Becoming involved in real estate can an expensive venture, and many people often do not have enough expendable income to invest in properties. Luckily, there is a way to make money, without having to spend money, by buying wholesale real estate.

The negotiating of wholesale real estate, or “wholesaling” is the process in which you buy a property and receive a contract of ownership. What’s great about this is that you do not have to pay for the house up front.

The person who ends up paying for the property is the investor, who will close the house in your place. As the wholesaler, you will sell the contract to the investor at a higher price.

However, before starting a wholesaling project, there are a few aspects of the business you must learn about. These key points are essential to follow so that you can see a profit, instead of literally paying for your mistakes.

1. Find The Right Wholesale Real Estate Property

Generally, when you are looking to buy wholesale real estate, you want to find property that is not at its most perfect state. These pieces of real estate, called distressed properties, are often smart finds because they allow you to negotiate the price down from the retail market value more easily than properties in prime state.

However, this does not mean you should purchase a property with structural damage, like a cracked foundation or a termite infestation. Properties with problems like these often cost much more than other repairs. Most investors would not buy a property with structural damage, leaving you to pay for the worthless property out of your own money.

There are many ways to find these distressed properties besides finding help from realtors, like real estate clubs, ads both online and in the newspapers, your town’s once a month housing auction, MLS, and craigslist.

Finally, you must remember to take your time to find the right piece of real estate. Don’t buy properties that you won’t profit from. If you cannot find what you’re looking for immediately, give it time. Houses are constantly being put on sale and new ads are posted every week.

2. Calculate The Profit

When you think about profit, you are most likely considering how much money you will have earned after the project is done. However, something you might overlook is the profit that the investor will make after he resells the property. If the investor thinks you are asking for too much money he will try to negotiate down, meaning that you could end up making no money or even have to pay for part of the price out of your own pocket.

An easy way to avoid this mistake is by simply doing the math before you buy the piece of wholesale real estate. First, you must consider the after repair value, or ARV, of the home. Next, you see if the seller is willing to negotiate the price down, ideally to 70% of the ARV, if not less. Then, you decide how much you think you can wholesale the property for, which should still be well under the ARV but a few thousand dollars more than you purchased it. The difference between the wholesale value and the price you paid for the property will be your profit.

After that, you must add the cost of repairs that the investor will be paying for to the price of the wholesale, and subtract that sum from the ARV. This final number is the projected profit of the investor.

The Four Formulas Look Like This:

• Negotiated Value = ARV x 0.7

• Wholesale Value = Negotiated Value + A Few Thousand Dollars

• Your Profit = Wholesale Value – Negotiated Price of the Property

• Investor’s Profit = ARV – (Wholesale Value + Cost of Repairs)

For Example, If The ARV of The Property Is $150,000, The Projected Cost of Repairs Is $20,000, And You Hope To Make $5,000:

• Negotiated Value = $150,000 x 0.7 = $105,000

• Wholesale Value = $105,000 + $5,000 = $110,000

• Your Profit = $110,000 – $105,000 = $5,000

• Investor’s Profit = $150,000 – ($110,000 + $20,000) = $20,000

Why Is Buying Wholesale Real Estate Great For Beginners?

If you are just starting out in the world of house flipping, buying wholesale real estate is a great steppingstone. Because you generally do not have to pay any money toward the property, wholesaling can be both safe and profitable. Moreover, since you generally resell the property within about a week, the process is not very time consuming. If done correctly, with the proper guidance, buying wholesale real estate can be immensely rewarding.

Like this post? Consider becoming a House Flipping School member and round out your house flipping education. Click here to see what it’s all about.

The post Wholesale Real Estate | 2 Key Facts To Consider Before Buying appeared first on House Flipping School.

House flipping and real estate in general, is a business based in risk and money. Most people believe that, in order to get into house flipping, you must already have a substantial amount of money to invest, or at the very least, decent credit so that you will be granted a loan.

They follow the old saying “you have to spend money to make money” and hold it to be the absolute truth.

While these two aspects make the process easier, it is very possible to learn how to flip houses with no money and no credit. If you have the proper motivation and instruction, you can make money without spending a dime of your own money up front.

Below are a few basic examples of easy ways to get into the business without money or credit.

How to Flip Houses With No Money and No Credit: 3 Ideas

While it is possible to start a house flipping project without your own money, the money does have to come from somewhere. A popular approach to this problem is “OPM” or other people’s money. To learn how to flip houses with no money and no credit, there are many ways to approach it, but these three below are the most popular by far.

Believe it or not, there always other people in the world looking to invest what money they have into projects that they feel could be successful. There are a number of different types of investors and ways to approach investing like partnership, private investors, and hard money. We outline them here:

1. Partnerships

A partnership refers to the process in which two people combine forces to tackle a housing project. One of the partners will pay for the initial costs of the home and any improvements that are to be made before the property is resold. The other partner (you), will be in charge of the rest of the logistical responsibilities of flipping the house like hiring contractors to do renovations, or doing them yourself.

In turn, each partner will receive fifty percent of the end profit. Because you will be giving up half of your final profit, this perhaps should be considered as a last resort option if you cannot find another type of investor.

Although there are thousands of ways to structure a partnership in house flipping, this is one of the most common ways. Be creative and figure out a partnership strategy that’s right for you.

2. Private Investors

A private investor is a person, who is not associated with any particular bank or business, willing to invest on your project. Finding a private investor may be as easy as looking close to home. People like friends and family; from co-workers to fellow churchgoers to members of your local chamber of commerce to your family dentist can all act as private investors. They are essentially people with disposable incoming looking to make a good return on their investments.

3. Hard Money Lenders

Like banks, hard money lenders will loan you out a sum of money expecting you to later repay the amount plus interest. Unlike banks however, these lenders do not typically regard things like the borrower’s assets, income or credit score. This means that if you are a person with no money and no credit score, hard money lenders  are still eager to loan you money.

In addition to the interest they charge you, they will also charge you what are called “points”. One point equals one percent of the loan they gave you. Typically, hard money lenders will charge you somewhere between five and six points on each loan.

While the interest rate money from the points might seem costly, if you calculate these numbers into your business plan you will know whether or not it is worth while. If you subtract the original price of the property, the expense of the expected repairs, and the money you will owe the hard money lenders from the expected value of the property after the repairs, and you’re still in the positive, then the loan should be worth while.

Instead of basing whether or not they will loan you money on your financial history and ability to pay the money back, these lenders use the property you wish to flip as collateral. Because of this collateral system, these hard money lenders can be risky to deal with. However, if you have a guided and well thought out business plan, you shouldn’t run into any trouble paying back the loans.

