Posted by SCook85 on January 28, 1999 at 22:26:10:
Nate,
You can flip to then end user and other beginning investors. These flips are generally more lucrative. Your I buy house’s type of investor usually pays less, reason being, they want to flip the home also.
SCook85
JACKIE FOLLOWERS: Bird dog vs. Top dog - Posted by Devin White
Posted by Devin White on January 27, 1999 at 20:33:30:
All this talk about “flips” is great, but…come on! Why hand over money to other investors? People, sure it’s a way to make a few quick bucks, but…why do you think the investors are more than willing to pay you $3,000 and walk away with the deal? It’s because they’ve done the extra homework and they know how to make many more times that. Why not be on their side of the fence? Why not be the one that HAS the “I buy houses” ad?
I agree it’s a way to learn the ropes a little, but so is reading. Go the extra mile, learn how to coordinate rehabs (Kevin’s book), learn how to buy and resell yourself for higher profits (that’s what the investor is most likely going to do!), and MAKE THE BIG BUCKS.
This is a simple case of walking over the quarters to get to the pennies! In addition, unless your market is completely bombarded with rehabs and motivated sellers, with little competition, there will surely come a day when you’ll wish you would have capitalized on a few more of those $3,000 flips that someone else made $20,000 on.
If you do your homework, the headaches really aren’t that bad–definately not worth giving up five times more return!
I certainly admire Jackie, and like everyone else on this site, I appreciate her willingness to share her wisdom freely in a form that’s easy to understand. I just hope that everyone realizes that there is a heck of a lot more money to be made by being the Top Dog, instead of the Bird Dog.
Just my .02!
Best of luck to all!
Two word formula for disaster . . . - Posted by JoeKaiser
Posted by JoeKaiser on January 29, 1999 at 12:00:10:
“My rehab.”
Joe
Flippers Unite! - Posted by Baltimore BirdDog
Posted by Baltimore BirdDog on January 28, 1999 at 17:25:56:
Devin, Devin, Devin…
First of all, have you ever done a rehab? Second of all, I must confess, in reading Kevin Myers, I thought the same thing you did until I started to read the posts and articles on this site and might consider rehabbing once I’ve stuffed my pockets with some cash, but then again…
In the words of Robert Allen (who, by his own admission, has never shown an aptitude or desire for rehabs), I’ll take a fast nickel over a slow dime any day (especially when the fast nickels add up to $250,000!!! Jackie, you are my HERO!). So Devin, still thinking about starting off with rehabs? If you do, good luck. I think you’ll need it.
-Jeremy
Re: JACKIE FOLLOWERS: Bird dog vs. Top dog - Posted by Stacy (AZ)
Posted by Stacy (AZ) on January 28, 1999 at 15:58:34:
If you scrutinize any niche of REI on it’s own, you’ll be able to make similar arguments.
Why just Rehab?? Why not develop properties from the ground-up, where the big bucks are?
Why just lease-option? Why not own apartment complexes, where the real money is to be made?
Why buy notes? Why not own a mortgage company, where the profits are much larger?
Why focus on SFRs? Why not focus on commercial properties where the paydays are substantial?
Why piddle with used mobile homes, when everyone knows major profits come from owning the parks?
None of these questions are valid. As we grow in our REI competence and comfort level, our desires take us into different directions, and for different reasons. I really think the best plan is to learn several different areas of REI…stock the toolbelt. But, I think flipping is a great way to start.
Stacy
More Fuel for the Fire - Posted by Dan (NY)
Posted by Dan (NY) on January 28, 1999 at 12:03:53:
I am an investor who makes his entire living off of doing rehab deals. I have been reading with interest all the information on flips and while I find it intriguing (I am even planning on trying a couple myself for spare change), I have this one really big, really nagging question…
If you are going to spend all this time and effort in setting up flips for a few thousand dollars, why not just get a real estate license and sell other people’s property? The commissions can be much greater than several thousand dollars, there is a much greater selection of available properties and there is no personal exposure or liability!
Just my two cents…Dan 
Re: JACKIE FOLLOWERS: Bird dog vs. Top dog - Posted by Jackie in Dallas
Posted by Jackie in Dallas on January 28, 1999 at 10:02:33:
Hey, Devin (bigbucks) why is it that you can’t use your REAL e-mail address or real name?
Got something to hide?
