. But if the seller is motivated, you have a good chance.

Once I noticed this, I then started to realize the only deals I was buying were from motivated sellers. Not desperate. Motivated. Motivated simply means the seller is flexible and willing to hear your offers. Notice I said offers (it’s plural). Not just one offer (just cash – more on this later).

2. Get your foot in the door by being their solution

The reason you wanted to find a motivated seller, in step one, is because the fact of being motivated means they are actively looking for a solution to their problem. Maybe they need to move immediately, due to a job transfer. Maybe they need to sell after a divorce. Maybe they just can’t keep up on payments due to a change in their financial situation. The list could be endless. But the fact is, they have a problem and need a solution. So the way that you will get the chance to speak with them and ultimately close the deal (if it checks out as a good one) is by being the solution to their problem. How do you do that? Simple. Just find out what their problem is (that is motivating them to sell) and let them know you are the solution to that problem.

3. Find out enough details about their problem so you can find a solution to it

The only thing a seller thinks he wants at first is an offer. They want to know what you are willing to pay. But the truth is, that’s because he hasn’t thought his situation through fully enough. If he had, he would already have a solution. Instead, his solution is just to sell. But that’s not actually the full solution. Maybe he needs to sell at a certain price that nobody is willing to pay. So he still has a problem. That’s why the decision to sell is not, in itself, the solution.

If you listen closely and let him tell you exactly what the problem is that he is trying to solve (the house is rarely ever the actual problem–it’s just involved in the problem) then you will be able to start thinking of some offers that would actually solve the problem. Maybe you can’t pay him his asking price, either. But if you can solve his problem by structuring a deal creatively, then you might be able to buy it for less than he thought he could accept. Deal structuring is the key and is the difference between a successful vs unsuccessful investor.

4. Use the technology of Dealology™ (deal structuring) to make an offer that the seller will accept

Think of it this way . . . if I ask you what you really want first (before making the offer), then structured my offer based on your answers do you think it would be close to a perfect offer? This is all covered under a technology I created which I call Dealology, which is how I am able to do so many deals that other investors simply miss out on, leaving tens of thousands of dollars on the table.

So, now that I have the seller’s ‘secret’ formula of what will motivate them to sell a house, I just make that offer. And it doesn’t matter if they owe 150% of its value, or they don’t owe a penny on the house. I have an offer that will satisfy every need.

It took me years, and years to figure this out. And I would hate to admit how many millions of dollars I didn’t make while not knowing this.

The 7-strategies I use (now) when buying houses

      1. S.L.O.T Deal (Sandwich Lease Option Transaction)
      2. Option to buy
      3. Lease Options (different than #1)
      4. Getting the deed (or its slang term: Subject To)
      5. Rehab Retail
      6. Wholesale
      7. Owner Financing

I explain all seven of these deal structures on my Intro To Flipping page. All for FREE.

Last thing I will leave you with is this very important piece of logic…

If you want to own real estate you will need lots of capital and will have lots of daily work to do (this is the conventional way). What I suggest, if you really want to know how to start a house flipping business, is to control the properties (not always own them to start off with) on paper and not always own them. And when you need money you assign your controlling interest and collect your fees. Once you understand this concept you will make a LOT of money without your own capital and risk. This is how I am able to buy as many houses as I can find.

There are two ways to make money with real estate:

      1. With equity (buy low & sell high)
      2. With monthly cash flow (terms deals)

So many folks go after #1 above. Only because they have no idea #2 exists. After today you now know the way to buy & sell real estate without credit or capital is to do terms deals until you can build enough relationships and capital to do #1. It really is how to start flipping houses!

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