Why You Shouldn’t Worry If You’re Flipping Houses With No Money And No Credit

The word “credit” comes from the latin word “credo” meaning “I believe”. Often times when people have no credit, they think that the world doesn’t believe in them, and that they will not pay back their loan. However, if you have a well thought out, well-managed business plan, you can successfully borrow money and later pay it back, while also earning some profit for yourself.

Like this post? Consider becoming a House Flipping School member and round out your house flipping education. Click here to see what it’s all about.

The post 3 Simple Ways How To Flip Houses With No Money And No Credit appeared first on House Flipping School.

Today is an exciting day in my personal house flipping business. After a 30 day rehab, I listed this Massachusetts property on Saturday and since then I have received 5 offers. Seeing all your hard work come to fruition is always a really nice feeling.

Yet as with any successful and profitable house flip, this project never would have happened had I not followed a specific formula.

One of the most important components to flipping houses successfully is being able to craft a killer offer that gets accepted. This is especially true in competitive real estate markets, like my primary real estate market here in Massachusetts. If you want to be successful in the long run, then you need to learn the intricacies and small details that go into making an offer the seller cannot refuse.

If you as the investor are struggling to get into good deals, then it can pay to take a close look at exactly how you are structuring your offers. There could be one small improvement you could make to your offer, such as waving inspections or placing a cash offer, that will make a world of a difference.

We’ll talk more specifically about how you can craft compelling offers that get accepted later on in this post. For now lets dive into my latest house flip in Carver, Massachusetts.

How I Acquired this Property

Just over one month ago I submitted what I refer to as a win-win offer on the house pictured above. As is evident in the photo this house needed a fair amount of renovation work.

Yet this property had a lot of potential, and after running my numbers, I knew for sure that this flip could earn me a fair amount of money. Yet as with most properties in the Massachusetts area, other investors were also chomping at the bit to scoop up this deal.

I was able to stay one step ahead of these other investors, because I had developed a close working relationship with a reliable and trustworthy wholesaler. I enjoy working with wholesalers, granted they know what they are doing. A good wholesaler is out there in the field, searching for deals he or she knows will appeal to house flippers like me.

Using Wholesalers to Find Houses to Flip

Recently we started working with wholesalers who are actively looking for buyers like me to sell their properties to. To be even more specific, we are working with motivated and reliable wholesalers who are new to the game. These wholesalers do not have much experience which is OK, because I am willing to show them the ropes.

Once these wholesalers understand exactly what goes into a good deal, they will go out and find those good deals on their own. If all goes well, I will be able to acquire the properties they find on a first come, first look basis. It is a great way of working together, and I think it really is a win-win for all involved.

It all falls back upon building a strong and reliable house flipping team.

So for this particular property in Carver, MA we met with a wholesaler we were already working with, as well as the sellers of the property. Usually when we meet with the sellers of a property they end up choosing to do business with us, because we focus on making a positive emotional connection with the sellers.

My belief has always been that people do business with people they know, like and trust. For this property I wanted to create a win-win situation for the wholesaler, the sellers and of course myself.

Crunching the Numbers

When I first ran the numbers on this property I came up with an after repair value of $210,000. I estimated that the house needed around $40,000 worth of repairs, which meant my maximum allowed offer would be around $90,000.

Everything came together perfectly (which doesn’t always happen!), and I was able to get this property under contract for $85,000.

I purchased this property back in April, and since then I am happy to report that the estimated after repair value has increased. Right now based on my formula, I believe I can sell this house for $19,000 more than I initially thought.

If all goes according to plan I’ll have this house sold very soon. As mentioned above I have received 5 offers over the past 48 hours. This sort of activity does not always happen, so I am going to try to enjoy this moment as much as I can.

Yet none of this would ever have happened had I not understood the intricacies of crafting an offer that works for not just me, but for all parties involved.

How to Structure a Win-Win Offer

Some people have the mindset that they will low ball their initial offer on a property and negotiate their way up from there. To put it bluntly, this is a horrendous strategy.

My goal is to always craft an offer that is a win-win for all involved. I recommend that you consider doing the same for your properties.

Yet there is a strategy and certain know-how that goes into structuring such an offer. Remember that the best deals are sometimes only available for a couple hours before they get scooped up by other investors.

With all this competition, how can you submit an offer that not only gets accepted, but leaves everyone involved in the deal feeling happy and content?

How to Craft Compelling Offers | a 3 part series

How to Craft Compelling Offers is a 3 part video series that wholesaling specialist John Fossetti and I created to show you the strategies behind crafting an offer that gets accepted.

I used these exact strategies to help me acquire the Massachusetts house flip described above, and I will be using these strategies again later this week when I submit an offer on a house not too far down the road from my home office.

John and I have created 3 videos specifically on how to make compelling offers.

In the first video John and I discuss 5 specific strategies that will help get your first offer accepted.  We use real life examples whenever possible, because I think real life examples are the best and only real way to learn the intricacies of this business.

In video number 2 I tell John exactly what my determining factors are for how I submit an offer. If you can identify these key determining factors in your deals, you can use them to help submit an offer that gets accepted, over the offers of other investors.

And in video number 3 we discuss “doing your due diligence” and why this is critically important to submitting a successful offer. You need to do your research and due diligence in every aspect of the house flipping business, but this rings especially true during the offer stage.

If you are already a House Flipping School member, simply login and click on the Round Table Discussions bubble to view the 3 part series.

If you are not yet part of the House Flipping School community, then first signup by visiting this page. You’ll instantly receive a username and password and be able to access everything that our new HFS community has to offer.

Stay tuned for another update on the Carver, Massachusetts house flip coming Thursday of this week. I hope to have some more good news to share with you soon!

Take care and see you at the top,

Mike

The post 5 Offers in 48 Hours | Update on my latest flip appeared first on House Flipping School.

It seems like us real estate investors always want to break the rules. We’re independent rebels who are taking control of our lives and turning the status quo upside down…

In fact, I seem to get at least one call per week from my previous coaching students asking me if they should break the rules of house flipping – namely The ARV Rule, The MAO Rule and The 70% Rule.

As you may know, The ARV Rule, The MAO Rule and The 70% Rule  are the three most important house flipping rules you should always stick to.

The After Repair Value (or ARV Rule) is the number that you  believe you can sell a house for after renovations. You get this from your real estate agent or from running comps in the area.

MAO Rule (maximum allowed offer) is the maximum amount that you should pay for a house .

And of course, The 70% Rule is what you use to make all these numbers work.

These rules work, they’ll keep you out of trouble and they will help you make money whether you are  house flipping, long-term real estate investing, buying-and-holding real estate  or  even real estate wholesaling. Said another way, you need to know these numbers.

Even for all you real estate wholesalers out there – you should know the 70% rule inside and out, in order to make your wholesale deals far more attractive to your potential buyers.

