I flip houses. AMA

Gen!x / Product
XPbr65

Gen!xProduct

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Aug 13, 2018 73 Comments

I left a 17 year tech career primarily in NC & OH to flip properties.

I have flipped 10+ homes and have another 10+ rentals.

I am moderately successful. AMA.

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TOP 73 Comments
  • New
    fjTN53

    New

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    Looking for engineering leadership role
    fjTN53more
    So how much income have averaged a year?
    Aug 13, 20184
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      $500k last year.

      Will exceed that this year unless shit goes sideways.
      Aug 13, 2018
    • Salesforce ozEK82
      For the 500k you make..how much income tax you pay? Do you pay capital gain tax or is it taxed as regular income? Also do you deduct your day to day expenses as part of work?
      Aug 13, 2018
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      My taxes are complicated.

      I make full use of SEP IRA.

      I have several companies. SCorp & C-Corp etc. I get pass through K1 and dividends. Tax treatment differs.

      I also qualify as a RE professional so my carryovers compute differently.

      If by day-to -day you mean personal, I don’t. I don’t even deduct my phone because it’s too much of a hassle and the darn thing only costs $70/month.

      I make full use of travel and entertainment deductions within IRS guidelines.

      I have no qualms at all about paying taxes.
      Aug 13, 2018
    • Genentech tiRm45
      Damn this dude fcja
      Aug 14, 2018
  • Avegant / Eng
    Zilla T

    AvegantEng

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    Bring Back Hardware Jobs
    Zilla Tmore
    What was your starting capital? Do you have a Contractor or did you get a license yourself?
    Aug 13, 20183
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      I pulled around $80k out of 401k for the first reno (2008) when banks stopped lending.

      I work with contractors for specific trades (HVAC, electric, new builds etc). I pull permits for everything else and run my own crews.
      Aug 13, 2018
    • Avegant / Eng
      Zilla T

      AvegantEng

      BIO
      Bring Back Hardware Jobs
      Zilla Tmore
      This guy fks
      Aug 13, 2018
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      Side benefit is I’m in much better shape than I was. Mixing and pouring concrete is one of the hardest things I’ve ever had to do and my paunch fell off in the process.
      Aug 13, 2018
  • Tango Health / EngWaterColor
    Have you ever failed to make money in a flip?
    Aug 13, 20183
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      Not yet. Though I have turned one into a rental because I misread the market.

      However, it now rents profitably.
      Aug 13, 2018
    • Tango Health / EngWaterColor
      Thanks and how is the stress vs the Tech Sector? Do you like it better in flipping vs the Tech? Never tried flipping but kinda scary to do it at the top of the market.
      Aug 13, 2018
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      Different kinds of stress.

      I have capital at play. Heavily leveraged. 5 employees that I need to make sure are working and making payroll for.

      But I can work when I want (I’m nocturnal so I can be on site at 3am doing shit). I’m my own boss and that counts for something... I hope.
      Aug 13, 2018
  • Intel / Engpleb
    When did you start ? Do you do fixing and improvments by yourself or hire contractors ?
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      I started in 2008 with flip to rents. Then I worked with contractors but found it lucrative enough to quit and run jobs on site.

      Yes, I wield a hammer as well as any other member of the crew.

      I have 5 FTEs now
      Aug 13, 2018
  • Intel / Engpleb
    How do you find properties ?
    Aug 13, 20185
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      This is the most time consuming part of my day. I zero in on an area and then do multiple projects in that area. So, I call people to make off-market bids.

      I scout news. Obits. Sweet talk just for the opportunity to pay cash for your house AS-IS.

      Now certainly I could hire someone for this. And I have. But I am more successful when I do it so I end up doing it myself [aka control issues].

      A robust pipeline is the key to maintaining business momentum.
      Aug 13, 2018
    • Intel / Engpleb
      Do you work with real estate agents to get insider info about particular areas ?

      Finding worthwhile houses seems to me like the most complicated and critical part.
      Aug 13, 2018
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      It is. Which is why it’s very time consuming.

      I mostly buy off-market and my strategy is what I noted earlier. I‘m a data nerd, I know a lot about what’s going on in any area I’m in. Divorces. Deaths. Debts etc. Anything that says you may be open to selling.

      And yes, it eats up a lot of my time.
      Aug 13, 2018
    • Intel / Engpleb
      Thanks, man, for taking the time to share with us !

      "Divorces. Deaths. Debts" that's exactly the kind of practical insight I was looking for. Never thought about this but it opens up new perspectives. I was thinking it must be some guided strategy. It cannot be just a number's game of mailing flyers to the entire city and hope someone will call you back. I suppose you have some connections with local attorneys, real estate agents, collection agencies ?
      Aug 13, 2018
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      I pay for info. Neighbors know a whole lot and I pay a 3% finders fee on information that leads to a purchase.

      I don’t do mass mailers. I prefer phone calls. If I write a letter, it has a specific offer amount on it.

