Money in Real Estate Flipping Homes

This is one of the best examples I’ve heard about flipping homes. Here’s the step-by-step process of my good friends the Bakers from Great Lakes, Illinois. The couple moved her to the Dallas area. He was a truck driver and had an accident while driving on the ice and snow. He couldn’t go back to truck driving so they moved here to the warmer climate after they sold their house.

At first they lived in an apartment. She found a job right off the bat. Actually, he never did find employment so let me tell you what happened. They knew if they waited until two years went by they were eligible to purchase a HUD house as a first time home buyer. He picked up some temporary jobs now and then, but never found a full time job. They didn’t have to put much funds up which is good. They only had a certain amount of funds to work with. They finally found the right house only needing cosmetic work.

Every week John would a few interviews. Meanwhile, he would paint on the house inside and outside too. He also had to replace all the fixtures, replace the wooden fence and change all the carpet. He also had to put new shingles on the house. Now, he didn’t do all the work himself. What he couldn’t do he had professional’s take care of. So, when it was all said and done he only had to pay others to replace the carpet and the shingles.

They were able to sell their house in Illinois for $72,500 dollars. Now, $22,000 of that was clear after they paid off the mortgage company. The HUD house they found was for $45,000 dollars and needed about $18,000 in repairs. About six months went by John had finished all the repairs. They decided to sell this house. They put it on the market and in about three weeks sold it and purchased another house. This time they made enough profit from the sale to put $20,000 dollars on their second house.

The second house wasn’t HUD house but it didn’t matter because they had the down payment to go conventional this time. The second house was from a distressed seller. You know what that is. A fixer upper or a must sale fast type home, like yesterday! If you’ll look for the worst house on a block that all the other houses look better. And, it only needs cosmetic repairs, unless you’re a carpenter. They did get out for less cost on repairs than they had on the first house. Basically painting is all they had to do.

At this point about eight months go by and they purchased their third house! Did they sell their second house? No! What did they do? They went and got an equity loan on their second house to buy the investment house which is their third house. They ended up looking link this. Two years plus six months plus eight months equals three years and two months after selling their house in Illinois. They actually lived in a better house than they had in Illinois plus they now have a rent house or investment house, that’s putting $350 a month cash flow in their pocket. That’s an income of $4,200 dollars a year while the renter will be paying down on the mortgage on their investment.