But how do these house flipping rules all work together? The question is ,  can you break  these rules every once in a while?

House Flipping Rules in Action

Here’s how all these house flipping rules work together:

• Let’s say your real estate broker determined your ARV is $200,000.

• Use the 70% Rule to determine what you should pay for it – factoring in your rehab and other costs.

• Take that $200,000 and multiply it by 70%, which then gives you $140,000.

• Your general contractor has told you that you need to spend $25,000 on the rehab.

• Then take the $140,000 and subtract the $25,000, which then gives you $115,000.

• Your maximum allowed offer (or MAO) is $115,000

So using these three rules, you’ll keep yourself out of trouble and in the black on nearly every house flip you’ll ever do.

As long as you don’t break the rules…ever.

Or can you break the rules…maybe just sometimes?

What Happens When You Can’t Make The House Flip Numbers Work?

On a recent house flip in Middleborough, Mass I had all my costs figured out right down to the penny. I even thought the ARV of 200,000 might actually be a little bit on the conservative side.

House flipping “eraser math”? A little bit, I admit it.

The house flip was located in a market I knew fairly well – but it was not my primary market by any stretch. So, if I broke the house flip rules, there was going to be a fair amount of trepidation on my part.

I just knew it was a good deal and I knew I could make money on it – even though I could probably acquire the house for $115,000, I decided to break my own rules anyway.

Sometimes – you do need to break the 70% Rule.

There, I said it.

Although I can’t believe I actually said it…

And at other times, you also need to adjust your ARV upwards, even though your realtor tells you differently

How and When to Break The House Flipping Rules

Don’t get me wrong, breaking the house flipping rules is not for the novice house flipper. No way. It’s an advanced strategy for even seasoned real estate investors.

And even when I do it, I’m still quaking in my boots… (although I don’t own any boots, LOL)…so to speak.

What makes it even more interesting is that on this property, we actually made an offer over our 70% Rule when everyone else was bidding tens of thousands of dollars below what we offered!

Did I absolutely need to break every rule I’ve ever advocated here on this blog?

Probably not.

But if I didn’t, I would have entered into a bidding war with some rookie real estate investor and lost precious time. I knew the numbers worked – even when I broke all three rules at the same time.

Why did I do it?

It’s simple: inventory was disappearing at the time, the market was heating up, and I could sense this deal would not last long – especially with the other professional real estate investors starting to catch wind of it.

I felt the vultures circling so to speak…

Also, at the time we were doing about one house flip per month and I had set a goal to do three house flips per month on average, so I was feeling a bit of pressure to get things going.

The good thing is we did not substantially overpay for this property – so I felt pretty comfortable in my decision to break my own sacred rules.

What happened next?

The bottom line is this:

If you understand exactly how these rules all work together, you can bend them in order to get into lucrative deals and make more money. Don’t get me wrong – this can be nerve wrecking, scary stuff – especially if your own money is on the line.

Therefore it is vitally important to know what you are getting yourself into, should you decide to break one of these House Flipping Rules.

This is exactly why my team and I put together the below House Flipping School Members video. In this video I dive into the exact details of how I pulled this off with my Middleborough, MA property.

Remember, it’s OK to bend the House Flipping Rules every once in a while-you just have to fully and completely understand exactly what you are doing. If you don’t know exactly what you are doing, you risk setting yourself up for financial failure.

And obviously losing money on a house flip is what we want to avoid at all costs.

Looking Forward on House Flipping School…

For all you new House Flipping School members, I wanted to let you know that we just posted a new batch of videos to the membership side of House Flipping School  yesterday.

As always these HFS member videos dive into the nitty gritty of what I have going on right now in my house flipping business. I hope you find them useful and I hope you are able to take away at least one beneficial piece of wisdom from each new video.

Keep me posted on what you think of the new membership side of HFS by leaving a comment below or in our members forum. I am having a blast watching our new House Flipping School community grow.

Take care and see you at the top,

Mike

The post How I Broke All 3 House Flipping Rules…and What Happened appeared first on House Flipping School.

The property was a single family home in Fairhaven, Massachusetts. It was a decent size colonial style house, right around 1600 square feet. After renovation I estimated the after repair value to have been right around $300,000.

This past week I was ready to act on this property, but the only issue was that for the first 15 days only owner occupied buyers could place an offer on the house. This happens from time to time in the New England area. In situations like this you just have to wait it out, because they won’t look at your offer until the 15 days is up.

Yet as mentioned above, things do not always go as planned when you are flipping houses for a living.

10PM on a Sunday Night

Last night my “too big for my pocket” Droid phone started beeping. At the time I was relaxing with my daughter and watching television. It was a Sunday and I had successfully “turned off” the business side of my mind which believe me takes some effort.

I debated for a moment not even checking my phone. If it was an issue with one of my ongoing rehabs or deals I figured it could wait until the morning. I sat there for a few seconds just staring at my Droid.

After a minute my curiosity got the best of me and I opened the message. It was a text from my real estate broker which read something along the lines of:

Mike, the Fairhaven property is available to investors. I just sent you an email. Call me if you want – I’ll be up until midnight.

“How is this possible?” I remember thinking to myself. We were only 4 or 5 days into that 15 day waiting period. Either way I suppose the folks selling the home can do as they please. This is just one of the many things that is out of our control as real estate investors.

Yet it was 10PM on a Sunday and quite honestly I was ready to hit the sheets. Plus these days I don’t spend as much time with my daughter as I used to. Since the kids started growing up I have realized just how important just 30 minutes in front of the TV with them on a Sunday night really is.

I decided to not respond and instead get the ball rolling on this deal in the AM.

Real Estate Never Sleeps

So today I wake up bright and early and begin preparing my offer, proof of funds etc. for my real estate broker. Just as I’m finishing up, my oversize Droid starts beeping again. It was my real estate broker – this time I decided to pick up.

I could tell the news was not good based solely upon the tone of his voice. The 1600 square foot single family home in Fairhaven Massachusetts, with the $300,000 after repair value, had already been pulled. It was off the market and I had missed my chance.

I could not believe it. How could this of happened so quickly?

Apparently I was not the only investor watching this property. Odds are many other investors in my area were eyeballing this deal just like me. The difference was that someone out there was willing to take immediate action at 10PM on a Sunday night. They succeeded in beating me to the deal.

First off I owe a big thank you to my real estate broker. Talk about a guy who is on top of his game!

Secondly, I learned the hard way that in this business nothing beats immediate action. The best deals are sometimes only available for a matter of hours.

My broker and I spent some time today talking this deal over. What we decided to do was not sulk over losing this property, but instead put together a plan so that next time a situation like this presents itself we are ready to rock n’ roll and place an offer.

