Investing in real estate can be intimidating for anyone. There is so much to learn. There’s the buying process, the rehab process, the selling process… and if you want to be a landlord, the state laws are yet another avenue to know.
I’ve been in real estate since I was 24 years old. I purchased my very first house, a single mom of one, to fix and flip. Oddly, at that age, my fear was small. I was so mesmerized by this home that I kept showing to buyers, and no one wanted. I knew it would be something nice if a few changes were made. I finally purchased it myself from the bank (it was a foreclosure) several months later. It took me 5 months from closing to closing. And… I made a nice profit.
Not everyone makes a profit on their first flip. But I saw the potential this home had if some things were changed. The things that buyer’s were complaining about. That’s what I went for. I had the knowledge from showing the home to many buyers to know what they didn’t like. I made those changes and then some.
However… there were bumps along the way. I had no knowledge at 25years old about construction. Nothing, zip, nada. I was just beginning my real estate career and I was young. A friend…. or so I thought… agreed to help me with the construction. He was a flipper himself and felt I could trust him. So I laid out the plans I wanted for this home and we got started. I did watch and try to stop by the property while he was working to get some idea of what the construction should look like, but there is so much to learn and I had a full time career in real estate sales plus a part time job.
Unfortunately, it wasn’t long before I hit a snag. The budget I had depleted very quickly and we still had a way to go. I was talking to a client at the time and he asked to see the house. So I took him over. He was trying to be kind, but at some point in the walk through, he couldn’t hold back. He began showing me the errors in the construction and in some cases, safety issues. Such as a missing header on a newly installed window. I was very embarrassed. As we discussed the project more, he offered to step in and take over and we struck a deal. I had to let the first contractor go, but the new contractor (who I was familiar with his new construction projects) did a great job, in a timely fashion. He was fair on our deal. We subtracted the costs of what he did from the profit and split the profit in the end. I still made a nice profit at my age and for a first project, but lessons were learned.
The second contractor did take the time to show me some construction work. I spent some time at the new construction development to see a home built from scratch. I spent time with a home inspector to see the problem areas when looking at a home and picked as many brains as I could. I didn’t want to make the same mistakes on a future project.
Over the years (24 years in the business as of this year), I have met a lot of people. It is mostly a man’s world in the flipper arena. Some are kind and will share knowledge, some not so much. I do think it is an ever learning part of the real estate space that you can’t just say you know it all. Things are always changing.
If I was going to start flipping homes in the current era, I might start differently. For one, we have the internet to lead the charge in learning. Although our world is different now, I would still look to shadow a home inspector, contractor and anyone else that could offer me insight into buying, fixing and flipping.
In my opinion, there is no way to avoid mistakes when flipping. You try to minimize, but even the most experienced flipper makes mistakes. Had I not made the connection with that second contractor, I’m not sure where I would have been on that project. I had taken out a conventional mortgage so I was paying overhead which would have eaten away more of the profits. I wish that back then, I had the opportunities for learning that we do now. But as I mentioned, in the end, even with the mistakes, I came out ok. And it afforded me an opportunity to have a down payment for a home for my daughter and I.
Always be observant and willing to learn. It does help to minimize mistakes.
This group was born out of my first experience. I want women to have the same opportunities in fixing and flipping as men do. Where do you start to learn and ask questions that is a safe, non-judgemental environment? Right here!
Although the content is geared toward the woman investor, all are welcome for learning.
For more information on real estate, Lisa has a second blog at: www.jerseygirlforeclosures.com