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How to Flip Property the Creative Way

how to flip propertyWhen I teach people how to flip property, I stress the importance of trusting your numbers. If you do your 5th grade math and the numbers don't work, by all means do not get aggressive with your eraser. Eraser math can get a new or seasoned house flipper into serious financial trouble.

Calculating your after repair value, maximum allowed offer and rehab costs are essential to house flipping success. I myself still closely abide to the 70% rule for my house flips, and I don't see that changing anytime soon.

But how about those times when there is a deal on the table that feels right, however the numbers just aren't adding up. For example, lets say your projected rehab costs are so high, that the projected rehab costs alone are preventing you from getting into a deal. Is it possible to get creative, and somehow manage to flip this property for a profit?

Remember that there is no eraser math allowed!

My answer to this question is absolutely yes - it is possible to get into this deal. The only catch is that you have to be smart, and understand where and how to get creative. This is when having a well established house flipping team can really pay dividends.

How to Flip Property Creatively with your General Contractor

I recently flipped a home in Massachusetts (which I will be talking about in great depth on the members' side of the new House Flipping School - launching on April 22nd) that required me to dig deep and get creative. Everything about this house flip looked good, except the cost of renovation. If I wanted to get into this deal, I was going to have to approach the renovation from a different angle.

Because I have networked well and built a solid house flipping team, I knew I could find a general contractor who would be interested in partnering with me on the deal. In my mind I envisioned that partnering with a general contractor on this property, could help me reduce the rehab costs by as much as 50%. I was excited about the idea and began making some phone calls.

One of those calls was to a friend of mine who is a GC operating in the Massachusetts area. I presented the deal and explained to him that we could partner on this deal and split the profit 50/50. My GC friend explained to me that he could run the entire project on his own, and actually perform much of the work himself. This reduced my projected rehab costs by $20,000.

All of a sudden, the numbers on this deal worked.

Other Ways to Get Creative

Brandon Turner from Bigger Pockets wrote a great post detailing 100 different ways to make money in real estate. If you want to learn how to flip property creatively, then his article, 100 Different Ways to Make Money in Real Estate is definitely worth checking out.

I wanted to mention Turner's article, because he does a nice job of communicating just how versatile and flexible the real estate business can be. House flipping in particular is no different. Here are some additional ways that I have gone creative, and pieced together deals over the years. Perhaps you can utilize one of these strategies to make your next house flip a success.

  • If you want to flip property but have no money, partner with someone who does have money

Anyone who has money to invest is a potential house flipping partner in my eyes. Of course these people are not going to hand over their money to anyone. They need to know you, like you and most importantly, trust you in order to invest.

These relationships take time to create, and you need to know how to properly treat people too. If you want to create a network of people who are eager to give you their money, read How to Win Friends and Influence People. Aside from helping you establish healthy relationships with investors, this book will also help you be a better friend, family member and citizen of your community.

  • Find houses to flip using a short sale specialist

Making money house flipping all starts with locating lucrative deals. Finding a good house to flip can be a challenge to say the least. To help improve my chances of locating a good deal, I will sometimes work with a short sale specialist.

A short sale specialist is usually a real estate agent that has become an expert in negotiating short sales. You can find these people through networking (especially at REIA meetings) or via RealtyTrac. RealtyTrac is a tremendous resource for any real estate investor looking to get into flipping short sales or foreclosures. I definitely recommend checking out.

Looking Forward

This post just barely skims the surface with regards to getting creative in the house flipping business. Later this month I will be releasing in-depth videos in which I analyze specific and recent deals that have made me money.

My plan is to help you by showing you exactly how I run my own personal house flipping business. There is only so much I can cram into a 1,000 word blog post! I think you will be excited about the level of analysis and education my HFS team and I are able to present to you via the videos we will be releasing later this month.

Until then stay tuned. I think 2013 will be a great year for house flipping and real estate investing.

See you at the top!

Mike

house flipping

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by Mike

I have been flipping houses full time for the past 5 years. Join me through the ups and downs, and learn how you can flip houses full time too.

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