Does anyone here flip houses?

[JimMorrissey]

The only way you can get the tax advantage is to make it your primary residence. I've found that if you power through the hard parts it's a lot easier to live with the rest. It's been worth it for us, but like you it's difficult to live with sometimes.

Once we figure out exactly what we want to do, I hire out the worst and get it out of the way ASAP. I have a full time job, so I can't spend all day on construction...but you have the time and you can make it a lot easier to deal with if you have a knowledgable hired hand to keep the pace up. I think you can get 2.5 times the work done with two people. Something to consider at least.

 

[JimMorrissey]

The only way you can get the tax advantage is to make it your primary residence. I've found that if you power through the hard parts it's a lot easier to live with the rest. It's been worth it for us, but like you it's difficult to live with sometimes.

Once we figure out exactly what we want to do, I hire out the worst and get it out of the way ASAP. I have a full time job, so I can't spend all day on construction...but you have the time and you can make it a lot easier to deal with if you have a knowledgable hired hand to keep the pace up. I think you can get 2.5 times the work done with two people. Something to consider at least.

 

[JimMorrissey]

One other key piece to the puzzle is buying a home with enough land to subdivide. This is what we've looked for anyway.....subdivide the land immediately, rehab the home and and sell it. We use the equity (100%) in the remaining land to help finance the new construction. Our current place was purchased with 6.5 acres and now it's down to 1.5 and still holds its value. The other 5 acres are now wholly owned by us to sell or build on and sell. We're going to build, then sell for the next four years or build and hold if the market is down. Anyway you look at it, we'll end up doing pretty well.

There are initial costs such as buying a more expensive home with more land and the legal and engineering fees to consider. So you do need some "seed money" to get going and you need the income to sustain the higher property taxes along the way. If you start small and think modular construction as a base you can keep the new constuction work to a minimum. We use modular as a base house and then customize the footprint as we want. Modular companies in this neck of the woods build homes as nice or nicer than anything stick built and you don't have to deal with plumbers taking off for three weeks during deer season. We also built one custom timber frame that was so nice, I hated to sell it, but we couldn't turn down the money. It sold the first day to the first person.

Knowing the local zoning and town subdivision rules are critical when shopping and having a couple of good realtors looking for you. There are also setback and water quality/availability and septic issues to consider. Septic is a big one....

 

[JimMorrissey]

One other key piece to the puzzle is buying a home with enough land to subdivide. This is what we've looked for anyway.....subdivide the land immediately, rehab the home and and sell it. We use the equity (100%) in the remaining land to help finance the new construction. Our current place was purchased with 6.5 acres and now it's down to 1.5 and still holds its value. The other 5 acres are now wholly owned by us to sell or build on and sell. We're going to build, then sell for the next four years or build and hold if the market is down. Anyway you look at it, we'll end up doing pretty well.

There are initial costs such as buying a more expensive home with more land and the legal and engineering fees to consider. So you do need some "seed money" to get going and you need the income to sustain the higher property taxes along the way. If you start small and think modular construction as a base you can keep the new constuction work to a minimum. We use modular as a base house and then customize the footprint as we want. Modular companies in this neck of the woods build homes as nice or nicer than anything stick built and you don't have to deal with plumbers taking off for three weeks during deer season. We also built one custom timber frame that was so nice, I hated to sell it, but we couldn't turn down the money. It sold the first day to the first person.

Knowing the local zoning and town subdivision rules are critical when shopping and having a couple of good realtors looking for you. There are also setback and water quality/availability and septic issues to consider. Septic is a big one....

 

[RayH]

Jim, you are my hero. Nice plan with little risk. Im not sure I can afford that approach just yet. Especially while land prices around me are in the neighborhood of $60000 per acre. Larger acreage gets somewhat cheaper with say 5 acres going for around $170000.
The modular home idea is good but around here the good modular home builders are backlogged by about nine months.

Im certainly glad Ive started this thread. I was debating whether or not to because it really doesnt deal with tractors. Ive learned some and heard from people who are actually making it work. It gives me hope.

 

[RayH]

Jim, you are my hero. Nice plan with little risk. Im not sure I can afford that approach just yet. Especially while land prices around me are in the neighborhood of $60000 per acre. Larger acreage gets somewhat cheaper with say 5 acres going for around $170000.
The modular home idea is good but around here the good modular home builders are backlogged by about nine months.