Together we decided that in the future, when we encounter these 15 days wait periods, I will have proof of funds, and an offer, prepared for him in advance. Therefore if something like this happens again at 10PM on a Sunday night we will be ready to take immediate action.

How to Deal with Deals that Go Bad

We talk a lot about developing a healthy house flipping mindset here on the blog. To be successful in the house flipping business, you need to have a positive mental attitude and be able to deal with adversity in a healthy manner.

However, a positive attitude can only get you so far.

What I have learned by flipping houses for a living is that nothing beats a sure-fire plan of action, especially when a deal falls apart – like what happened to me today.

Being able to deal with deals that go bad is an integral component of my house flipping business. Flipping houses is not a cake walk, and a key to long-term success is being able to bounce back and save deals that seem to be crumbling in your hands.

The ability to handle deals that fall apart in a productive fashion is so important, that my team and I have developed a video for House Flipping School members specifically on this very topic.

What’s my goal with this video?

To help you rebound and save deals that are on the verge of collapse.

I hope you enjoy and find this video helpful.

Big thanks to all the new House Flipping School members that have joined up since we launched the new website last Tuesday. It is great to have you on-board.

We filmed more ‘members only’ videos this past week and will have them posted on the membership side of House Flipping School by Wednesday.

Take care and see you at the top,

Mike

The post How I Missed Out on a $300,000 Deal appeared first on House Flipping School.

Can you actually create a better life for JUST $1?

It seems a little ridiculous to think that its possible to scrounge around between your couch cushions for a few coins in order to build a better life…

But for a limited time you can.

In this world of super-hyped up gurus and “real estate coaching” scams – you probably cringe at the thought of hearing such an outlandish statement from me.

After all, I’m just a guy who was installing floors in my family business just five short years ago – DREAMING of someday investing in real estate full-time.

It seemed like an impossible dream…that is before I took the plunge to create the life I’ve always dreamt about – not by making millions – but by creating a lifestyle doing something I love to do…

And it just so happens I get paid handsomely to do it….

I just made a DECISION to do it. And I did – learning the hard way – making TONS of mistakes (I still make those by the way all the time) – but learning and growing and ultimately SUCCEEDING along the way.

So why waste all that knowledge just on me?

I always felt that it was selfish of me to keep these secrets to myself. I believe I am truly a TEACHER at heart. I love to teach others how to do something successfully – that is the reason I do paid coaching and  it is why I started this website one year ago.

And since then House Flipping School has touched the lives of THOUSANDS of people who want the same exact things I always wanted, namely:

Freedom

Doing something you love

Making a lot of money

I want to share it all with you, the HFS reader and give you even more in-depth secrets to help you be as successful (and hopefully even MORE successful) than me flipping houses, real estate wholesaling and investing in real estate.

The NEW House Flipping School…LIVE!

Just yesterday, we flipped the switch (no pun intended) on The NEW House Flipping School (known as “HFS”) and I am super stoked because – believe it or not – my goal is to not just to teach you how to make at least $50,000 flipping houses….but to show you how to build a better life for yourself…all for just one measly buck.

I don’t want anybody to miss out – so we made our new FREE site here super easy to navigate (what do you think of it?) – but even more importantly, we made the paid side of House Flipping School so RIDICULOUSLY affordable that anyone can afford it.

So can you make a better life for only $1?

You sure can…so let me show you how we are going to help you do it on The NEW House Flipping School.

So here’s a breakdown of all the goodies we have SO FAR…which means we’ll probably add more based on your feedback.

But for now the NEW HFS is super packed with so much in-depth info, you gotta see it for yourself!

The House Flipping School “Flips In Progress”

Truth be told, we added The Flips in Progress at the last-minute…and I am so glad we did.

In fact, as you’ll see from the first video on our new Taunton, Massachusetts flip – I don’t even know what to call it yet!

Suffice to say, we are super excited about this series of videos. We will also be doing whiteboard style videos, property walk-throughs, live shots – and updating you on what we are doing on this property in REAL TIME each week!

The House Flips in Progress Videos will give you a running play-by-play analysis of house flips I have going on right now. You’ll see my mistakes, my lessons, my analysis all in real-time.

As an HFS member – you get a new Flip in Progress update each week!

And we get right into the hard numbers on each flip we discuss – we hold NOTHING back.

Check it out for yourself below:

Right now, I have two deals in Massachusetts that I am working on (with more on the way). I also have dozens of other investment properties for my investors that I’m working on out-of-state. I will be keeping House Flipping School members up to date on our progress as these deals unfold.

In the Flips in Progress, we teach you and take you through the journey right alongside my team and I, giving you a blow-by-blow analysis as these deals take shape. So you’ll see the decisions that I make on a daily basis – the good ones, as well as the bad ones – so you can learn right along with me.

It’s like you’ll be looking right over my shoulder in real-time, as we update these flips and buy-and-hold investments as they occur.

It’s like Internet-based reality TV…although this house flip “reality TV” isn’t staged by some Hollywood producer! It’s all real and nothing is held back.

The House Flipping School “Roundtable Videos”

The HFS Roundtable (the table REALLY IS round by the way) are a bit less formal. In these videos I talk with special guests and go through the good, bad and the ugly of our flips and investments – sharing lessons and stories on how to flip houses, wholesaling real estate, as well as buy and hold.

Here we discuss general strategies and philosophies – as well as some really specific tips on what to avoid, what to do and how to think.

Sometimes, we just talk about our failures (imagine a real estate “guru” talking about how he screwed up!) Although I am far from a “guru” – I know that in this business, things don’t always go right – so why hide it?

My hope is if you learn from my mistakes, you’ll be in a better position to not do them yourself, right?

We also talk about my disappointments and my successes and what you can learn from them.

As an HFS member – you get 3 brand NEW Roundtable Videos each week!

In this video here – wholesale specialist John Fossetti and I discuss exactly how one of my most recent deals went South for some crazy reasons that make little sense to me. THAT is the business folks..check it out below:

With John, we get into some pretty high-level strategies for the advanced house flipper and real estate investor. I also do a fair amount of these with HFS web designer Ryan – who as a novice real estate investor is perfect for the more newbie type of house flipper.

We discuss the strategies behind all the various ways to make money investing in real estate and give you real world tactics to help you get on your way quickly.

In these roundtable discussions we discuss real estate investing strategies, details on how to flip a house, as well as all aspects of real estate investing; including mindset, team building, finding and funding real estate deals and so many other important aspects of real estate investing – all of which I wish I had when I started flipping houses.

The House Flipping School “Whiteboard Videos”

The whiteboard videos are what you’ve seen so far here at House Flipping School in the “sneak peaks” we released last month…

They may not be super slick – with all kinds of cool special effects and whiz-bang production…but who cares?

They DO give you all the little details you ever wanted to know about various aspects of flipping houses and real estate investing.

