Is there money to be made flipping houses?

By
Real Estate Agent with CEO - Dale Ross Realty Group 0316603

flipping propertiesThe answer is yes, if you go about it exactly the right way. You see commercials on the television all the time selling these methods to get rich quick buying and selling houses. They make it look so simple, and it is if you have the right plan in place, but not necessarily theirs. Remember, they are selling information about how to do a transaction in their area. They don’t really care if it works in every area and it doesn’t. Real estate laws vary by state. You can lose a lot of money if you don’t have the perfect plan.

In order to make money flipping houses, you need to buy low and sell high; common sense. You need to buy the worst of the worst houses, have your own crew to fix them up, get the materials at wholesale, and then have your real estate license to save the fee when buying and selling. A problem you will face is the IRS will consider you a house dealer if you buy and sell more than 2 houses in a year which means you will pay additional taxes; another dip into your possible profits.

If it were easy, then every real estate agent in town would be doing it. Are there real estate agents doing it? Yes, and they are probably making an extra $8,000-$15,000 per year, before taxes. It’s not get rich quick. Holding the property is the way to make money. Buy it in good condition, hold it for 15 years then sell it. The payoff comes in the interest deduction off your income taxes and appreciation while the tenant pays off your mortgage. Some years you may lose money in cash flow but you will still do ok on your tax deductions. If you are seriously considering buying homes to flip or for rental purposes, then do it while the interest rates are low. Just about all investors are making a positive cash flow right now on low interest mortgages. It’s the best time to buy rental homes I have witnessed in my 33 year real estate career.

If you are thinking about flipping a home in the next six months or want to learn more about the strategy of fliping property then give us a call and we will be excited to share our aggressive marketing system with you. If you are curious about the value of any home, then visit DaleRoss.com for a free market analysis. To schedule an appointment, call 24 hours a day at 281-599-6575.

 

Dale Ross

Dale Ross — The Home Marketing Expert

Dale Ross Realty Group

920 South Fry Rd, Katy, TX 77450
281-599-6575
rdr@daleross.com
www.DaleRoss.com

 

 

Comments (24)

Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Thanks for your honest, straightforward advice. It is appreciated. Most overnight successes are because that person has toiled behind the scenes for many prior years. Thanks again!

May 14, 2015 04:38 AM
Jerry Newman
Brown Realty, 210-789-4216,www.JeremiahNewman.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Dale, You've painted a clear cut picture for those agents, who are considering house flipping. I especially love your statement, " If it were easy, then every real estate agent in town would be doing it". I know because tried when I first got my license, and wasn't prepared for all the delays caused by the contractors that I hired.

May 14, 2015 08:29 AM
Pete Xavier
Investments to Luxury - Pacific Palisades, CA
Outstanding Agent Referrals-Nationwide

So right, flipping is not easy, some deals look very promising and than turn out otherwise.

May 14, 2015 08:51 AM
Sonja Patterson
Keller Williams - BV - College Station, TX
Texas Monthly 5-Star Realtor Recipient for the Hou

Great article Dale!  Your blog details how to invest the right way!

May 14, 2015 09:14 AM
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Dale Ross - yes, some agents have courage to do it - and they do make money in it!

May 14, 2015 02:07 PM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

There is a formula to the system and then you have to test it. The catch? One wrong move and you go home with a ......"thanks for playin"!   broke

May 14, 2015 11:47 PM
Ron Aguilar
Continental Mortgage - Saint George, UT
Mortgage & Real Estate Advisor since 1995

thanks for the post

May 14, 2015 11:48 PM
Chuck Willman UtahHomes.me
Utah Homes - Alpine, UT
Utah Homes

I helped investors buy and sell or buy and hold during the post bubble years. In the beginning there were giant profits to be had but within a couple years the margins began to shrink. Currently, most transactions are hard singles with very few home runs... and yes... investors will sometimes lose money.

Your post would never make for a tv series- more reality here than on the reality tv hype machine. Those shows are very staged and edited in a way to make the not trustworthy sources of information.

May 15, 2015 12:03 AM
Jim Miner
Miner Noh & Associates - Phoenix, AZ
Loan Modfication & Short Sale Specialist

I have flipped a number of homes and the one constant is the IRS.  If the market is not moving up at a percentage that will cover up your miscalculations then I highly suggest you flip with a very low mortgage amount, the monthly payment can eat up your profits in a hurry.  If the market should shift to the downside are you disciplined enough to cut your losses?

