<p>Coralbrook, as much fun as this is to follow, I’m wondering if you are already thinking forward to your next project. Do you have to start to be on the lookout for that, or do you wait until a current project is sold?</p>
<p>Thanks for the info on that root barrier. I’m actually in the process of making a little french drain system along the concrete porch on the back of my house, and this seems like the perfect system to keep the ficus tree (or might be another very large tree from my neighbor) from regrowing underneath the concrete and lifting it up. I had thought about those little weed shields, but they didn’t seem like they’d go deep enough.</p>
<p>This looks like a new technology for house piers, without using the car jacks and dig down deep.</p>
<p>[Foundation</a> Repair with Helical Piers - YouTube](<a href=“Foundation Repair using Helical Piers - YouTube”>Foundation Repair using Helical Piers - YouTube)</p>
<p>No association with the supplier.</p>
<p>In answer to question about looking for next property. My competitors are definitely out searching far and wide every day. They have deep pockets and large teams of people doing auctions and searching. A lot if them put up “bandit signs” with We Buy Houses. I only have enough money for one at a time since this is an all cash business. So, can’t buy the next one until I sell this one. Some day I will get more organized and get “hard money” loans to try and purchase while still holding. I did have an investor that would loan 75% against property I was holding at 12% with a First Trust Deed on my project (no upfront points,good deal) but I haven’t used it the last couple of projects.</p>
<p>A lot of competitors use hard money loans to do their business. These cost 2% points up front and 10-12% interest during holding period. It is s large carrying cost that would eat a large part of my measly profit
If you watch Flipping San Diego they use hard money loans (I can see the recorded trust deeds against their houses). So when they show their profit at end of show I don’t think they are revealing these huge carrying costs. On a $300,000 buy they would be paying about $15,000 to hold it 3 months.</p>
<p>^^Wow. Those are high costs. </p>
<p>For our purchases (only in the 150-200K range), our bank gives us a commercial loan for 80% of purchase price. Current loan is at 5%, minimal origination fee, and is for 9 months, renewable. They don’t seem to care whether we plan to hold for investment (we buy, fix up, then convert to mortgage and rent) or sell. Our stuff is pretty low risk.</p>
<p>I guess I should send them flowers.</p>
<p>
Many of the flipping shows don’t seem to show the true costs at the end of the show. I’ve seen some that don’t include realtor commissions or various fees associated with closing costs and I’m sure other costs. Some of them that have prominently displayed certain items, like a certain brand of window, certain tools, certain siding, certain home center stores, etc. also are likely getting some kickbacks somehow from those vendors and that’s never stated either. </p>
<p>In a nutshell, I don’t think flipping profitably and consistently is always truly represented on those shows although I have seen a few of them where they were upside down and either sold at a loss or gave up and rented the house which is more realistic and at least a balance.</p>
<p>I can see that there could be a real issue in the business where one big loss can make it very difficult to stay in the business and obviously a lot of flippers failed during the housing market slump. I have a neighbor though who keeps flipping houses, ones that don’t require a lot of work - just painting, carpet, re-roof and the like, and seems to be doing okay at it. The key in his case seems to be in the selection of the homes - buying ones in certain locations only (but an expensive part of the country) and at a relatively low price, having people do the cosmetics, and then re-selling it quickly - all on his own dime so there are no loan fees to accommodate and the turnaround is quicker when not dealing with a bank on the purchase.</p>
<p>I wish I could find houses that only need cosmetic work. Competition is so fierce for those properties because almost 75% of the flippers will only buy what I call “late model” in tract developments. This is because they can very accurately predict their future sale price because Model A just sold in the neighborhood. </p>
<p>When these come up for auction or for sale there will be multiple cash offers and they are selling at only about 5% off market. I know they are just painting them, renting and holding about 2 yrs waiting for appreciation to make money.</p>