Here we break down individual flips I’ve done in the past, what I paid, how I projected the profits, how I sourced it – plus an insider scoop on specific tactics and strategies used to ensure profit on each flip.

As an HFS member – you get 3 NEW Whiteboard Videos each week!

But we don’t just discuss house flips here – we also discuss buying investment properties as well as real estate wholesaling in these short 5 to 10 minute videos in front of my trusty whiteboard.

In this video, I talk about one of my Middleboro deals and how I determined whether I should buy it and why. Then I go into how we structured our offer, and acquired the property. Check it out:

It’s all there – we hold nothing back. All the numbers and “down and dirty” details are revealed in plain sight.

In fact, my two producers, Ralph and Ryan, insisted that I drag out my old files (it took me hours to find some of them way – as a few of them were in permanent storage), so that everything we tell you in these videos is 100% accurate – in most cases, right down to the penny.

I honestly don’t know any other real estate investment program that gets into this kind of detail…

…which is precisely why we did it.

The House Flipping School Forum

 Wouldn’t you love to have 24-7 access to guys who are making serious money flipping houses, buying long-term real estate investing properties and wholesaling?

Wouldn’t it be SO COOL if you could ask them ANYTHING you wanted about YOUR OWN real estate deals?

Wouldn’t it be super cool to have other like-minded real estate investors with your interests to collaborate with?

Now you can.

As an HFS member, you’ll get DIRECT access to me and my team 24/7 – every day!

This is why we created The House Flipping School Forum.

Ask any question. Pose any argument. Talk about anything related to real estate…

You now have a forum with other like-minded investors like you to get the answers you need to launch and continue to succeed in your real estate investing career.

So What’s Holding You Back From Creating a Better Life For Yourself?

All or this…

Thousands of dollars of real estate investing education OTHERS WOULD MAKE YOU PAY THOUSANDS FOR…

And for a limited time, you can get it ALL for just $1

 You gotta act fast, because we are not going to offer this for $1 for long. But this low introductory rate (your monthly rate and it will never go up by the way) is not going last long. We simply can’t offer it SO cheaply for long.

So, don’t wait, sign up as a member to the NEW HFS today for just a BUCK!

What are you waiting for?

Get started as a House Flipping School Member Today for Just $1 by filling out the below form:

The post Who Else Wants to Create a Better Life For Just $1? appeared first on House Flipping School.

Real estate wholesaling is a great way to get house flip deals…

But how about when you’re buying investment properties…should you use a wholesaler, then too?

We’ve talked about wholesaling so many times here as one of the best ways to find houses to flip.

At House Flipping School, we actually took on a full time wholesaler (as well as a property acquisition manager who does wholesaling) as a way to continue our deal flow for our house flips.

THAT is how important wholesaling is to our house flipping business.

But what about when you’re buying investment properties? Do you still use wholesalers the same way you would if you were doing house flips?

We answer that question here.

Buying Investment Properties with Wholesalers?

In this SNEAK PEEK video below, (I’ll save the super-hype for now LOL), John and I tell you one of the many ways in which you can use real estate wholesalers for buy-and-hold investment properties, as well as in traditional fix and flips.

Truth be told… I kinda take over the video and don’t let my good friend and House Flipping School wholesaler John Fossetti get in a word edgewise…sorry John!

But regardless of John’s silence (there’s a first time for everything), we divulge how you can use wholesalers to not only flip houses, but also for buying investment properties as well.

This is precisely the kind of in-depth information and one of the many “exit strategies” I reveal in many of these videos at the new HFS!

A sound exit strategy helps you keep your cash flow positive, as well as minimize any downside risk. It’s a bit of an advanced strategy, which is why we get into it more on our new paid site for SERIOUS real estate investors.

John and I will be revealing this kind of real-world money-saving strategies inside the new House Flipping School…as well as tons of other super-detailed, super-informative tactics to get you in the money on each and every real estate investment you do – whether its flipping a house or buying investment properties.

Introducing: The New House Flipping School Video Formats

In the New House Flipping School, we’ll be teaching you about buying investment properties and house flipping using three different formats to begin with:

1. The House Flipping School Whiteboard

The whiteboard videos are what you’ve seen so far here at House Flipping School. They may not be super slick – but they give you all the little details you ever wanted to know about various aspects of flipping houses and real estate investing.

Here we (John actually does talk and some of these videos ) break down some of my best real estate investments, some of my not so great real estate investments, as well as what I would consider my total flops.

We discuss buying investment properties, fixing and flipping as well as real estate wholesaling in these short 5 to 10 minute videos in front of my trusty whiteboard.

It’s all there – we hold nothing back. All the numbers and “down and dirty” details are revealed in plain sight.

In fact, my two producers, Ralph and Ryan, insisted that I drag out my old files (it took me hours to find some of them way – as a few of them were in permanent storage), so that everything we tell you in these videos is 100% accurate – in most cases, right down to the penny.

I honestly don’t know any other real estate investment program that gets into this kind of detail…which is the reason why we wanted to do it.

2. The House Flipping School Roundtable

These videos are more informal in nature and are where I discuss overall strategies and philosophies on flipping houses, buying investment properties and real estate wholesaling. Some are with Ryan (the handsome devil pictured above on the left) and some are with our wholesaler John Fossetti.

As a novice real estate investor, Ryan is the perfect one to talk to about house flipping and real estate investing from a beginners perspective.

Whereas with John, we get into some pretty high-level strategies for the advanced house flipper and real estate investor.

We discuss the strategies behind all the various ways to make money investing in real estate and give you real world tactics to help you get on your way quickly.

In these roundtable discussions, where we discuss real estate investing strategies, details on how to flip a house as well as all aspects of real estate investing; including mindset, team building, finding and funding real estate deals and so many other important aspects of real estate investing – all of which I wish I had when I first started flipping houses.

3. The House Flipping School Flips in Progress

The really cool thing about real estate investing is that although you can certainly learn a lot from deals you’ve done in, the market is constantly changing.

So we thought it would be really awesome to not only show you what I’ve done in the past for a lot of my deals – but also to give you a running play-by-play analysis of house flips I have going on right now. For example, I have two deals in Massachusetts that I am now working on – not only that, but I have dozens of other investment properties for my investors that I’m working on out of state.

In the house flipping school flips in progress videos, we’ll be giving you a blow by blow analysis as these deals take shape. So you’ll see the decisions that I make on a daily basis – the good ones, as well as that ones – so that you can learn right along with me.

It’s like you’ll be looking right over my shoulder in real time, as we update these flips and buy-and-hold investments in real time as they occur. Of course, if you follow me on Twitter or Facebook, you can get some sleep as these deals as they take shape and progress as well.

The House Flipping School Flips in Progress are what I’m REALLY excited about.