      My state has lots of info online. I scour a lot of this. I am a data nerd. So I amass info to trade.

      This is why I operate in a small geographic area. Attempting to do this at scale would be impossible for me.

      I also work with wholesalers. As long as the price is right...
      Aug 13, 2018
  • New TAbQ12
    What does knowing a market comprise of? I would imagine - knowing the good and bad neighbourhoods, being able to value a property, estimate the work, cost and time to flip on sight. What am I missing?
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      For me it’s knowing the year on year appreciation rates. The zoning laws. The projected developments. School ratings. Any deficiencies in the neighborhood. And other such intangibles.

      Who is moving in? Who is moving out? Why? Rental trajectory? Purchase trajectory? Right down to what streets have flood back ups.

      Who is buying? What do they do? What do they like? What sells here? What’s overkill? What’s your fallback strategy? etc
      Aug 13, 2018
  • Twilio / Salestestingme1
    How much prior knowledge did you have in construction to be able to run your own crews? Any resources you’d recommend to learn more?
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      I had some DIY knowledge, but not of the permit process and the insane effort that goes into building a solid house.

      But I’m a sponge and wanted to succeed.

      I honestly did not read a single book. I watched tons of YouTube and practiced a shit ton often on my own house to learn stuff like taping/mudding.
      Aug 13, 2018
  • Airbnb heyha
    What is ur margin
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      Varies.

      I can do a gut and flip, light reno or full gut. It just depends on the zip code and the audience I’m catering to.

      I don’t touch anything under 30%. My last was 90%. I’m planning for 110% in the one about to hit the market.
      Aug 13, 2018
  • Intel / Engpleb
    Do you flip single family houses only or condos too ? Is there any difference ?

    For those who think about getting into this, condos have a lower price but I don't know about profitability.
    Aug 13, 20183
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      I flip everything. It entirely depends on the entry price, cost to cure and potential exit. Also, can I add it to my rental portfolio because it’s near a college, hospital etc.

      SFHs have the highest margin but I’ve gotten some deals in high end condos with crazy HOAs especially when it’s part of an estate.

      [Non-sequitur: Children are the worst. The speed with which out-of-state kids dispose of assets of their dead folks for pennies on the dollar is fucking shameful]
      Aug 13, 2018
    • Aren't you profiting from that? I can't imagine you're able to shame them when you're the one trying to lowball them
      Aug 13, 2018
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      You can be a janitor and still think shit stinks. It’s not mutually exclusive
      Aug 13, 2018
  • T-Mobile Bwe12
    How do you identify rental?
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      Location, size and some intangibles.

      For instance if I buy in a college area and it’s not some stately brick structure, it’s mostly going to be targeted at a student/YP rental market.
      Aug 14, 2018
  • LinkedIn PESn67
    I want to get into multi family construction. But being an out of the state investor, how do you suggest I find a good GC?
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      I quit my tech job to become my own GC. That’s because finding an awesome GC was elusive.

      I wish I had a better answer.
      Aug 13, 2018
  • Affirm 650califor
    Advice for getting access to capital? Or just save for 20% + repairs and get a lender for the rest?
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      I don’t have a good answer to this. I work with banks and private lenders. I keep a failsafe cash pool available because...2008.

      20% + repairs cash on hand is good. Access to lender funds is fine for the rest.
      Aug 13, 2018
  • Is this business scalable into something that you can hire more people to work for you to flip faster?
    Aug 13, 20186
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      Limited by capital. I have 5 FTEs (6 next month). I don’t want to scale too fast. And I work insane hours as it is ( I was onsite till midnight today).

      $1m/yr by 2025 is a good goal.
      Aug 13, 2018
    • But if you have more capital (from passive partners for example), do you have a system in place that can scale it up using just the extra capital?
      Aug 13, 2018
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      No. I am not a good process guy. If I died today the business would disappear. It relies heavily on me to be the quarterback.

      More capital would likely mean I have more people on the same project so they can finish faster. I tried multiple crews without constant oversight.

      That’s mistake cost me 6 figures.

      #lessonLearned or maybe #neverAgain
      Aug 13, 2018
    • What's the current bottleneck?
      Aug 13, 2018
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      1. Me (physically). I never really set this up to grow super large. I still think the operation is big and requires a lot of my direct effort. My phone rings constantly and texts stream in all day. I don’t delegate well because too many people fuck things up.

      2. Me (risk level). I’m 42 I’ve seen a few recessions and I know shit can turn on a dime. I don’t want to deal with a 20 person company and have 10 properties on backlog when a recession hits.
      Aug 14, 2018
    • Sounds like what you need to do is to find a good partner/team. But good people are hard to find.
      Aug 14, 2018
  • Qualcomm
    Kimjeller

    Qualcomm

    PRE
    Qualcomm, AMD
    Kimjellermore
    What is your age now? What is your advice if I want to get into this business right now?
    Aug 13, 20185
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      I’m 42.