May 15, 2015 01:35 AM
Patrick Willard
Rio Rancho, NM

I really enjoyed this post. As a former REO broker I dreaded when those seminars rolled through town. My phone would ring off the hook. One person actually told me they wanted to buy foreclosures that only needed carpet and paint at 50% of market value and wanted to make at least $50K per deal. She got angry when I laughted at her.

I sold several properties to a local broker that makes his living on these "flips". He told me he has three full time crews, is happy to make $6000-$8000 per sale, and does 20-30 a month. He said he's willing to buy one he won't make a lot on because it was more important to keep his crews working (otherwise they'll go work for someone else) than to make a big per house profit. The "Secret" to his success is volume.

Buy and hold? I have a couple of past clients, now retired, that built a multi-million dollar portfolio of rental properties over 25-30 years. In my opinion it's a smarter strategy but I guess it's not sexy enough for reality TV.

May 15, 2015 01:42 AM
Greg Nino
RE/MAX Compass, formerly RE/MAX WHP - Houston, TX
Houston, Texas

Sure there is, just depends on the market, the area and find the right property. Too many people think it's an easy system to "make a killing." Houston is a strong sellers market (has been for quite some-time) so finding those gems is not as easy as it once was. 

May 15, 2015 01:58 AM
Ann Wilkins
Golden Gate Sotheby's International Realty - Oakland, CA
Oakland, Berkeley, Piedmont CA

It can be done as I represent several investors but...it is getting harder and harder as the prices, even for total fixers, are going sky high.  I did meet with a so called investor who went to a special HGTV class/seminar - actually paid big money to attend.  She explained to me that they might have to write 15 offers before getting one accepted because she wouldn't pay over the asking price.  Wished her luck and said goodby.

 

May 15, 2015 02:00 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Like anything else, you need to take the time to learn how to do it right. Those who jump in without the required knowledge are sure to get burned. 

May 15, 2015 02:23 AM
Chris B Johnson REALTOR®
Allison James Elite - Moorpark, CA
5 Star Rated REALTOR® Quality, Not Quantity

I still do come across one or two properties a year that have Flip potential and I wish I had the cash to do them my self. I have a handful of Investors who are still Flipping and more than happy to buy when the numbers work...and it is WORK!

May 15, 2015 07:51 AM
John Enxing
Real Estate Advisor Group - Slidell, LA

Dale great post and thanks for sharing your knowledge in this area.

You are absolutely right about the propaganda on TV and how they make is look easy to buy, renovate and bring to market for retail.

If you look at the areas of flipping on TV, they are predominately out west where the market values in housing are much higher.

I like the idea of purchasing, renovating, and holding for long term as a rental. There are favorable tax incentives and someone else is buying down your mortage.

It does seem with a volatile economy today, more folk tend to lease property due to the risk of a falling housing market and being flipped in a purchase. So, rentals is a good way to invest.

 

May 15, 2015 10:36 PM
Anita S. Zahn
Advantage Realty 863-840-1420 - Sebring, FL
Highlands County Real Estate Source! I work 4 U!

Great Post.  Right on target!!!  Have a plan know what costs are before going into contract give yourself an extra money set aside for expenses you will encounter along the way.  It won't make you rich but is a descent income if done correctly.   

May 15, 2015 10:46 PM
Andrea HoffDomin
Florida Dream Homes Realty - Fort Lauderdale, FL
- in Real Estate always on your side!

Thanks for sharing and you are so right. In every area and every municipality you have to consider different insight details.

Sunny greetings from Fort Lauderdale, Florida.

May 15, 2015 11:10 PM
Annette Thor
Connecticut Homes and Commercial Fairfield Cty,CT reinct.com - Westport, CT
Residential & Commercial Real Estate Broker in CT

Really good post Dale, the money is really not in doing flips but holding, renting and waiting for more appreciation.  You really need to be extra vigilant and cautious to make sure that your flip does not turn into a flop.

May 15, 2015 11:39 PM
Greg Mona
eXp Realty - Scottsdale, AZ
Professional Real Estate Representation for YOU!

Dale Ross Well done!  I like your post and how it is succinct and touches upon the things that are very important to consider.  Personally, the times we have wanted to do this have been the times when cash flow was the biggest issue precluding us from jumping in.  That said, every so often, even in this robust local market, an occasional deal still surfaces that you could actually make some money on.  Those opportunities are just very few and far between.

May 17, 2015 04:23 AM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Great post Dale!  I agree with Greg Mona above.  We are in the same market and flipping homes is difficult in Scottsdale, unless you're in the $500,000 market with lots of cash! 

May 21, 2015 02:16 AM