How to start the BEST House Flipping Business!

How to start the BEST House Flipping Business!


how to start your own house flipping
business what’s going on friends it’s Sam Kwak your real estate investor
coach and mentor and in this video I want to share with you guys how to start
your own house flipping business now you might be brand new you’re just getting
started you’re interested I mean you’re excited and you might have watched HGTV
and you’re feeling really inspired about starting your own house flipping
business as well so I will tell you that this business is very very lucrative and
very profitable but at the same time you gotta understand that there’s a lot of
risk to it financially and also legalize you know there are things that you can
do that can actually get you in trouble in terms of law so I want you guys to be
prepared educated and you guys understand the different things in the
real estate investing world so that you guys don’t go out there and just hog
while and get in trouble and lose ton of money because that could really really
happen and I’ve seen many many people who’ve gone into real estate doesn’t try
to do their first flip and ended up a bit you know losing ton of money and
never went back to finish their projects and never really went back to the
industry in the first place so I want you guys to get educated to get prepared
because a lot of what I’m going to say is is real you know I wish a lot of
things that that it happened to a lot of people’s on you or just you know
practice but guys take the time and learning right take the time and getting
yourself educated because making that one mistake is going to cost you more
than the time and the price that you pay to get educated okay so that’s really
really important and I can’t I can’t stress that enough because there’s a lot
of people who in my life have suffered a loss from not getting prepared in this
real estate investing world so in real investable there are different
strategies you know fix and flip is definitely one of them buy and hold you
know being a landlord notes you can get into wholesaling which is a strategy to
fix and flipping so I want to talk about that a little bit but those are the main
strategies that you can use and you might be interested in and who knows
doing your first flip you might not even like it you might be more inclined to
doing landlording you might be more inclined to doing notes and and I hope
that my youtube channel is going to help you figure out really and get to know
yourself a little more who you are as an investor you know what
type of investing does appeal to me what what works for you right you know some
of the things that in in the real estate investing world doesn’t work for me
right I definitely do not like short sales you know they’re not short I don’t
know who named it but you know short sales are definitely up for me but fix
and flips buy and hold and tax liens are definitely something that I can do all
day long and make ton of money at so I’m gonna go and talk to you guys about
basic overviews of starting your own fixing foot business today and I’m not
going to get too much into details which by the way I will spiral this video into
whole another series where I’m going to go and talk about each of the things
that I talked about today right now so things like ARV how to calculate market
price what’s fair market value on a property how to do coms how to raise
money right that’s a huge huge topic and some of you guys might be interested in
taking that training because no money might equal to no deals but sometimes I
could prove that wrong I can actually show you how to find real estate deals
get into and get out without any money being involved so I will show you how to
do real estate deals without your own credit or money but at the same time
I’ll show you how to raise money so that it’s Bor there’s an easy of at ease of
access getting into deals and rather than trying to figure it out in your in
a creative way but in fact I feel I feel like creative real estate investing is
far more superior because you know you can go in without any money and come out
with ton of our eyes and ton of profit that you can generate definitely
possible but i’ma show you guys how so I’ll go and spiral into a whole nother
video series do do and cover the details of some of these moving parts to the
investment strategy right so in my one point here today I’m going to show you
guys a hypothetical real estate deal that I may find and in fact I’ll go
create a whole nother video where I’ll go and walk in through an actual real
estate deal that I’m working on so an actual fix and flip deal that I will
show you and show you guys what’s going into it what tips what types of repair
what to look for and how much you should do how much of repair should you be
doing in comparison to your local market which by the way before before I go on
make sure your understand your market number by what I
mean by that is I work off of Chicago numbers right shakaal numbers is going
to be different from Florida numbers it’s going to be different from Michigan
numbers it’s going to be different from California numbers so do your due
diligence as far as what is typical in your market and that’s something that
most of the gurus aren’t going to talk about it you know a lot of the
infomercials out there they’re not going to say do your due diligence in your
local market some will but some will not right so I’m gonna be the I’m gonna be
one of the first few people to tell you do your due diligence as far as where
you are in your market and if you live in Chicago great you can work if I offer
my own numbers but but again still it depends on where you are in Chicago
right if you’re in 6061 Englewood side yeah the numbers going to look really
really different right versus 606 25 and into towards the Chicago so be be
mindful of where you are and understand that different markets play with
different numbers okay so let’s go ahead and put together a hypothetical
situation here so I’m going to use blue to get started now calculating ARV I’ll
go ahead and put together another video on that but in a RV stands for after
repair value so R after repair value is basically the number the price that we
were going to be able to sell it for after we finish doing the repair and
Rehab so make sure you understand our number that’s going to be your key term
so let’s say our ARV for this given property is about $200,000
okay so we have $200,000 property ARV so after we you know painted we make it
look really nice we got new cabinet in there and you toilet you backed up with
all that being done we know we’re going to be close to two hundred two hundred
thousand dollars now if you’re in a range if you’re calculating this within
range always always always take the lower
numbers so if your let’s say you’re working with a real estate agent
competent real estate agent that says yeah the ARV is going to be anywhere
between 180 to 240 right don’t go with the middle go with the lowest number
because you know even even on the downside red even on the very low side
if you know you can make money you know you can make money on a $220,000 that’s
an for 40 grand profit that you can take
away but if you decide to take the 220 and also BAM you sell your house for 200
then you lost two hundred twenty thousand dollars of calculated profit so
always take the lower money always be fiscally conservative when it cut when
you’re calculating the deals don’t don’t you know try to budget the numbers and
make your air if you all look nice and pretty
no no be real call it like it is don’t fudge with the ARV because if the deal
doesn’t work don’t force it right do not force the deal to make it work so we got
we got to two thousand dollars ARV that’s that’s what we know we can sell
for that’s the lowest number we can take that’s being conservative right be super
conservative about your numbers now let’s say our repair estimate came to be
about thirty thousand dollars so repairs okay and with repairs it’s all going to
depend on if we the contractor is going to be when your relationship to that