It’s like reality TV on the Internet…although this house flipping “reality TV” isn’t staged by some Hollywood producer!

The New House Flipping School – More Meat!

I love meat…red meat, that is. Nothing beats a nice big juicy medium rare steak with a nice glass of Chianti…

So when we did this redesign and new paid site, we wanted TONS of meaty tidbits that will help you make money – and you’ll get it.

The question is in what format this “meat” will come. At first, we’ll have everything in videos – as well as the transcripts and the audios if you guys want (one of my producers, says that the only way he would ever watch these on his iPod or iPad or on MP3) – so we’ll figure out what format you folks really want as we progress.

Not only will we have these videos series to start – but will also have all kinds of other cool goodies for you to feast on. Too many to mention at this point, so at first, we’ll just keep it simple.

One of them is a super cool House Flipping School Forum – where you’ll have immediate access to me and my team. Mmor eon that to come….

And depending on what part of the world you live, it all starts Tuesday, May 7 when we “flip the switch” (no pun intended) to set the new House Flipping School live to the world.

So stay tuned for the launch of the New House Flipping School…

Buying Investment Properties, House Flips and Exit Strategies

Okay…back to the content.

In this House Flipping School Whiteboard Video, John and I (well, actually just me – as I said, I never let John actually talk in this one) discuss one of my deals and how we used wholesalers to make the deal even sweeter.

But the interesting part of this deal is that we actually did not flip it. Yes, we did use a wholesaler – but we didn’t look for the deal with the idea of it being an investment property deal…it just turned out to be one.

Even though this is House Flipping School, we do buy and hold a lot of properties. In fact, in almost everything that I buy with the intention of flipping it, I always think whether or not it’s a good buy-and-hold property.

The point is this: be flexible when you’re investing in real estate and always have an exit strategy – if not multiple exit strategies. This is exactly one of the many things we teach you in the New House Flipping School.

Breaking the 70% Rule…Again?

Yes, as we mentioned earlier this week, I do break my own rules on occasion. This is even though I’ve told you 100 times before on this blog and all the other places where we teach real estate investing not to do it.

On this deal, I did break it again.

Knowing WHEN to break the 70% rule is the key to real success in finding real estate deals. But it’s not for the faint of heart.

When you’re buying properties from wholesalers, especially from good wholesalers like John, they need to know your rules just as much is you do. In this case, the wholesaler was paying 75% and not 70% – trying not break my 70% rule. He knew he could not get 80% – so he lowered the price so I could acquire it.

If your wholesaler tells you that the ARV is $200,000 and the cost of repairs are $40,000, and you think you can get the property for $100,000; you’d probably be pretty excited.

But is he being completely honest with you?

What happens when you do the deal and then you find out the hard way that the ARV was really $180,000 and the cost of repairs was actually $60,000.

You just lost money on your first deal…and you are deep in the hole…

Working With Real Estate Wholesalers…Beware

The point is this: real estate wholesalers are great sources for house flipping deals – but you must do your due diligence.

So before you take the wholesaler’s word on his ARV and his cost of repairs, here are a few things you should do before you start working with them:

• Ask Around: Talk to some real estate investor friends. Find people at a REIA meeting who have done business with the wholesaler. Check out his background.

• Ask THE Question: When I meet with a wholesaler, I always ask the most important question:

“Who are the other investors you worked with?”

I’ll the call those investors (many of which I probably know) to make sure the wholesaler has a good reputation.

• Do Your Own Homework: With any real estate wholesaler (including John Fossetti, LOL) I do my own homework to check on verify his ARV against some independent resources. I’ll surely look up on Trulia, Movoto and Zillow – but most importantly, ask some of my real estate brokers that I know in the area.

• Arbitrary Realtors: I especially like this one. Just pick up the phone and call a random real estate office in the town where the property is. Tell them that your thinking about buying the property. Don’t even tell them what the price from your wholesaler is and simply ask them:

“Can you run a CMA? I’m thinking about buying this property.”

See what they come up with. If they come up within that price range, then you know the wholesaler’s ARV is good.

• Get Your Contractor’s Input: Call your contractor, do a walk-through. At this point of your house flipping career, you likely have a reliable general contractor who you been working with. If you don’t, then get one as soon as you can. Not all wholesalers are going to be 100% accurate with their cost of repairs. Of course, it’s to their advantage to give you a lower number – but many of them will give you numbers that are accurate. Having your contractor give you a number on cost of repairs is much preferable – as its independent and unbiased.

• Split The Difference: Keep in mind that your contractor may actually give you a higher than average cost of repairs. If that’s the case, with some experience on your part figure out a number between the wholesalers lower number in your contractors. If necessary, call on another contractor to give you another price.

Wholesalers and Buying Investment Property: Conclusion

Any smart wholesaler will know that if you use you a bad number, then you simply won’t do business with him. But it’s up to you to make sure you do your homework before you enter into a deal with him.

As we state in the video above, there can be a lot of negotiating on the asking price from the wholesaler. Negotiation is really a lesson unto itself – (a subject covered WAY more in the New House Flipping School ), but you can certainly use the number from your contractor as well as the numbers from your realtor as proof sources in your negotiations.

You don’t want to try to “trap” the wholesaler in some kind of deception – but let’s not forget here folks, this is business and negotiation is part of business. Although we teach you how to negotiate with wholesalers in the New House Flipping School – but an important point to remember is:

In real estate…EVERYTHING is negotiable!

What do you think? If you’ve made it this far, leave a comment below and tell me what you think of the videos and anything in this post!

The post [SNEAK PEEK VIDEO] How to Buy Investment Properties Through Wholesalers appeared first on House Flipping School.

One of the many deals we will analyze together is a property I recently flipped and closed on in Massachusetts. This Massachusetts property is of particular interest to me, because while putting this deal together, I broke one of my most important house flipping rules.

However I did not break this rule by mistake. I intentionally broke this rule because I knew a good deal could still be put together, and I could still turn a nice profit.

According to the 70% Rule my maximum allowed offer for this property would have been $115,000. Well I ended up getting this property for $120,000 – obviously breaking the 70% Rule.

I never like the break the 70% Rule, but the market was heating up and competition from other investors was very high. If you find yourself in a highly competitive market, you may have to bend the 70% Rule in order to get into deals.

I do not recommend rookie house flippers do this, especially for their first flip. Bending the 70% Rule can be dangerous, because you may end up losing money on the deal if any of your other projections are off. I made sure I was 110% confident with my after repair value of this house and my estimated cost of repairs.

I closed on this property last week, and am projecting a profit of more than $50,000. I explain how I made this happen in the Whiteboard Lesson below.

I am also filming follow up videos that dive even deeper into this specific deal, which will be available here at HFS next week.