Re: JACKIE FOLLOWERS: Bird dog vs. Top dog - Posted by Mark R in KCMO
Posted by Mark R in KCMO on January 28, 1999 at 09:49:42:
TO Whoever you really are…
Everyone here knows that I am a rehab type person, I like them and much of the hassles that people say exsist do indeed exsist.
What you are missing, is that you are placing some sort of “level” to the different positions, using your logic the person who is the top dog, would be the home owner.
Because:
1.) They get a nice new house
2.) a easy to work with seller
3.) generally favorable terms compared with the un-rehabed houses in the same area.
Try as much as you would like, there are NO losers here, there are No top dogs, No bottom feeders, they are simply different people doing things that they enjoy, and do well.
The words of the wise man’s mouth are gracious, the lips of a fool shall swallow him up.
Hope this helps
Mark R in KCMO
Re: JACKIE FOLLOWERS: Bird dog vs. Top dog - Posted by SCook85
Posted by SCook85 on January 28, 1999 at 24:21:05:
Devin,
I started out flipping because rehabbing is something that I was not financially capable of at the time. Today I am capable of doing rehabs. I have learned as a result of my success today that even if I was financially capable when I started Rehabs probably would have brought me down. They are much more involved then a flip. Take much more time. Require a different type of marketing and can’t be done in the volume that flips can.
Someone who does flips on a regular basis does not deal with the hassles of contractors, mortgage brokers, and unworthy buyers. They can do many more deals a month then most rehabbers.
I am doing more rehabs then flips right now but am looking to do a few flips in the next couple weeks. That quick cash sure is nice. I don’t mind making $3,000 for a couple hours work here and there.
SCook85
Re: JACKIE FOLLOWERS: Bird dog vs. Top dog - Posted by Jackie in Dallas
Posted by Jackie in Dallas on January 27, 1999 at 22:45:15:
Rehabs… been there - done that - NO THANK YOU!
I’ve never proposed that anyone has to do flips and only flips for the rest of their lives and ignore all the other wonderful opportunites that are available in real estate. (Although many people ONLY do flips and do just fine!)
Flipping is simply a stepping stone - or starting point. When you have very little money, but need some desperately, and want to avoid the time factors and risk factors and hassles – flipping is (in my opinion) the absolute best place to start and the FASTEST way to make money now!
I’ve seen many people START with rehabbing and loose everything (I’m talking bankruptcy and divorce here!). They just don’t have the experience to evaluate a deal, line up the purchase money, get the rehab money, estimate costs, line up quality handymen(or women), market the property, get a buyer qualified for a mortgage - just to have it fall apart a week before closing then start all over again to find another buyer, etc, etc, etc.
Even after studying some of the best books about rehabbing - beginners will pay too much for the house, under estimate rehab costs, find out what it’s REALLY like to work with contractors (2 weeks really means 5 weeks) and think they can sell the house for more than it’s worth just because they have put their blood, sweat and tears and a chunk of change into the house for the last 3 - 4 + months.
Sure, after you’re had time to learn the ropes of real estate through flipping contracts or lease options - for about a year. I think some people may be ready to take on a rehab. It depends on many other factors.
But, while they’re dealing with all the hassles and time delays for 3 - 4 months and the bills from Home Depot and Lowe’s are piling up , I’ll be perfectly happy flipping 6 - 8 … houses and making two to three times as much with one-fourth the hassle, effort and stress.
Or, if you REALLY want to blow the rehab myth out of the water - take a look at Joe Kaiser’s new Hunt for Abandonded Properties course! Instead of tying up the house with a purchase agreement - just get the darn deed THEN “flip” to a retail buyer as a handyman special in 30 days. You make as much, OR MORE, as you would with a rehab minus the rehab hassles.
So BigBucks aka Devin White aka Kevin…PLEASE don’t continue to try and get people in over their heads before they are ready by teasing them with BigBuck profits that are hard to come by.
Re: JACKIE FOLLOWERS: Bird dog vs. Top dog - Posted by Stacy (AZ)
Posted by Stacy (AZ) on January 27, 1999 at 21:11:31:
There is a larger upside in rehabbing. But there’s a much larger downside as well. You don’t mention that at all in your post. Flipping is a good way to start, and handy knowlege to have all throughout one’s REI career. It’s profit is fine for a beginner, to help generate seed capital, and eventually transition to another emphasis. The downside is very small, with very little risk of financial ruin. It’s a perfect start for a beginner. Just the first weapon in the arsenal.
