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Fix and Flip Real Estate – Pros & Cons of Flipping Homes


Today on Limitless Wealth TV, we’re going
to be talking about the pros and cons of flipping real estate. I get it, it’s a hot topic, everyone’s starting
a TV show over it and today, me and my real estate business partner, Steven Michael Miller,
are going to jump in and share with you the do’s, the dont’s, the pros and the cons. Steven, I got a good idea. You know what we’re going to do? We’re going to start a TV show on fix and flip,
dude. Oh my gosh, fix and flip, get back in the shot,
is one of the most glamorized concepts that are out there right now. Look at shows, they’ve done such an amazing
job bringing real estate to the fore front. – Fix this house, flip that house, flip you
off, I don’t know. – It’s alot of flipping. And you know what’s interesting about real
estate is that I think that there’s an immediate draw because people are sick and tired of
being in the grind, sick and tired of how long it takes to just save some basic money
as a hard working person and yet this idea of wait, I can do something and in ninety
days have $50,000, that’s a super super compelling idea. – I think everyone is looking for that drop,
it’s going to happen, I’m going to win the lottery, this is so exciting and that’s kind
of the draw, the fix ad flip crowd, I think is, it’s this idea that, yeah in a very short
amount of time I can make a lot of money and it’s easy, I mean, you watch those shows and
it takes some 30 minutes to flip a house, right? – One episode and it’s done. – And they get all this money then they get
to put it in another one and you know, all that glamour as the kind of situation. – And what we’re going to do today is, we’re
going to talk about three really important pros and cons in fixing and flipping and that’s
coming from an individuals who have fixed properties up. We have flipped them, I have made money flipping
homes and I have lost money flipping homes. In fact, if I just take a moment and tell
you a couple of really extreme cases, one of the first videos that I did, one of the
first five deals I did was actually a flip and I made $20,000 on and I put in only a
handful of hours, someone else do the work, and I actually made $20,000 and I look back
on that and for having just started out, that was one of those glory moments of *grunts*
I went in on another property that had $95,000 of profits, that’s what I thought I was going
to get and by the time the deal was done, I only lost $5,000 – Oh that’s good. Only $5,000 – Which is incredible if you’ve
actually heard some of the real horror stories of flipping. – But you keep the shirt on your back? – I kept a shirt on my back but seriously,
how is there a $100,000 discrepancy between the money I thought I was going to make and
then what reality ended up dishing out. So flipping is, I just want to start out by
saying like Steven said, it’s high glamorized, it’s an idea that’s super popular out there
and what we want to debunk today is just say, hey, let’s just get in the trench and get
real with the pros and cons of it and I want you to understand, this is coming from a little
bit of a slightly biased team. Well, Steven and I, we have done thousands
and thousands and thousands of properties with our team and we have flipped none of
them and there’s a reason why, because we have found a more consistent, more stable
and more profitable concept while that works for us and you can click the link and you
can learn more about it. We do really want to focus on this video on
the pros and cons and we want to talk about the big three right now. – Yeah, so the first one is, big money now,
the pro to a fix and flip is you can get a lot of money right now. Meaning in a very short amount of time, you
can earn this kind of big purse and the better you get at it, the more kind of get into the
details and try to scrape and sink here and the weeds there, the more you can make but
the con is that sometimes it just doesn’t happen. I mean, the reality is, so many people, as
a matter of fact, I just want to talk about this real quick, I had a couple, I was down
in Denver, we were holding a wealth intensive down there and we were talking to this couple,
I was talking to this specific couple, he came up to me and said, “Steven, we’ve implemented
your system, we’ve used your power team and it was amazing and then we want to go do some
fix and flip.” And I said, “Great, that sounds exciting. How did it go?” And she said, “Well it went okay, we earned
$25,000” And I said, “Wow, that’s great! Good job!” She said, “Well, it wasn’t really that great.” I said, “Well, that’s a lot of money. You know, you got that big pay day right?” She said, “Yeah but we did the math.” I said, “What do you mean?” She said, “Well, we put a lot of our own time
and effort into and it took a lot longer that we had thought it was going to take and that
$20,000 we realized we actually ended up being about $5.75 an hour for my husband and I.”