<p>Because of this I have just evolved into my niche which is extremely distressed houses that are disgusting and need really serious work. Lucky me!</p>
<p>Sent from my Nexus S 4G using CC</p>
<p>^You are California’s version of Rehab Addict!</p>
<p>Yes, my bandit sign stapled to telephone poles should read “we buy failed foundations and mold!”</p>
<p>I cannot see myself to buy flip houses using hard money loan, that is crazy. You just have to do everything perfectly without any hiccups, in reality, that is not possible. In case of a small down turn, like we have now, the interest rate alone will kill you. </p>
<p>Numerous examples of flip failures and bankruptcies had happened during the 2008 crash and if you are in the flipping business, no matter how successful you are, a crash will come eventually and it will hit hard to those leveraged to the hilt (80% LTV). I have seen and heard horror stories about all those big shots who own 20-100 homes using leverage. I will buy real-estate only if I can afford to pay all cash from my own bank account, no more no less.</p>
<p>Artlover, can you share the issues you are having now? I love to learn from other experiences.</p>
<p>Wouldn’t the cheapest way to get money be to just get the largest HELOC on your own home, and use that as necessary? That is, if you had the equity.</p>
<p>What I buy normally are “soft” or possession problems, I don’t have mold, foundation or caved in garages etc. yet. The problems I have been facing are mostly “people” or “legal” related, those are much more difficult problems to solve than hard problems, which you can get help and know how. As a result, banks are selling those “soft” problems at a deeper discount than “hard” problems, thus the margins are much higher. Since I buying them using my bank account, I do not have pressure to “fix” it in two months or die, like those on the TV shows. I figure if I put my money in the bank I got 1.5% interest rate. If I put my money in a house that has a difficult prior owner who file 5 bankruptcies to stave off eviction, I think I get my money’s worth if the margin is 50~60% vs 20~30% as opposed to buying it from MLS. I do write off the interior cosmetics when I priced out the bids, so I am fine with that, if I do not have to fix much upon possession, it is a bonus.</p>
<p>So far, I think I doubled my money in two years.</p>
<p>busdriver,</p>
<p>Now a days, Heloc also requires full docs. In other words, they have to approve the loan based on your income, mostly earned income. It is no longer, here is the house, give me the money. Since I am on my own, I don’t show a lot of income and my wife has loan phobia, so we do not get loans for investments.</p>
<p>Actually we have a significant HELOC, based largely on the enormous value of our home. There was no need for an appraisal if you wanted $250K or less. The homes around our part of the island are worth multiples of that. </p>
<p>HELOCs still do carry interest charges once you start drawing on them, but can be a way to get money pretty quickly and at a better interest rate while you refinance a purchase bit is a risk tho, as is all flipping.</p>
<p>HELOC is how I was able to get started. At the bottom of the market I saw my layoff coming so I bee lined to the bank to take the largest HELOC I could while still showing full employment. Luckily we had been very conservative with our original mortgage and still had a ton of equity even in worst market. My original intent was to just have it as a safety net but then this new career took off since I had cash to buy the real estate. I’m paying 3.4% for my funds I use out of the HELOC.</p>
<p>House flipping is a full time job and half. But you cannot tell the bank ‘I am a flipper, so loan me 700k heloc’.</p>
<p>Yes, but good to get the max when you’re still showing income from employment. Hard to beat the cheap money from a HELOC, at least you don’t need to tell them why you’re using it.</p>
<p>Market is a bit slow in my flipping house area. Its on the market for 20 days and so far no offers. I know i am not high, just the market condition.</p>
<p>Was extremely lucky on one of my flip home. I was using one of the bathroom, after deliver a stove to the house. I notice there was some water gushing noise in the bathroom, to my horror, the toilet valve was leaking crazy, it was not the hose, I had to cut off the water main and rush to home depot to buy a valve to replace it. Since I don’t live there and visit there only once a week or so, it would be a disaster if the valve failed for even one day. The damage could be substantial.</p>
<p>I am wondering if I should change all valves once I take possession of a vacant house.</p>