Interested in house flipping? I get asked about that a lot. Here are the basics of what and who you’ll need:
1) Hard Money Lender. Unlike the late-night infomercials promising you riches, you will need money to acquire properties. No, not the entire amount of the list price on a property, but you’ll still need a down payment and that’s 20% for a conventional lender. Their interest rates are low, but they have more stringent requirements to qualify. Hard money lenders lend at higher rates, but they’re private individuals or a group of individuals without the governmental requirements needed to lend you money fast. They’ll lend you the money for the purchase of the property AND repairs, but you must also put some form of down payment as well, so you have “skin in the game” and they’re not left having to do the work if you skip out.
2) Construction Crew. To be a house flipper in WA state, you need a general contractor’s license if you’ll be hiring subcontractors OR hire a GC to hire subcontractors. This area of the U.S. does NOT have the great number of blue collar trades that other states do such as Southern CA or AZ. Our contractors have an abundance of work and can take their pick of jobs, so expect to pay good money for labor.
3) Wholesalers. You know those little signs you see on the side of the road, on poles, etc. that read “We buy ugly houses,” or “We buy houses, any condition”? They don’t actually buy houses. Haha! They put your house under contract then sell the contract to a house flipper. They make money and the house flipper gets a house at well below market value. That’s how they can flip the house and make a profit – because it was done off market (that is, NOT on the MLS). And that’s also why putting your home on the open market (that is, the MLS) is the best way YOU can make the most money from selling your house. When it’s on the MLS, your property gets exposed to the greatest number of potential buyers, including investors. As supply is perpetually low in the Pacific Northwest, investors DO look on the MLS for fixers. Don’t expect to get paid the same as a house in good condition, of course, but certainly better than a wholesaler will offer you. Back to being a house flipper. You want to know a few wholesalers who can bring you good deals to buy.
4) Join a local REIA – Real Estate Investors Association. Every major city has at least one. This is a great place to learn about real estate investing from people who are actually doing it. It’s also a great place to connect with wholesalers and hard money lenders. Contractors don’t attend much for the aforementioned reasons; they just don’t need a local REIA to get business.
DAISY CASILLAS, 1% Real Estate Broker
(206) 866-8090 call or text
1% listings. Just 1.5% total if I represent your buyer too.