Im certainly glad Ive started this thread. I was debating whether or not to because it really doesnt deal with tractors. Ive learned some and heard from people who are actually making it work. It gives me hope.

 

[HGM]

I'm glad you started this threa too.. I've been kicking it arround long enough to see that I could have made a fortune if I'd have kept my Fla townhouse a couple more years... I'm still curious to see what hasent been described here yet.... I've been looking for the "steal" or even a practical deal that I can rent while the market rises so I have a no cost(payed by rental) long term investment for retirement(30yrs from now).. How do you guys find the deals? Do you subscribe to these forecloseure listings? do you monitor the county paper for forecloseures, just drive arround alot looking for distressed properties???? If I could find these properties, I could probably justify the leap.. But often, when I have found a property, its much worse than I expected or sold... I'm looking at one now that sounds like the $25k investment above.. It needs a roof and facia(to start).. I'm capable and have done roofs in the past, but estimating the cost is something that has me second thinking it because the profit will be marginal if I need to put 30k in this home..

Dont mean to hijack, but I think its a key peice that anyone thinking about it needs to know....

 

[HGM]

I'm glad you started this threa too.. I've been kicking it arround long enough to see that I could have made a fortune if I'd have kept my Fla townhouse a couple more years... I'm still curious to see what hasent been described here yet.... I've been looking for the "steal" or even a practical deal that I can rent while the market rises so I have a no cost(payed by rental) long term investment for retirement(30yrs from now).. How do you guys find the deals? Do you subscribe to these forecloseure listings? do you monitor the county paper for forecloseures, just drive arround alot looking for distressed properties???? If I could find these properties, I could probably justify the leap.. But often, when I have found a property, its much worse than I expected or sold... I'm looking at one now that sounds like the $25k investment above.. It needs a roof and facia(to start).. I'm capable and have done roofs in the past, but estimating the cost is something that has me second thinking it because the profit will be marginal if I need to put 30k in this home..

Dont mean to hijack, but I think its a key peice that anyone thinking about it needs to know....

 

[JimMorrissey]

Ray,

That's about what land goes for around here too...which is good. A one acre lot is worth about 60K. You want high raw land prices. It means $$ to you after you subdivide. We snagged a nice place that was pretty expensive, but way worth it when it's done. The higher prices are a good barrier to entry for a lot of people so it reduces competition a bit. The more expensive properties have the nicer land and more of it in better neighborhoods/areas, which is critical to reduce risk. You don't want to find the cheapest junk around, but you don't want to pay too much either....balancing act for sure.

As far as modular goes......we found a high quality dealer and we just get what they call a "drop ship". You design the house with their designers/planners (nothing too fancy) as the core and have it dropped on your foundation that you contract out. The modular dealer doesn't do anything but set the house and leave. You put the siding on, build the decks/porches/entries, install the furnace and water...make the electrical connections, wire the panel, drywall the marriage walls, fix any cracks, paint and so forth. This allows them to make a quick easy few grand for minimal work and leaves plenty for you to do for sweat equity. And if you don't become too needy and don't become a PITA, then they'll drop what you want, when you want. All they have to do is place the order and organize the crane for a day or two (put simplisticly). The key is finding a good company that will drop ship, as not all will do that. The beauty of that is that you have a place to live that is nearly complete and you're not living in drywall dust. The interior walls are primed....kitchen is done, trim is done. You then add on a guest room or a playroom, garage, or better yet an apartment....whatever you want. An apartment with separate heat is a great selling point and really adds to the value. The parts that you add to the base modular are not necessary for your daily survival and are separated with plastic, so the part you live in is clean and free of tools and power cords etc. I hate tripping over power tools day and night.

Our current place used to be a duplex, so we retuned it to its original state and now we'll sell the main 3 bed / 2 full bath house with an attached 2 bed 1 bath apartment that has it's own heat and entry. It was a good find and we got lucky on the sewer. We've spent over 10K already just on engineering, so it's not a cheap way to go sometimes. We looked for nearly a year before we put our deposit on it. You just have to be flexible and your partner needs to be onboard. It's not something that happens overnight and there are certainly ups and downs.

