Get Rich Quick Flipping Houses………….well, not so fast………
I work at least 40 hours a week at the type of soul- crushing job they make movies about people escaping. Making a better living is something that appeals to people in my position. Flipping houses looks like a good way to do this. However, there are things I need to do to get started.
Since I have already done the impossible, obtain a negative credit score, and earn just enough to pay my commitments every month, it will be a long journey. I do not have the complete skill set or resources to flip a house. Fortunately, I don’t have to.
Crush It is a group of real estate investors operating close to where I live. When I met with Russ Keith about learning to flip houses through REI Systems Academy, he invited me to attend DFW Area Crush It meetings. As any self-respecting nerd would do, I looked into the subject matter before the meeting. The meeting times and subject matter are introduced on a social networking site called meetup.com.
There is stuff you can find on google and stuff you can’t. As a novice, it is always a good idea to look ahead into the subject matter.
The Crush It meetup gave me a learning and networking opportunity. This meetup talked about costs associated with flipping houses. This includes closing costs on a loan, taxes, title fees, etc. This is stuff I need to know. I also learned about determining the MAO (maximum allowable offer) and was given a formula calculate that.
Russ Keith (who is a sponsor and often a speaker) also gave some insight into negotiating a purchase price for a property. He told us we should be up front with how we determine the amount for the offer. This includes sharing the cost of repairs, closing costs and even how much of a profit margin you’re looking for.
Close to the end of the meetup, Russ introduced a case study. I thought this was a cool idea. He lays out a picture of a property to flip, shows the math and asks who in the audience would take the risk?
I not only made my choices by show of hand, but also looked around the room to see who else would take the risk. He then explains how the investment plays out. This exercise is a good way of answering the skeptical question of “What could possibly go wrong?” It also explains how challenges are met when things go wrong.
Along with the valuable insight into the business, I also discovered a skill I will need and never really thought about. People who work 40 hour soul-crushing jobs don’t really hone this skill. The skill is called networking. As I mentioned earlier, I have a negative credit score. Banks have pictures of my credit scores on the wall with the words “do not lend” written over it. There were hard money and soft money lenders at the meeting looking for people who have found the properties and willing to loan short term money. By simply talking to them, someone in my position can gain the contact, obtain the investment money, and find people with the skills and/or resources I don’t have.
Of course this doesn’t happen very fast. It will take time and persistence. Training from REI Systems Academy and networking at Crush It meetups are a good start.
Tags: Case Study Crush It entreprenuer flippers get rich quick hard work house flip MAO REI research rich dad poor dad Wholesaling houses