contract is going to be as well and also understanding what types of repair do
you need in your given market because if you’re in a low income side low income
housing you don’t want to necessarily put put in the nicest granite countertop
you don’t want to put in brushed nickel everything right you want to you want to
go light with the rehab when it comes to the when it comes to that kind of
housing right if you talk about you know a little bit more affluent areas you
know we got higher income median income be in the town neighborhood then yeah
you want to you know upgrade to granite countertops you want to go with
travertine tiles you know you want to go all how almost all out to the point
where the buyers in that neighborhood are going to be interested in your
property and they’re going to buy it so keep in mind
don’t overdo your property don’t put the shiniest thing on the property always go
with what’s acceptable to your local market so we put in $30,000 repairs in
and one of the things that I see that a lot of the Guru’s out there don’t talk
about is holding costs holding cost is your utilities right you got to turn the
lights while you’re doing the rehab right especially there in the inner
corner time right water right you got to make sure
your contractors are getting water in there you want to make sure you got your
taxes right that’s another thing that you should be looking at I didn’t make a
video called five things that you should always know
before doing any real estate deal do check it out
and that that’s a huge saying on how to find the taxes right to your given
County and your and your given property so we got to put it we got a factor in
holding costs let’s let’s say we’re holding this about six months because I
always go to six months number because you never know the market my shift and I
all of a sudden I’m holding this property for four more months when I
only anticipated two so I put in six months worth of a holding cost just be
just be more safe so let’s say that we’re putting about twelve thousand
dollars of holding cost right and holding so that’s your that’s your taxes
utility that could be I mean little little things like hey you need to buy a
new air filter right little things like that is all going to only hold into that
now let’s let’s let’s now calculate the price of purchase or or the goal what
our goal is going to be for a purchase right so we feel if we want to make a
least thirty forty thousand thirty thousand dollar profit into that right
so let’s say you’re gonna put in twenty let’s see yeah let’s let’s be let’s be
more profitable here so thirty thousand dollars worth of profit we want to be
able to create that number right so that’s our profit now also on top of
profit I like to put in what’s called a an oops cost right so this is this is
something that I put in there just in case let’s say we tore up a drywall and
awesome Wham there’s a whole patch of molding we need to be able to fix it or
let’s say we tear up the roof and also we’re missing sheathing or something all
right I’m going to put in five grand in there
just as our our oops cost okay that’s so that if there is something that I
discover that is going to be little more costly that I think’s
anticipated I can always take take the money out of the cost budget and bam we
got our we got our challenge taking care of so if we want this if we want $30,000
profit on this on this deal then we gotta work that we gotta work the
numbers backwards so 35 we got 35 year 47 right 47 and 77 so we got 77 thousand
worth of expenses or 77,000 expenses minded 30,000 Papa so we got $47,000
with expenses out of you know out of the entire calculations that we did here so
with the $200,000 AR be subtracting the seventy seven thousand dollars we get
about 120 three thousand dollars right so that is our target purchase price so
if you want $30,000 profit out of this deal we gotta have it within no more
than hundred twenty three thousand dollars right so is it possible to go
lower than 123 thousand dollars with good negotiation skills yeah sure so if
we go lower than hundred let’s say we were able to buy this property for a
hundred and ten thousand dollars alright so we actually made thirteen thousand
dollars extra on our profit right if all these numbers been consistent so if we
know that repairs are going to be stay are just going to stay at thirty
thousand dollars and that’s the conservative side meaning if even if
it’s going to cost heaven and earth it’s going to cost you thirty thousand
dollars to repair and yeah that’s that’s a good number to stay with so so with
the purchase price how you negotiate is going to matter if you have a good
negotiation skills one thing remember is that you make money when you purchase
the real estate deal not when you sell it when you walk into the deal you
should have already have this number all laid out right there on the spot right
so today I never go into a single real estate deal especially a fix and flip
without having these numbers in my head somewhere uh and then
actually walking in from there so I need to know what the end is going to look
like right never walk into a real estate deal without knowing your answer
strategy and what is your outcome going to be so no no that number in your head
right no that outcome and if you so if you don’t know these numbers you’re
going to be led by the numbers right the real estate deal is going to be owning
you not you owning the real estate deal does that make sense so you want to have
a number in your head calculate it go through this analysis and understand if
this is a good deal or not a good deal and remember this is something that I
see a lot of beginners and new real estate investors run into is they try to
fudge with the ARV to make the real estate deal work right do not do that
because you’re losing money if you’re trying to if you’re trying to fantasize
the ARV into something that’s not okay if the ARV doesn’t work with the given
calculations and if you know that if you know for a fact that the purchase price
is not going to come out to be that way then yeah don’t don’t do the real estate
deal right don’t do it because you can lose money and if the market and the
numbers are telling you one thing but your heart is telling another let’s
listen to the numbers first and then listen to the heart okay so I just
showed you guys the basic fundamental analysis on a fix and flip deal right so
for those who are brand new you might not understand each of the numbers and
the details of it all so like I said I’ll go ahead and start a whole nother
video series to show you guys how to talk the ARVs how to estimate the
repairs how to estimate the holding cost and how to raise money right how to also
build business credit that’s that’s a whole nother topic that we can get into
that’s going to help you a lot getting into real estate deals right so I’ll
cover those videos in the coming weeks and you’ll see it so those are the video
series I’m going to go and create and you’ll see them if you’re subscribed to
my channel for those who are not subscribed to my channel do you
subscribe to them because I’ll go and share ton of information how to raise
money right that’s the biggest challenge that I’m seeing with new investors how
to negotiate how to run these numbers so all those videos are going to be coming
out very soon so do you subscribe to my channel and I’ll show you guys the
details of calculating all these numbers and doing other things like raising
money and you go that’s going to help you start your
fixing foot business now I’m also looking for qualified trainees to work
with me on a side-by-side level so if you’re interested in getting qualified
to work with me as a trainee and a partner go to investor coaching that
info I am looking for qualified candidates to go into the process and
work with me and I can personally mentor and coach you along the way so go to
investor coaching that info I’ll throw the video down in the link on the video
right here you’ll be able to see it and always if you have any questions go
ahead and drop them down below and I’ll answer them for you guys as soon as
possible alright thanks for watching guys

