My rental sold about two weeks ago and now I'm without any investment property. I feel strangely naked. I do have other passive investments, but I just feel like I'm really at the mercy of my job without some rental property. I guess that's a good thing, since it provides an incentive to get more properties.
My next project will be flipping houses. I've set up an LLC, of which I am the manager and two other investors are the main shareholders (read money suppliers). I will be buying properties, most likely foreclosures, doing minor fix up work, and reselling them. The majority of the profits will go to the investors, but I will retain a percentage of the profits as payment for my work.
The investors are currently waiting for another house to sell in California to provide me funds to get started. It's been delayed for a couple months because the house is in Leisure World, a private retirement community, and that presents all sorts of problems. There are strict regulations about what can be fixed, who has to do the fixing, how the house can be sold, etc. It looks like those have finally been cleared up though and the house can be listed fairly soon. I hope it will sell quickly, but one of the rules of Leisure World is that you cannot put the property in the MLS, nor can you put up For Sale signs or flyers. You must list the house with their agent and they get 5.5% commission. Since it's not in the MLS, I'm not sure how quickly it will sell.
My plan is to use the funds from this venture, together with the leftover funds from the sale of my last house, to get another rental property.
Monday, September 13, 2004
My next project: flipping houses
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4 comments:
Are you taking on any additional investors?
This LLC is already closed, but if there is enough interest, I might look into starting another one.
Shaun,
I stumbled upon your site. I am looking to try my hand at my first "flip" but don't know where to begin. The real estate market is crazy right now here in Orlando, and a home can rise $24-$40 thousand in a couple of months even without major fix up. I am looking to by as under market as possible, correct minimal issues mostly for a quick resale, and will mostly be contracted out. Any suggestions?
Cori
Cori - you are on the right track. Check out my post titled "Step by step guide to buying preforeclosures (and birddogging)" It's listed under "Key Posts" to the right -->
That will give you some basic steps towards finding people who will sell for less than full market value. The post "How To Get Started In REI For Under $400" will also be helpful.
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