Another Baby Boomer Losing Job dipping into Real Estate Investing

WIL84911 · WIL84911's Garage

In a nutshell I'm a mainframe programmer getting pushed out. I really do not wish to go back into this work if I can help it. I have been intrigued by real estate for some time and have actually attended investing classes. Though I have not flipped any homes yet I feel this will be my best chance to actually get my feet wet. I will have some severance from my employer so family will be ok for a while.

I would like some pointers from seasoned investors here. Goal obviously is to layout as less cash up front as possible and to be able to flip 1-5 homes per year. Thank you in advance. Wil

ckelly78z · 01-20-2016, 07:17 AM

Check out the comps in the same area of where you are looking to buy, it's important not to invest too much into a house where you can't easily sell for the going rate of the neighborhood.

Have your subs pre-arranged, and ready to make a bid on work that you can't do, like electrical, foundation, roof....etc.

Be prepared to spend ALOT of your own time on the project, and realize that you can't pay yourself for all that time, but keep mindful of the # of hours/days you have into it, and try to get a good return when selling

Dantilla · 07:33 AM

A) In real estate, you make money when you buy- Not when you sell.

You have to buy homes under market value, because it is not possible to sell over market value. If the buyer gets a mortgage, the lender will pull the plug if the appraisal doesn't meet the proper criteria.

When the right one pops up, jump on it quick! When I was flipping fixers, my realtor's rule:
"If it's been on the market for more than one day, it's not a good enough deal".
A true bargain will be sold by tomorrow.

B) I only bought lower-end homes, because the pool of potential buyers diminishes greatly as prices climb. Gotta have great curb appeal, and be in a decent neighborhood. Tough combination to find, but those are the profitable ones. If it's an ugly house, but it is too cheap to let go, the only way it will sell is because it is cheap. No thanks. I want potential buyers to fall in love with the cute house as they pull up. Then purchase price becomes secondary in their mind. It becomes "Look at this great home that's within our price range", instead of "How low should our offer be?". Don't forget the landscaping.

C) Every house had to be top quality to sell. I sleep very well at night knowing I didn't cut corners on structural/safety items. All kitchen and bath wiring was up to current code. Not interested in houses needing structural work. If the roof is sagging, walk away. I want my time, energy and money put into things that the buyer will see, as that will allow a quick flip.
I want a solid structure that needs "lipstick and nail polish".

D) The value of a great realtor: Whenever I thought the house was ready to sell, my realtor would walk through, and usually refuse to list it until her punch list of minor items she saw was taken care of. Sometimes frustrating, but she was always right. Nice to have an extra set of eyes on my work. When listing, she always started near the top of what she thought would be fair market value, and if no offers came in within a week, drop the price by a few thousand. The house usually sold at the first price drop. She had the market nailed.

When buying, she also talked my out of more houses that she talked me into. This is highly valuable! I remember being ready to sign the dotted line, and she telling me "We can do better".

If you find a realtor like this, grab them, and keep them happy! We both made money. She found bargain houses, and she knows I will list it with her after I'm done with my hammer and paint brush. Sales commission coming and going for her.

Amail · 01-20-2016, 07:31 AM

Look in to real estate investment clubs in your area. You'll need to build up your network of agents, lenders, contractors, bird dogs, etc. and this is a great way to start that. I'd recommend teaming up with someone established to learn the ropes and grow from there. If you help them, they'll help you. Don't jump in head first.

WIL84911 · WIL84911's Garage

Thank you so far. Everything mentioned makes sense.

Deschodt · 01-20-2016, 10:51 AM

Wil, just to inject a small dose of warning... you aren't the first IT person attempting to recycle him/herself into RE. I've seen it happen a lot with friends and acquaintances, post-outsourcing. And it hasn't worked all that often, from my small statistical sample. There are a few people making a killing, and a lot barely making a living...

A lot of folks find out they end up being free-uber-drivers for tons of home showings and don't make all that much commission. Some lost money on gas! You can go unpaid for a while, too, if nothing sells...

On the "flip" side, there is a lot of competition already better setup than a newbie - contractors for one, people not needing to borrow (no pressure on interest) and it only takes one bad purchase to ruin 5 good flips... If there's a show on TV about it (let alone 10!), it's probably a little late in the game.

Not to rain on your parade... Just saying be careful who you associate with. And there are still a lot of mainframe jobs out there ;-)

Amail · 11:35 AM

If you haven't already found it, check out https://www.biggerpockets.com/forums/12-starting-out. Lots of information there.

rwest · rwest's Garage

Another thing to be aware of is that many jurisdictions will let you do things like plumbing and electrical on your own residence, but will require a licensed contractor for many things on property that you're trying to flip, increasing your costs.

URY914 · URY914's Garage

I would get a contractor's licence or a RE licence. Why pay others to make phone calls that you can do?

Also buy a house that will resell. A house with small bedrooms or a weird floorplan will never sell even if you do put in new kitchen cabinets.

Good luck.

CalPersFatCat · 01-20-2016, 01:50 PM

Quote:

Originally Posted by Amail

If you haven't already found it, check out https://www.biggerpockets.com/forums/12-starting-out. Lots of information there.

www.biggerpockets.com is the single best real estate investing resource in the world. Nothing else even comes close. It doesn't matter if you are brand new to RE or are a seasoned veteran, the networking capability of this site for ANYONE involved in any aspect of RE is simply astounding.

And its free.

p.s. I am a pro member (paid) because I believe so strongly in the mission of bigger pockets and in the values and principles of founder Josh Dorkin.