You May Also Like

About the Author: Oren Garnes

42 Comments

  1. Great video. I was doing the 65% rule but I notice when you go with higher value homes it does seem to work in my favor. I like the way you strategy this . Also can you make a video on how investor can use your pay off mortgage in 5 to 7 years idea. Thanks for the great video Buddy

  2. So ive got 120k to invest into flipping a house, do I need licenses or anything here in Texas?

  3. really good pointers for someone like myself looking to getting into house flipping. great video guys

  4. thank you for your video! if I have enough cash to buy a property for fliping purposes should I pay cash or use bank loan?

  5. Short sale is a term used in the lending industry that means you're discounting (Shorting) the loan. It has nothing to do with how long the process takes.

  6. I was told that I needed to get a “business license” before I start flipping and also banks will help with loans if they see you have a license. Is this true!?

  7. Hey man I was just wondering how much money someone like me would realistically need to start flipping houses like this. I am just 17 soaking in as much knowledge as possible and saving my money. I have a mentor whose net worth just hit 9 figures and he says I only need 10k to get started. I really like this video and just wanted to see what you had to say.

  8. I work with a large company looking to buy fix and flips and buy and holds with good numbers. Sfr and small mf (up to 50 units) in Houston, Vegas, Phoenix, Birmingham, and Cleveland. If you have under contract, the actual seller, or NO MORE than one away…send to [email protected]

  9. Do you do your own fixes on the property or do you hire contractors? If you do by yourself how do you learn how to do that? Excellent video.

  10. How would i do my first flip if i have no money because i have not flipped any houses yet? (And i dont want to be in debt)

  11. Where is the accounting for that good ole 6% commission? That’s gonna come right out of that 30k commission the way you have it calculated.

  12. I wish there was someone follow behind while they did this. I really want to learn this kinda stuff but i need that OJT

  13. Tons of people get excited about flipping houses. Very few actually do it. Even fewer make a profit from it. It's never as easy as people on TV or Internet make it look.

  14. Great video! For cash-flow analysis we have the 1% test to see if a property is worth looking at. Is there a similar test for Flipping?

  15. So you have to start out knowing what you can sell the home for!!! That’s the key right?
    New sub btw…

  16. Note from the future: the market is saturated with flippers, so you'll need to know "a guy" who can find houses before they hit the general market, contractors are too expensive, and still slow as hell, and houses always sell for less than what you want them to. If you can't buy, fix, and flip the house with all the expenses in between within 4 months, dont expect to make a dime. Oh also include yourself as a cost.

Leave a Reply

Your email address will not be published. Required fields are marked *