Definitely keep me posted with what you think, and stay tuned for the NEW House Flipping School launching in 7 days.

The post How I Broke the 70% Rule and Still Made $50,000 appeared first on House Flipping School.

Although traditional mortgages are not my preferred way to fund my flips as I prefer to flip houses with no money using private money, you can learn how to get a loan to flip a house using traditional banking.

Some house flipping pros would say that with tightened restrictions on the banking industry, it’s nearly impossible to do it this way nowadays.

However, I highly recommend you go the traditional bank loan route first when you are doing your flips.

So due to big demand on how to get a loan to flip a house, enclosed is a guest post from our friend Trenton Fortes from Mortgage Fit on how to get a loan to flip a house using traditional banking. Enjoy!

Traditional or conventional mortgage loans are a tad different from the mortgages that are backed by the government.

Not only are they not backed by the federal government, but also the entire risk factor for the loan remains on the part of the buyer. Taking out a traditional mortgage on a real estate investment is obviously different as compared to taking out a VA or FHA loan. Especially if you’re flipping houses, these loans are even more distinctive.

The banks and credit unions also go ahead and issue a traditional mortgage loan with the assumption that if you default, then the risk is all yours. Now, with higher risk involved in a traditional mortgage, you might as well expect to make higher down payments and meet stricter lending requirements as well.

4 Steps to Help You Get a Loan to Flip a House

If you go by historical data, then the very first mortgages that were issued happen to be traditional mortgages itself. It wasn’t until later that the concept of mortgage financing came into vogue for the low-income buyers or those who happen to have special demographic requirements. Arm yourself with paper, pencil and a loan mortgage calculator and get set to do the needful as discussed below.

These four steps below will help you to get a traditional bank loan to flip a house.

1. Have a look at your credit score: Before you do anything further, the very first thing you should do is check out your credit score at the moment. This is essentially because good credit scores are extremely important for the purpose of obtaining bank finances.

You should have a minimum score of 620 if you’re looking to get approved, but the interest rates involved aren’t going to be great. The idea is to try to raise your score from a few months before you actually go ahead and apply for a mortgage loan.

2. Have all your documents in order: It’s rather important that you have all your documents in order. It’s also necessary that you get your income and assets verified if you’re looking to get a traditional mortgage loan. Moreover, you need to be prepared to put down the value of at least 20 percent of the value of the house or pay Private Mortgage Insurance (PMI).

This Private Mortgage Insurance is obviously required by lenders essentially because of the risk of default. Amongst all other documents that you’ll be required to produce include W-2 tax forms, your most recent pay stubs, plus your employment history as well as bank and account statements.

3. Send applications to several places: Once you’ve come to a definite conclusion about mortgage requirements with the help of a loan mortgage calculator, then it’s time you contacted several lenders regarding this.

This is essentially because the terms keep varying across lenders and you might feel that the bank where you conduct your day-to-day transactions isn’t the ideal choice. You should also run a check of the credit unions that are known to offer better rates to their members.

4. Supply extra documents when requested: You’ve got to understand the fact that due to the increasing number of house defaults, lenders are also scrutinizing mortgage requests far more carefully.

For instance, if you’re self-employed you should be prepared to submit copies of your last 2 years’ taxes at least. Massive layoffs have given lenders all the more reason to ensure the fact that you’ve got cash reserves after you’ve bought the home.

How to Get a Loan to Flip a House Conclusion

Keep in mind the above steps when you’re going to take out a traditional mortgage. Make sure you’ve got an approximate estimate with the help of a loan mortgage calculator before you go about doing anything.

As a house flipper, getting a traditional mortgage loan isn’t that difficult provided you do things the right way at the right time.

The post 4 Essential Steps on How to Get a Loan to Flip a House appeared first on House Flipping School.

Over the past few months I have received many emails from passionate blog readers, asking how do you flip a house…but not in the typical way.

Sure, I do get a lot of emails every week asking how to flip a house with no money, how to use partners to flip houses, how to best use general contractors, how to get started flipping houses, how to wholesale and all the basic beginner questions that most people want to know.

In many cases, people will email me specific numbers, addresses, pros and cons of different house flip deals that they are considering purchasing.

Let me tell you, it is AWESOME when people take the time to send me an email – and even though I run a super busy house flipping business as my main business, I’m always happy and eager to help.

But it also makes me realize that although house flipping is a basic five-step process, it’s far more complex than many people are led to believe.

And if people understood the complexity with real numbers and real dollars, and all the little details that go into each and every house flip deal, many more people realize the incredible benefits and wealth possible with this kind of real estate investing.

The Danger With Simplicity

No doubt, keeping things super simple is extremely helpful when learning how to do something new.

Sure, we’ve all heard of the “Keep It Simple Stupid” or “KISS” formula – but at a certain point in your quest for knowledge, you learn the majority of the simple concepts – but the real secrets of true mastery in doing anything really well – are in the details themselves.

Many people say that “The Devil is in the details”… but when it comes to learning how do you flip a house, the devil sometimes is in NOT being aware of the details.

And if you knew some of the details or at least the vast majority of them – you could stay out of some serious trouble, while at the same time locking in some serious profits.

Flipping House Details

It seems like many of these emailers want to know more than just the simple ways in which one goes about flipping houses. Sure, there is plenty of information online on how to get into house flipping…but many fall short in revealing the exact dollars and details associated with each and every flip.

In many cases, many of those house flippers are reluctant to give the exact dollar figures of each and every deal for fear of tax implications and people stealing their ideas.

However, when I was first learning how to flip houses, this is exactly the kind of information that I wanted to know!

So now that I’m getting dozens of emails a week from readers of this blog and many of the other places where we teach people how to flip houses, it only makes sense to start giving more details…

At a certain point in your house flipping career, you probably want to learn a little bit more than the 70% rule, ARV, MAO and the house flipping mindset.

Not that those concepts aren’t important, because they are extremely important. But I get a sense from the readers of this blog, that people just want more – more numbers, more mistakes, more data, and more details on everything.

Its not like I’ve been withholding details on my flips…far from it. Just read a dozen or so posts on this blog and you’ll see that there’s TONS of info you can absorb to start your house flip career.

But I agree. We SHOULD offer more.

And we will. Very soon…

How Do You Flip a House: The Down and Dirty Details

For the remainder of this spring, and throughout this summer, I will be focusing on developing much more detailed and in-depth house flipping content here at House Flipping School. As mentioned in a past blog post, my team and I are developing a brand NEW houseflippingschool.com blog but also a separate side of House Flipping School never seen before, which will be ready to launch in just a couple of weeks.

And that side will give everyone the most intimate and personal details of each and every house flip we’ve ever done.

And not just the really good ones – but the not so good ones too!

