desire, energy, and sticktoitism can do it.” By following the advice in this book, you can acquire the necessary knowledge, gather investment capital, and find plenty of properties to flip, but if you don’t have sufficient gusto and grit, your flips will most assuredly flop.
This chapter leads you on a journey of self-examination to determine whether you have the right stuff to flip real estate – time, energy, a strong financial position (with your own or other people’s money – OPM), organizational expertise, people skills, tenacity, decisiveness, imagination, endurance, a healthy sense of humor, and a good support system.
Most casual house flippers are weekend warriors. They hold down a day job of 40 or so hours a week and then work nights, weekends, holidays, and vacations on flipping houses. They typically invest anywhere from 20 to 40 hours a week, depending on how dilapidated the houses are, how ambitious they are to turn a profit, and how much of the work they want or need to do themselves.
Full-time flippers, who have enough cash on hand to finance their flips and cover their living expenses, typically invest 40 to 80 hours a week.
Although you may be able to delegate most of the work that goes into flipping a house, several tasks demand your uninterrupted time and focus:
❯❯ House hunting
❯❯ Networking to develop relationships that expand opportunities and flip houses in less time and for less money
❯❯ Negotiating and closing the deal
❯❯ Securing financing for purchases and renovations
❯❯ Budgeting and other accounting tasks
❯❯ Planning, executing, and supervising rehab projects
❯❯ Marketing and selling the property
In the following sections, I explain the advantages and disadvantages of part-time flipping, tell you when you can safely start flipping full time, and list the tasks that you should (and shouldn’t) delegate to save time.
For the time-strapped: Part-time flipping
When you’re just starting out, consider keeping your day job and moonlighting as a house flipper until you establish yourself. Your day job provides steady income and security, which enables you to qualify for traditional financing at lower interest rates. Your paycheck helps you cover the mortgage payments, finance renovations, pay quarterly income-tax payments, and stay afloat when the housing market cools. Your full-time job also (hopefully) provides you with health and dental insurance, retirement planning, and other benefits you don’t get from flipping houses.
❯❯ Flipping part time dilutes your focus. You may be in the middle of a complex renovation project late Sunday night and then have to show up for work bright and early Monday morning.
❯❯ Working overtime on flipping projects can sap the time and energy you have for your family and your day job. Keep in mind that part-time flipping is like having a second job.
❯❯ When you work a full-time job, you’re less available for fielding calls and dealing with problems that arise.
To compensate for some of the drawbacks, consider the following solutions for integrating part-time flipping into your life:
❯❯ Work the second or third shift and focus on flipping during the day.
❯❯ Schedule vacations around your rehab schedule.
❯❯ Ask your spouse for help with paperwork and fielding phone calls while you’re at work – a perfect job for the work-at-home parent.
❯❯ Become a weekend warrior, performing cleanup, yard work, and other chores on your days off. If you’re married with children, make the project a family affair.
❯❯ Partner with a trustworthy friend or relative who has more free time or a more flexible schedule.
All the time in the world: Full-time flipping
Full-time flipping requires a big time commitment and a cash reserve to back it up. You need enough cash on hand not only to fuel your flip but also to cover several months of living expenses. Most flippers choose to become full-time flippers only after they successfully flip several properties, have a proven system in place, and have the financial resources to live without another source of income for at least one full year.
❯❯ Five years’ experience successfully flipping houses on a part-time basis
❯❯ At least one year’s income in reserves
❯❯ Health, dental, disability, and life insurance and sufficient funds to cover the premiums
❯❯ A blanket insurance policy that covers liability
❯❯ A line of credit that enables you to do two projects at the same time
❯❯ A solid business plan; check out Business Plans For Dummies by Paul Tiffany and Steven D. Peterson (Wiley)
❯❯ A team of experienced advisors with varied backgrounds – financial, legal, construction, and so on (see Chapter 4)
Without these essentials, along with a strong work ethic, determination, sufficient cash reserves, a well-defined goal, and a solid plan to achieve that goal, failure is almost guaranteed.
Delegating time-consuming tasks
You can get more done in less time by delegating tasks. But be careful when choosing tasks to delegate. You can safely farm out any of the following jobs:
❯❯ Securing financing for purchases and renovations.
❯❯ Anything that requires the handling of money, including making payments. You can hire an accountant to manage the record-keeping.
❯❯ Meeting city inspectors.
❯❯ Accompanying home inspectors.