After you do it a couple of times you'll get good at dealing with town issues and state laws and such. It won't seem so daunting and properties will begin to look more and more valuable (or not) to your eye. The harded it appears the better. The more barries to enty the better, within reason. You need to be able to afford the base property payments and have some money to do a quality rehab, pay taxes, pay engineers for subdivision. Once rehad is done you can get a home equity loan to start the new house, or just get a constuction loan. Now you'll have tons of equity and be able to get a better rate.

My wife likes the fact that we keep stepping up in homes, which is a good selling point for the idea if necessary. You end up living in a nicer and nicer house while reducing your debt along the way. Moving sucks, but it's part of the deal and you get good at it. Besides you are just moving to the lot next door anyway...friends/family can help. You assure that you've got good neighbors too /forums/images/graemlins/smile.gif Our next place is going to be pretty nice with little to no debt and I'm under 40 years old. Granted I hit the market at a good time, but barring a total economic meltdown it's hard to loose, providing you don't overbuy for your income and you don't get burned on something weird like ancient artifact site or endangered species....

A high quality title search is manditory. I do them myself, then have a lawyer look at it. Survey is also manditory IMO. The costs do add up, but I think it's worth it.

 

[JimMorrissey]

Ray,

That's about what land goes for around here too...which is good. A one acre lot is worth about 60K. You want high raw land prices. It means $$ to you after you subdivide. We snagged a nice place that was pretty expensive, but way worth it when it's done. The higher prices are a good barrier to entry for a lot of people so it reduces competition a bit. The more expensive properties have the nicer land and more of it in better neighborhoods/areas, which is critical to reduce risk. You don't want to find the cheapest junk around, but you don't want to pay too much either....balancing act for sure.

As far as modular goes......we found a high quality dealer and we just get what they call a "drop ship". You design the house with their designers/planners (nothing too fancy) as the core and have it dropped on your foundation that you contract out. The modular dealer doesn't do anything but set the house and leave. You put the siding on, build the decks/porches/entries, install the furnace and water...make the electrical connections, wire the panel, drywall the marriage walls, fix any cracks, paint and so forth. This allows them to make a quick easy few grand for minimal work and leaves plenty for you to do for sweat equity. And if you don't become too needy and don't become a PITA, then they'll drop what you want, when you want. All they have to do is place the order and organize the crane for a day or two (put simplisticly). The key is finding a good company that will drop ship, as not all will do that. The beauty of that is that you have a place to live that is nearly complete and you're not living in drywall dust. The interior walls are primed....kitchen is done, trim is done. You then add on a guest room or a playroom, garage, or better yet an apartment....whatever you want. An apartment with separate heat is a great selling point and really adds to the value. The parts that you add to the base modular are not necessary for your daily survival and are separated with plastic, so the part you live in is clean and free of tools and power cords etc. I hate tripping over power tools day and night.

Our current place used to be a duplex, so we retuned it to its original state and now we'll sell the main 3 bed / 2 full bath house with an attached 2 bed 1 bath apartment that has it's own heat and entry. It was a good find and we got lucky on the sewer. We've spent over 10K already just on engineering, so it's not a cheap way to go sometimes. We looked for nearly a year before we put our deposit on it. You just have to be flexible and your partner needs to be onboard. It's not something that happens overnight and there are certainly ups and downs.

After you do it a couple of times you'll get good at dealing with town issues and state laws and such. It won't seem so daunting and properties will begin to look more and more valuable (or not) to your eye. The harded it appears the better. The more barries to enty the better, within reason. You need to be able to afford the base property payments and have some money to do a quality rehab, pay taxes, pay engineers for subdivision. Once rehad is done you can get a home equity loan to start the new house, or just get a constuction loan. Now you'll have tons of equity and be able to get a better rate.

My wife likes the fact that we keep stepping up in homes, which is a good selling point for the idea if necessary. You end up living in a nicer and nicer house while reducing your debt along the way. Moving sucks, but it's part of the deal and you get good at it. Besides you are just moving to the lot next door anyway...friends/family can help. You assure that you've got good neighbors too /forums/images/graemlins/smile.gif Our next place is going to be pretty nice with little to no debt and I'm under 40 years old. Granted I hit the market at a good time, but barring a total economic meltdown it's hard to loose, providing you don't overbuy for your income and you don't get burned on something weird like ancient artifact site or endangered species....

A high quality title search is manditory. I do them myself, then have a lawyer look at it. Survey is also manditory IMO. The costs do add up, but I think it's worth it.