Stacy
Re: JACKIE FOLLOWERS: Bird dog vs. Top dog - Posted by Rob FL
Posted by Rob FL on January 27, 1999 at 21:04:10:
One thing you don’t consider. You can spend a month or more rehabbing a home (hiring contractors, pulling permits) and then have it sit on the market for a few months and finally close and make 10K-15K. But it take 4-6 months to do it.
A flip could happen in 30 days or less and you walk away with 3K-4K. Multiply 3,000 * 5 deals in 5 months and what do you have 15K.
Rehabs are much more involved than flips and contain much more liability. I have done one before. I like Jackie’s idea of flips because it involves many of the same ideas as rehabs but minus the final 80% of the equation.
my .02
Jeremy, Jeremy, Jeremy - Posted by Devin Brown
Posted by Devin Brown on January 29, 1999 at 08:21:56:
Here for the benefit of all is Devin’s (if that’s who he really is) response to Flippers Unite which I, Baltimore BirdDog, received via e-mail:
Dated : January 28, 1999 at 17:49:21
Subject: Jeremy, Jeremy, Jeremy,
Jeremy, Jeremy, Jeremy,
*First of all, have you ever done a rehab?
Yes,many…this is how I know where the big money is.
*Second of all, I must confess, in reading Kevin Myers, I thought the same thing you did until I…
Until you what? You thought it was right because you knew it would work. With a good team of competent people, IT WORKS.
*started to read the posts and articles on this site and might consider rehabbing once I’ve stuffed my pockets with some cash, but then again…
Sounds to me like you beleive anything you read. Try doing one for yourself (after you’ve done your homework!)
*In the words of Robert Allen (who, by his own admission, has never shown an aptitude or desire for rehabs), I’ll take a fast nickel over a slow dime any day (especially when the fast nickels add up to $250,000!!!
Don’t quite understand this misuse of a good quote. While your flips are adding up to $250,000 ($5,000 at a time), I’ll be taking a couple years vacation while you’re still out bird dogging.
*Jackie, you are my HERO!).
Jackie is great, but…PLEASE! Why don’t you talk to Kevin Myers a few times and tell me if he doesn’t motivate you. My point…Many smart REIer’s out there–if you’re going to follow the crowd, make sure you are looking at the big financial picture and not just the “CREONLINE NEWS GROUP” buzz.
*So Devin, still thinking about starting off with rehabs? If you do, good luck. I think you’ll need it.
As always. And…thanks!
Devin
Re: Why the Schrade? - Posted by Jackie in Dallas
Posted by Jackie in Dallas on January 28, 1999 at 20:43:56:
So D(k)evin - is it White or Brown?
Want to fess up to who you REALLY are?
I’m not AFRAID to use my REAL and my REAL e-mail address.
WHY ARE YOU AFRAID TO?
Got something to hide? What?
Perhaps it’s your true motive for the post…things getting S L O W on the other side?
Re: Flippers Unite! - Posted by Kathleen
Posted by Kathleen on January 28, 1999 at 18:20:17:
Where in Baltimore are you?
Re: More Fuel for the Fire - Posted by Rob FL
Posted by Rob FL on January 28, 1999 at 22:16:54:
Being a good realtor that doesn’t actually starve to death takes lots of work. Most of the full-time realtors I know work 50-60 hours a week and are working evenings and weekends. Sounds like a job to me.
Also look at the numbers. Say a realtor average house sale is $100,000. He sells one house every other week (26 a year). That equals $2,600,000. Wow he is a million dollar producer 2 times over!!! Average commission is 7% or $182,000. Now we split it up 4 ways. Listing broker gets 1/4, Selling broker gets 1/4, listing agent gets 1/4, and selling agent gets 1/4. I end up making $45,500 a year. And that doesn’t count all of your expenses for car, advertising, cell phone, paperwork, realtor dues, TAXES, etc. Not too bad, but not that great.
Now think if you do one flip a month at $4,000 each. You make $48,000 a year. And I bet it didn’t take 50-60 hours each and every week to do that.
Re: More Fuel for the Fire - Posted by JPiper
Posted by JPiper on January 28, 1999 at 13:37:12:
Dan:
Here?s a few thoughts pertaining to your idea.
Let?s assume we?re talking about a house that?s worth $100K fixed up. Let?s assume that this property can be bought for $50K. An agent who is not the listing agent, getting one side of the commission, would receive at most 3.5% of $50K, which is $1,750. Since he is an agent he is then required to split with his broker?.resulting in let?s say a net commission of $1000. The listing agent would receive the same amount. ONLY if you had both sides of the deal would you receive $2K.