      My advice. Know your market. Have access to capital. Know your market. Be ready to get your hands filthy. Did I say have access to capital yet?
      Aug 13, 2018
    • Qualcomm
      Kimjeller

      Qualcomm

      PRE
      Qualcomm, AMD
      Kimjellermore
      What’s your progression per year? 1st year one house? 2nd year 2? Then just exponential growth? Are you leveraged to your neck?
      Aug 13, 2018
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      Generally speaking yes.

      I did 3 flips and 2 rentals last year.

      I’m on the 3rd flip this year and 1 rental. I have 4 properties purchased and waiting for work to start. So, yes, I’m leveraged up the yaya.

      But that’s the biz.
      Aug 13, 2018
    • Qualcomm
      Kimjeller

      Qualcomm

      PRE
      Qualcomm, AMD
      Kimjellermore
      3 flips = 500k income last year? What is your market?
      Aug 13, 2018
    • Gen!x / Product
      XPbr65

      Gen!xProduct

      BIO
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      OP
      Central Ohio
      Aug 13, 2018
  • Hortonworks mjKTs32
    Did you ever sue or get sued for anything and have to go to court? For example, evictions and non paying rent. Paying contractors to do work but they took money and ran away?
    Aug 13, 20183
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      Yes. Yes. Yes.

      It’s all part of the business.

      You learn from it. Recalibrate. Move on.
      Aug 13, 2018
    • Hortonworks mjKTs32
      I’m asking because I went through it all. I sorta hate flipping because I hate going to court. I’m the the geeky tech nerd that gets easily bullied. Therefore flipping isn’t for me. You really need a passion for it and don’t do it just for the money.
      Aug 13, 2018
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      I’m honestly doing it just for the money. I’m not a people person. I hire people to handle the shit I don’t like.

      That’s why I have a property manager.

      Lawyers are there to handle evictions and sue errant contractors or firms that do substandard work.

      At least that’s how I’ve done it.
      Aug 13, 2018
  • Amazon Pooper69
    2 things:
    1) how much did you net your first year (after taxes and considering your 401k withdrawal)
    2) how much experience did you have prior to your first project?
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

      BIO
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      OP
      I started with flip to rent, so the first 3 years I did not draw much of an income (or any) from this but, I had a 100k+ tech salary. Paid down debt and reno costs.

      Rentals are awesome but they’re annuities.

      Question 2 was previously answered above
      Aug 13, 2018
  • Yahoo OfficeSpce
    I have five rentals, most in the Bay Area. I want to expand out of state. Which area do you recommend? Please specify the part of the city and state.
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      The key to out-of-state RE investment is having people you trust implicitly and whose judgments mirrors yours.

      I know Central Ohio, it has been (very) good to me but I can’t recommend it to you because it may not fit with your approach, outlook, risk factors, Capital cushion etc.
      Aug 13, 2018
  • New / Eng🌲50
    Why
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      Because I don’t live there and don’t know the market
      Aug 13, 2018
  • Yahoo OfficeSpce
    Do you have any properties or have done flips in the Bay Area or CA?
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      Nope.
      Aug 13, 2018
  • This comment was deleted by original commenter.

    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      2008 was a pretty severe one.

      I don’t understand the second question.
      Aug 13, 2018
  • Medallia Qualtrics
    What's the best strategy for you to find a tenant as quick as possible? i.e. photos from a particular perspective, particular description of a property, etc. There are also so many web sites where you can post a deal, but do you really go to all 50+ of them or Zillow is enough? Thanks!
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

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      OP
      I have a property manager to do that for me. I do have 10+ rental properties but it translates into 25 units. Thats almost a full time job.

      Also, I don’t want tenants to have my number.
      Aug 13, 2018
  • Blue Cross Blue Shield Avv
    Wholesale flipping?
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

      BIO
      ¯\_(ツ)_/¯
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      OP
      I’ve done that too. But I’m primarily a reno-flip kinda guy.
      Aug 13, 2018
  • Blue Cross Blue Shield Avv
    TC Flipping houses vs Tech TC?
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

      BIO
      ¯\_(ツ)_/¯
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      OP
      Flipping homes has been much better for me income-wise.

      There’s no RSUs in the Midwest (that I know of)
      Aug 13, 2018
  • Apple Google L7
    What is your net income after expenses? Which areas are you doing this?
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

      BIO
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      OP
      Already answered both in prior questions.
      Aug 13, 2018
  • Amazon / Other
    Quadruple

    AmazonOther

    PRE
    Amazon
    BIO
    Why the fuck do you think I would put any personal information in an anonymous chat app? You seem really confused, @blind
    Quadruplemore
    Do you keep any rental properties?
    Aug 13, 20181
    • Gen!x / Product
      XPbr65

      Gen!xProduct

      BIO
      ¯\_(ツ)_/¯
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      OP
      Yes. I noted this in the intro.
      Aug 13, 2018

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