Lately I’ve been fielding some great questions privately and have always kinda thought everyone else would benefit from hearing my answers so I’m taking this email public as a test to see how it goes. It’s from Steve Parry, location unknown.
First off let me say I love your website. I’ve been following it for a while now and it is the most informative, honest flipping blog I can find.
The reason for the email is I’m a young guy. My dream has always been to flip houses. I went to Columbia university, majored in engineering, minored in business. I work now for a construction management company as a superintendent so I am getting more and more familiar with construction techniques. I have the capital to start but think I need more experience to be anywhere as close to successful as you are.
My question for you is:
1) How did you get started?
2) What would you recommend for a guy like me just starting out trying to get the experience to successfully do what you do? Would you get involved, hands on as a superintendent so that later down the road I can act as my own contractor, or as a project manager so that I know the contracts and estimation side of the job or an engineer so I can pull virtually every permit I need and stamp my own drawings?
Any other advice you want to shed on me that maybe you would have done differently if you started over now….feel free to school me.
I know you’re a busy guy so I’ll keep my many questions to just those two.
Thanks for taking the time.
Thanks for the comments Steve and I’m glad you find inspiration here. It sounds like you have a great start to building the skills you would need to succeed in house flipping. Engineering and business will both help you tons. Having the capital to get started is also something that alot of other guys are not lucky enough to enjoy and they still make it happen using hard money loans, so here’s another strong point you have on your side.
1. I never set out to become a house flipper. Its been told, do what you love and the money will follow. I grew up around tools my whole life and was lucky enough to have a dad (r.i.p.) that took the time to teach me how to use them. He always was taking on remodeling projects around the house although his profession was a computer programmer. I always found myself helping even if it was just cleaning up. At an early age I learned about tools and I think it led me to be more mechanically inclined than other kids later on in life. I’ve had a lifetime of other careers in sales, manufacturing, construction, marketing, real estate and more. I think at some point everything just clicks and you take experiences and skills you’ve learned throughout life and they all come together and your path becomes clear.
Having tool knowledge and odd construction jobs throughout college enabled me to take on my own projects when I first became a homeowner. I was never really taught the right way to do anything (except painting) but rather just jumped in and did it the best I could, figuring it out as I went along. I always say you can learn how to do anything you want by asking questions (at home depot). In addition to growing up around tools with my dad, I was also lucky enough to have a mother who was a Real Estate Broker. I didn’t realize it at the time but I was absorbing everything from my parents that I would be using today being self employed.
Don’t quit your day job to become a house flipper. Build it up slowly and jump in full time after you’ve proved to yourself mentally and financially you can do it. After buying and rehabbing several homes for myself I took on my first official flip while still working a 9-5 job. It was a full gut 3 bedroom, 1 bath house in my neighborhood. You can find a video of it here called The Probate House. It was in my neighborhood and I new the local market like the back of my hand. I spent evenings and weekends rehabbing that house and had all my friends help me. I made more from that house in those 4 months than my job paid all year. To buy that first house I sold all my fun toys to raise the down payment and rehab money. After the first one went so well I rolled straight into 2 more. All 3 I made great money on. I had once heard somewhere If you make money on your first 3 real estate deals then you’ve got it wired. Looking back on it that was a bit naive, but it gave me the courage to quit my job and jump in full time.
2. This is a great question. You see on my site that I do alot of the work myself. This business model is not scalable however, so in theory you want to just oversee everything at some level but be able to delegate the work. Not to say that its not valuable to get your feet wet on the first few deals by doing some of the work if you are capable. There’s nothing like knowing how its suppose to be done, even if you are overseeing it. In todays market its important to produce a good product so dont compromise on quality just so you can learn how to do tile jobs yourself. I found it appealing initially that I could do alot of the work thus saving me tons of money on the rehab budget and hedging my bet for making a profit. This model works, but you’ll never be able to do 10-15 house a a year. Most of the construction knowledge you need revolves around what order to do things in. It’s really not that hard to do a big rehab if you just break it down into steps and hire qualified sub contractors for each step. Being a project manager is great but you probably wont need an engineers designation and if you do rarely need one, you can easily pay a few hundred bucks. You cant do everything yourself and thats one thing I’ve rarely had to use. I’d say being a draftsman would rank very high on the personal skill wish list. Being able to use auto-cad and draw up your own floor plans would definitely aid you down the road. If you have time I would learn this. Just about every house we do now needs floorplan changes and being able to put it all on paper is great. My last recommendation for you is to get your real estate license. Knowledge in this field is just as, or more important, than the construction side. Also, network with other local investors and investment clubs. Its great to surround yourself with like minded people. Be prepared also to hear negative reactions from some friends about your new career idea, its best to not even associate with anyone who expresses negative feelings on this because it could make you second guess your actions. People don’t like to see you make money, especially when they are stuck in their crappy low paying jobs, that they hate, just waiting for the day they are going to get laid off. What I do is not rocket science, anyone who puts their mind to it, and has passion for it, can be successful.
Good luck in your future and thanks for the great questions!