Greater selection of available properties?? Well let?s assume that you?re right?that everything in the MLS is open to deal in. You won?t obviously be the listing agent on the ENTIRE MLS, so therefore it will be impossible to get both sides of the commission, therefore you talking about receiving $1000 per deal. If you ONLY deal in properties that you have listed, you obviously DON?T have the entire MLS at your disposal?.. a kind of conflict in your statement. Even then though, your profit is only $2K.
No personal exposure or liability?? Absolutely untrue. Agents have got to be one of the most highly sued group of people on earth. Issues of disclosure, agency, misrepresentation, etc. are widespread concerns by any thinking licensee. It?s much easier to protect yourself as a buyer than as an agent. The use of legal entities like corporations, trusts, etc. along with the appropriate contract language go a long way to sharply reduce legal exposure.
Having said all this, I would add a couple of points. I have never personally flipped anything for $2K. I think this is setting ones sights somewhat low. I would further point out that wholesale flipping DOES take on a lot of the aspects of a JOB. You?re only as good as your last deal. I think there are better ways to approach the subject of flipping other than flipping to the ?I Buy Houses? folks?..something I have never done either.
Finally the idea that thousands upon thousands of newbies are going to be able to successfully invade the market with very limited knowledge and scrape out a few thousand dollars on a regular basis stretches my credulity. Be that as it may, I think the idea of wholesale flipping is a possible starting point?.and one that I have used many times over the years.
JPiper
Re: JACKIE FOLLOWERS: Bird dog vs. Top dog - Posted by J. Clifton
Posted by J. Clifton on January 29, 1999 at 13:38:16:
“Or, if you REALLY want to blow the rehab myth out of the water - take a look at Joe Kaiser’s new
Hunt for Abandonded Properties course! Instead of tying up the house with a purchase agreement -
just get the darn deed THEN “flip” to a retail buyer as a handyman special in 30 days. You make as
much, OR MORE, as you would with a rehab minus the rehab hassles.”
Just my .02, but I concur that the fix-up market can be quite rough. In my area, many brokers with decent rehab or fixer REO inventory don’t even bother with wholesale investors—they sell them to owner-occupants at retail, by helping them get FHA 203K financing to buy/fix. (Some of the cynical among us think when 203K was withdrawn for investors due to “abuses,” that it was code for “private investors were making too much money with it, at the expense of government-approved real estate agents.”) Also, instead of 25-year old houses, property in the NYC area is more on the 35-40 year-old side, meaning old houses tend to have already been renovated. The flip market thus seems to be thinner here, because there are fewer successful wholesalers to flip to.
I’m With Jackie On This One Devon. - Posted by Ben (IN)
Posted by Ben (IN) on January 28, 1999 at 24:37:28:
Dear Devon,
Old Boy, I’m afraid you are giving too short shrift to the roles time and risk play in a deal.
Rehabbing and then retailing a house is doing it the “long” and “hard” way. There are many “ifs”,and a whole raft of “what ifs” that need to be conquered before you get that big check in your hands when you take a fixer through the whole routine of getting it pretty enough to attract a real buyer who will close. If you know the ropes and have the contractor and financing elements nailed, then great, rehab to your hearts content. If you got the bucks to sit on the puppy for 6 months while its not moving then that’s great too. Its not great business though. And I think the average Joe Beginning-Investor has a lot too worry about when he/she decides to take that on.
Flip it in 2-3 weeks and pick up $3K (really, you shouldn’t work for less than $5K on these) cold hard cash, or go the whole hog and make a potential $20K 3-6 months down the road (face it, you don’t “know” it will move fast) getting crapped on by contractors and flaky buyers in the meantime? I’ll take the first choice every day of the week. $5K cash in 2 weeks, “no risk”! I just don’t see how anyone can complain about that.
I closed on a little flipper about 2 weeks ago making the necessary $5K minimum. For a couple of days I contemplated financing it and retailing it. Then I started preparing the bus. plan for it that stretched out to June this year. That was a very good thing to do, because half way through it I came to my senses and said “Screw this! I don’t want to still be putzing around with this house half a year from now. It’s not worth it” and picked up the phone to call my investor.
