How I Started Flipping A House
With project #1 almost finished, here’s how I started!
If you’ve read my recent post Mastering Your Side Hustle, then you know that one of my side-gigs at the moment is house flipping. If you haven’t read it yet, you totally should and can do so here. Now, I’ve (almost) finished my first one – it’s under contract as of today and we have started for flip house #2! For all of you interested in hearing about my journey, or interest in starting to flip houses on your own, listen up!
Back in August 2016, Louisiana experienced a “historic flood”. To put that in perspective for people who aren’t from here, we had approximately 7 trillion gallons of water rain down on us. That’s enough water to fill Lake Pontchartrain almost four times! It was estimated that over 140,000 homes had been flooded, many without flood insurance. My parent’s house was one of these homes. And even today, many people don’t know the fate of their insurance payments, can’t live in their home, and can’t afford to fix them.
Before all of this happened, I was interested in flipping houses. Like many others, I was addicted to Flip of Flop on HGTV and loved First Time Flippers on DIY network. I wanted to get into flipping in the future, but when the flood happened, I decided no was the time. Now, don’t get me wrong. I didn’t just start because I wanted to take advantage of the situation. Before the flood, there were barely enough houses for sale to meet demand. After the flood, that only got worse.
Right after the flooding happened, many people (if they could afford it), took out a second mortgage and essentially left their flooded home for the bank to repossess. While this not make much sense to you, image yourself in their shoes. You own your house, have a family, and still owe money on your home. Your credit score is good and you are financially stable. Like many others affected, didn’t have flood insurance. Your home is going to cost you a fortune to repair, and you aren’t sure if disaster relief funds will cover it. Wouldn’t it be easier to just take out a new mortgage and a buy a new home and have the bank foreclose on your old home? With only a moderate impact on your credit score?
But what happens to your old home? Or what happens if you can’t afford to buy a new home without selling your old one? What if you have no where else to go?
Well, that’s where the flippers come in. While I was just getting started, veteran flippers saw an opportunity and pounced. They were buying up flooded houses like hotcakes, quickly making repairs and selling them. While these flippers are making money, people are also getting out of their flooded house and into a new home. While we might be making money, we are helping other people. At least that’s how I see it.
Now I’m no millionaire. While I could’ve gotten a loan and paid a ridiculous amount of interest, I did what any other 20 something would do. I asked my parents for help. I partnered up with a local real estate agent to show me the ropes, and a friend of his. My dad agreed to pay for half the cost of the house and all repairs, and they split the profits accordingly. Since it’s not my money, I’m being paid a finders fee. This is for my part in finding the house, and also deciding on all the design aspects as well.
Now, almost 4 months later, we are a week away from closing. We listed the house in January just after the new year, and with less than a week on the market we had multiple offers and were under contract. Now we’re just waiting to officially close! I promise to go more into detail about the actual project in my next post, so stay tuned!
I’ll be using the money from my finders fee to invest into the next flip, turning my own profit on it. Small yes, but still a profit. I’ll keep repeating this until I am able to do business on my own, but who knows? Maybe I’ll stay partners with the real estate agent! Hopefully we’ll be able to juggle multiple projects soon!
If you want to read more about the August flooding, you can do so here.
Have any questions or something to say? Comment below or email me at email@example.com!