This way you know what TO do and what NOT TO do…

It’s all going to be there – so you can learn (and we can all learn together) and make tons of money in the process.

Although we’ve yet to decide how we are going to present this and also how much it may cost, I assure you the new House Flipping School will not only continue to give you relevant and helpful free content, but the optional paid side will be extremely affordable.

House Flipping School members will be able to follow along in every deal we do (and many of the ones I don’t do) – as we both make progress and learn together.

Each week I’ll keep members up to date on how I am finding properties, renovating responsibly and selling for a profit.

It’s going to be a fun ride and I hope you will come aboard as a member.

More to come on that soon…

How Do You Flip a House: The House Flipping School Whiteboard Sneak Peek!

One of the new components that will be available to House Flipping School members are the Whiteboard Lessons. During these lessons I will break down a recent deal or effective strategy, and talk you through the steps. I think this will be a very effective way of communicating ideas and tactics that are often hard to get across in one blog post.

The below video is one such House Flipping School Whiteboard Lesson. In this lesson I talk about “The Art of the Deal” and how creativity plays a major role in house flipping success.

More specifically, this video covers how I creatively partnered with a general contractor to get into a deal that I otherwise would not have been able to get into. The result of this partnership was a $25,000 profit for me and $25,000 for my general contractor.

I hope you enjoy this HFS Whiteboard Lesson and find it helpful. There is also a full transcript of the video located below.

As always – let me know what you think by leaving a comment at the bottom of this post. Enjoy!

Hey, guys. It’s Mike, with House Flipping School. Welcome to the House Flipping School Whiteboard. If you notice, I have a smile on my face. I want to share with you the little smiley guy up there as well. My film crew, Ralph behind the scenes and Ryan, have not even heard of this deal yet, so they told me to share some of this information with you guys.

This is one deal I have not shared with too many people, so I hope you enjoy it. What I’m calling this one is ‘the Art of the Deal’, because quite honestly, I didn’t even set out to put this deal together like this. It all kind of unfolded like this, and I had that kind of ‘aha’ moment myself on this one.

This is a deal I put together with a contractor partner of mine. The arrangement I made with this contractor was that we were going to be 50/50 partners on the deal, and we would split the profits at the end of the project. It was a contractor that did have some money, so he was able to fund his portion of the labor and lay out money for materials and supplies. Then when we sold the property, we would cash out. We would deduct all the expenses and basically split the profit 50/50.

If you really want to learn how do you flip a house, you’ll see in this example. I want to share with you how I put the financing together on this deal. I do a lot of private borrowing from private lenders that fund a lot of deals, but we also do business with the banks. That’s right banks are lending. If you have decent credit and you have money coming in, then go talk to your local bank. I always recommend local banks because you’re going to get the lowest interest rate possible. If you can’t get financing from the bank, then you can deal with private lenders or work something out with a partner.

Yet that is a video for another time. Right now, I want to tell you how I funded this deal and how I was able to realize a profit on this deal before we ever sold the house. That’s pretty cool, so pay attention! LOL

The purchase price of this house was $81,000. After talking with my banker, they decided that they could lend us the money on this project. You’ve got to realize that banks are not doing 100% financing anymore, and in my position, I didn’t need 100% financing.

We put some cash into this deal which I typically do not do. I like to leverage my money and continue to grow my business so I can do more and more deals. In this particular case, because the bank doesn’t do 100% financing, I had to come up with $24,500 of the purchase price of $81,000; thus leaving the bank to lend me $56,500 of the purchase price.

What the banks will do is 100% financing on the construction. On the construction side, we had estimated with the bank around $50,500 for the construction side of this project. The bank note totals $107,000, which is the $56,500 for the purchase and $50,500 for the construction loan which gave me a total of $107,000.

Of course it would be really nice if they gave me all that money at the closing, but they won’t and that is okay. You probably do not want it all at once anyway, especially if you’re not good with managing money. My team is good at managing money but that doesn’t matter in the eyes of the banks. The bank’s going to release the money as you do the project. This project took us only 30 days to complete, so we were able to receive our disbursements pretty quickly – because we move through our projects quickly. When you want to know how do you flip a house, you gotta remember to work fast.

Let me explain how we were able to realize our profit before the sale of the property. The construction loan of $50,500 is money I’m receiving from the bank to do the construction. What did I say earlier? The arrangement I made with my contractor was I would secure and get the deal, put everything together, do all the paperwork, all the legal work with my attorneys and so forth. He would basically run the project and supply materials at his cost, and pay for everything along the way.

Not every contractor can do that. Some can, but you don’t know until you ask. This particular contractor’s business might have been slow at the time, plus he was a friend of mine. It was a deal we could do together, so we did.

As this project is completed, I have my bank come by and do their inspections. After which they release the funds to me. After 30 days the project is done and I had $50,500. I didn’t go buy big screen TVs with it, buy a nice Corvette or take a big vacation. The money was sat in my checking account safe and secure, and I had access to my profit before we sold the house. How cool is that?

Let me explain one more thing to you:

We had the purchase price of $81,000, we had a bank loan of $107,000, and we had the construction loan of $50,500. $24,500, if you remember what I told you earlier, was my cash, my deposit that I put into the deal. In the beginning, I did have to fund some cash into this deal, but that was not a problem because we quickly got a lot of work done right off the bat.

With our first disbursement we drew around $20,000 or $30,000. We only needed two disbursements on this project. It took two weeks to receive half of it and another two weeks to receive the rest of it.

Immediately, I’m able to fund the $24,500 back within 2 weeks. Technically, I did have some skin in the game, but for a very short amount of time. What does that leave after I fund my initial $24,500? That leaves $26,000. That’s not the profit I made on the project, but that’s still $26,000 from the deal that I realized before we ever sold it. If you want to learn how do you flip a house, you have to think creatively and non-traditionally like we did in this deal.

Of course there’s marketing time and closing time. The nice thing about this project is that we sold it the first week that we had it, but it’s still another 45 days before we closed and received the money. In essence, I received the funds a couple months before we ever closed. My GC and I both made about $22,000 each on the project, so therefore I got my profit and a little bit of extra money before we ever sold it.

I wanted to share this experience with you because this is just another creative way of how you can put together deals with a partner. Basically if you think about it, this was like a three-way partnership. My bank was a partner in lending us the money and my contractor was a partner in running the rehab project. I would love to tell you that I’ve done a lot of deals like this, but the truth is that I have not.

It’s just a matter of whether I’m borrowing money from the bank or whether I’m using private funds. I want to share this with you because it’s just another way that you can put a deal together to make money.

I hope you enjoyed this House Flipping School Whiteboard. Maybe you can let me know when you put a deal together like that yourself. Sound like a deal?

Again, it’s Mike from House Flipping School. We’ll see you soon.

Mike

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