He was actually a little hot he hadn’t heard from me for a while, but after we closed a few days later he was all chummy again. He’s happy, cause he likes doing all that crap. I think he’s addicted, and he’s one of these types that boasts about how many houses he’s got. Each to their own. I’m very happy with my five K, that I have about 5 hours total work time invested in,and now I can go back to this pretty house I optioned and get the $30K out of that that’s coming [from the buyer’s savings account, by the way, Not a bank loan]. I think I have about 4 hours total work time invested in it so far.
Best ‘a luck with the rehabs Devon, but I think you’re pushin’ the wheelbarrow instead of crackin’ the whip. And that aint Top Dog now, is it.
Ben Innes-Ker
At the Risk of Wasting My Time… - Posted by Baltimore BirdDog
Posted by Baltimore BirdDog on January 29, 1999 at 10:34:05:
which we all know is more valuable than money, I feel that I must respond.
J-**First of all, have you ever done a rehab?
D-*Yes,many…this is how I know where the big money is.
J-Glad to hear you’re making money in your chosen area of REI.
J-**Second of all, I must confess, in reading Kevin Myers, I thought the same thing you did until I…
D-*Until you what? You thought it was right because you knew it would work. With a good team of competent people, IT WORKS.
J-I know it works, but without taking the time to put together a good rehab team, I can put some cash in the ol’ bank account. Once I’m in the black and able to do REI full-time, THEN AND ONLY THEN will I consider rehabs. First, with cash in the bank, I will have some staying power and second, I will have the time to put together a rehab team that I can trust. Currently, there’s no way I’m going to put my future in the hands of a bunch of strangers that I can only supervise on a part-time basis. Even if I can find a handyman to supervise, he/she won’t have earned my trust.
J-**started to read the posts and articles on this site and might consider rehabbing once I’ve stuffed my pockets with some cash, but then again…
D-*Sounds to me like you beleive anything you read. Try doing one for yourself (after you’ve done your homework!)
J-First of all, if I or anyone else on this site believed everything we’ve read (e.g., go to school, get good job in the rat race, save for retirement), then we wouldn’t be involved in creative real estate. Second of all, I’ve done my homework, exploring ALL of the avenues of REI, and determined that rehabbing is not a valid start, at least for someone without much cash to take care of unforeseen problems, which I’m sure you have encountered if you have as much experience as you say you do.
J-**In the words of Robert Allen (who, by his own admission, has never shown an aptitude or desire for rehabs), I’ll take a fast nickel over a slow dime any day (especially when the fast nickels add up to $250,000!!!
D-*Don’t quite understand this misuse of a good quote. While your flips are adding up to $250,000 ($5,000 at a time), I’ll be taking a couple years vacation while you’re still out bird dogging.
J-It’s not a misuse of the quote for the following reasons:
It’s possible to do two or three flips each month. Assuming a low average of $5,000 per transaction, that’s at least $10,000 per month. Multiply that by the 3 months for an average rehab, and you get $30,000 (plus a few bucks more for beer money if you add interest, not to mention the other deals which I might be able to get into during the three months while the rehabber is waiting for his dough). From a time standpoint, my flips will average, say, 5 hours for a total time investment of 30 hours–at least comparable if not better than a rehab.
My reference to Jackie’s $250,000 profit refers to a single transaction. Follow the “Not Just for Beginners…” thread. There are two more examples–one for $1 million and one for $5 million. How’s that for vacation money!
J-**Jackie, you are my HERO!).
D-*Jackie is great, but…PLEASE! Why don’t you talk to Kevin Myers a few times and tell me if he doesn’t motivate you. My point…Many smart REIer’s out there–if you’re going to follow the crowd, make sure you are looking at the big financial picture and not just the “CREONLINE NEWS GROUP” buzz.
J-Of course Kevin motivated me, as has Robert Allen, Russ Whitney, Jackie (who, by the way, is still my hero), and everyone else on this site. No personal conversations, but they’ve all shown their experience and value through great material or educated responses to posted questions. So have others. However, I’ve explored all my options in REI and purposefully selected flipping as a start. I’m not following the crowd anymore than you or anyone else on this board, which by the way, covers the “big financial picture.” Not only does it address most of the areas of REI, but it also draws from investors across the country and their experience, be it 2 months or 20 years. No other resource does the same.
J-**So Devin, still thinking about starting off with rehabs? If you do, good luck. I think you’ll need it.
D-*As always. And…thanks!
J-Again, glad rehabs work for you. Sounds like we could all benefit from your knowledge and insight. Why don’t you try answering some of the posts rather than boasting your successes? I’m sure your input would be appreciated, especially from future rehabbers.