– $5.75 an hour? – Sorry, I shouldn’t laugh. $5.75 an hour. – Dude, you could have gone to McDonald’s
and more money working there. – That’s what I said to her. – Really? – I actually told her. I know, it was maybe rude. – Hey, if you’re working fast food, don’t
worry. We’re going to help you get out of that. – No, I want to drive the point at home. I said, “Look, had you both gone and gotten
job at McDonald’s, you would have probably doubled or tripled your investment.” So get people to get in fix and flip’s because
they think they’re going to get a lot of money right now but the reality is, often times,
it gets stretched over to a long time frame and that dollar per hour, it just doesn’t
work out to be big money. – And you can make a lot of money. In fact, I’ve got a couple of friends that
flipping is what they do for living and they’re really good at it. It requires massive knowledge base, good experience
and you have to have an appetite for that if you lose money, you need to be okay with
that because there are some things that are not always in your control with the flipping
game. Here are the three factors that you want to
be considering.. One is time, two is effort, and three is money. So let’s talk about the three of these. Steven, talk about the first one. There’s big money and big money can turn into
small money and small money can turn into you owe me money. And so, that’s what can happen in real estate
and here’s what I’m going to say, until you’ve done five flips, please consider yourself
an absolute beginner because these things can go on your first or second property and
the tides can turn pretty quick because you’re also dealing with a changing and evolving
market. How many homes are available in the market
place, what’s happening, is the market stalling out because it’s winter time, did you missed
that on your own time frame, did you end up eating into, did you sign some money for hard
money, someone came in and you borrowed money at 18% plus 2 points on the front and then
things slowed down during the winter and you didn’t sell it til the spring and then you
had to carry seven additional months on the project then you thought you maybe would have. A lot can turn into little. Here’s another way that a lot can turn into
a little.. Whenever I have done a flip, and last year
I did a flip and it actually turned out quite profitable but it turned out $10,000 less
profitable than expected because the more work and effort you got to put into the project,
the more risk there is that you didn’t think of something. Basic cosmetic, that’s pretty easy to calculate
but the second you’re getting in the structural changes, that’s where you start stepping into
some unknowns and on this project, we came up to some structural foreign proms and had
to dump in an extra $10,000 in what $30,000 a profit and then turn it into $20,000 a profit
and I probably would have done the deal had I actually known that. I had a team doing the whole thing. Big money can turn into small money and it
can happen in so many numerous ways that you just need to be aware that when you’re the
beginner, you don’t have the ability to think through all of the different possibilities,
experience will dictate some of that. – Yeah, those situations come up all the time,
by the way. I mean, with the normal fix and flip, it’s
called a fix and flip and usually what you’re trying to do is you’re trying to find all
the different problems anyway. And so when you begin to open up and take
down walls and you get excited because you’re going to turn this like, worst property in
the neighborhood into best property in the neighborhood. Sometimes that means opening up things that
you probably would have hoped that you have never opened up. Pandora’s box. And so you take down a wall and all of sudden
you see this pipe there that’s in the middle of the zone where you want it to be open concept,
open floor plan, you just can’t move it or to move, it’s going to cost you several thousand
dollars more. That’s how $10,000 you had planned on easily
be eaten up. – Well and I also found that for everyone
that’s advertising a fix and flip that needs 30,000 or 20,000 of fix up, we’re capable
of going in and finding a better deal that doesn’t require that kind of fix up or cosmetic
at most. So money is the first factor, the second one
is time. We’ve been talking a little bit about this
that, you know, we’re talking about time in a couple of ways. One is, how much time are you going to have
to put into it, how long will the project take and often, these projects just take double
or triple or quadruple amazingly enough, time than what you originally factored and what
that does is, if you thought that you were going to be making a 20% ROI, you cut that
by a factor of four, you’re making a 5% ROI. And so, when you’re dealing with time, you
just need to be able to factor it.. What is the value of your time? Are you doing real estate as a job? That brings us to number three which is effort. Are you a hands on person or are you a hands
off person because I always get worried when one of our amazing friends from YouTube starts
interacting with us and they’re like, okay, I want to get hands on, I want to go loads
on home depot, I got all these stereos, I got mad tiling skills and I’m a great carpenter
and I’m a handyman. And there’s this idea that there’s this, I
think it’s almost this romanticize idea that I want to go on and fix this house up and
so, we got some of you that you need to get your hands dirty or else you’re just not going
to feel good and that’s okay. – You know what, I want to talk about this
for just a moment cause I was actually on the phone with someone just a couple of days
ago and we were talking about the difference between the hands on kind of experience or
letting it kind of just be run by itself and do its own thing and the way that we help
people do real estate often and he said, you know what I really just want to get my hands
in there, I just want to get my hands dirty, I like to kind of be in the mix and control
things and I just want to caution you for just a moment.. If you’re thinking that you just want to get
your hands in it, chances are, that stems from this belief that it can’t be done without
you, alright. It often times stems from this limitation
of, in order for it to go and to be successful, you have to have a hand in it, you have to
be a part of it. And the reality is, when you create a system
like we have, Kris, where people can literally step away. Like people can just say, no it’s just going
go on auto-pilot and work for me. If you could free up all of your time, because
I think that’s what most people are wanting, that’s why people are attracted to fix and
flips because they think that the fix and flip will free up time for them. If I can help you free up time, if we can
help you free up time, you don’t have to get your hands dirty, do you still want to? Just a question. – At the end of the day, you can put in less
money that you think, you could put in less time than you think and you can put in less
effort than you think and that’s a great recap for this fix and flip video, which is, as
we weight out the pros and cons of should I or shouldn’t I, listen, I’ll do any deal
at the right price, given the right circumstances and the right , that’s why I didn’t flip last
year. But why for every flip am I doing hundreds
of other deals? Well, because at the end of the day, I can
calculate the value of the time over return and realize, what is the most profitable way
for me to spend my time doing what I’m going to do. And the one last thing that I’m going to throw
out there and conjunction, Steven dropped a huge nugget on you talking about this mindset
of I have to do it myself, I got to be in control. One of the things that we’ve learned that
is if you want it done right, don’t do it yourself. Are you ready to get started investing in
real estate? Click the link up here, contact me and my
team and we’re going to give you immediate access to our inventory, I’ll start showing
you some of the deals that I’ve just recently done and learn how you can do real estate
with the lease time, the lease effort, the lease risk and start making the most money
right now and also, if you haven’t already, subscribe, ring the bell and we’ll let you
know when tomorrow’s video is going to hit.

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