How Do I Begin Flipping Houses?

thank you for joining us America this is the Dave Ramsey show we're glad you are here Dean is with us in Clarksville hi Dean how are you I'm doing great thanks for having from the Kop sure how can I help you looking first off thank you for your done you've done a lot for my wife and on our financial aspect of life I am 25 years old my wife is 23 we're making about three thousand dollars a year and following your principles we're debt free except for thirty two thousand dollars on our how our home I'm sorry you said three thousand dollars you're making one thousand we're making thirty thousand dollars per year okay okay and I said we're debt-free I said for thirty two thousand dollars on our home okay good cool we're also wanting to save ten to fifteen thousand dollars somewhere around there for a car and the main question that I have I've been working for my dad since I was fourteen general construction and I'd like to start flipping houses so my question is how about started at that time um well let's back up one step if you're making thirty two thousand I probably wouldn't have fifteen thousand tied up in a car if that's your household income because you don't want more than half your annual income tied up in things that are going down in value which is cars so I probably back the budget down on the car a little bit but then back to your flipping houses question as you know you said you've been following some of our stuff I don't borrow money and I teach people not to borrow money so that means flipping houses is a little difficult from your situation because you'd have to be going into debt to do it obviously and I'm not going to sit set you up for that it's actually how I went broke when I was your age I was flipping houses and I had three million dollars in debt on house flips and the bank got sold into the bank they called our notes and it took you know two and a half years for me to lose everything I owned I don't want to put you on that gravy train it ain't gravy's not good so you know I just don't want that plan for you so instead what I would tell you to do is this one is um if you have the ability to find a house cheap enough that you could flip it and make money on it then you have the ability to tie that house up and sell it to another investor that does have money and so I actually made good money doing that after I went broke I had no credit and I had no money because I'd gone through bankruptcy but I didn't know how to dig up a deal and I had been doing that so I would find a property in foreclosure for instance let's just I'll make up some numbers let's say I found a $50,000 house and foreclosure and I could buy it for 21 I did this a lot and I would write a contract with the bike that's with the owner to buy the house in the next five days for twenty one thousand subject to my partner's agreement contingent upon my partner's agreement and then I would go and talk to real estate investors that I knew that one of the house of that type and sell it to them and maybe I had twenty one was the contract but I might sell it to them for twenty six which is still a great deal on a fifty thousand dollar house but I'm making five thousand bucks on the spread on the contract and I paid nothing I didn't tell you I never bought it I just sold the contract sold the position and then the another investor went in and bought it now one of the reasons you're wanting to flip houses is because you know how to do construction right that's correct yeah and that plan that I just outlined doesn't involve you doing any construction what you've got to be careful of in the house flipping business when you do construction is you don't want to buy a house go into debt and you go in there with your sweat and fix the house up and then only make wages that you would have made working for somebody else fixing their house up same if you go to work for somebody doing a remodel job they'll pay you to do that right and you'll make a profit and you don't have to go in debt to work for you know Joe and do fix-up Joe's house over here he'll pay you you know your construction costs as a prophet and if you don't make your wages plus a profit that you would have made on a regular job plus make money on the investment then you didn't really make money on the house flip you just are buying a house so you have a remodel job and you can get remodel jobs without buying houses and give them for other people so make sure you're not just paying yourself out wages when you're doing your own work like that I know a lot of guys that swing a hammer and you know know how to use a paintbrush that have fooled themselves into thinking they're making money on the houses and really all they're making money's on the remodel and if you're not making more than you would have made doing the remodel for somebody else then you don't need to be doing the house deal and you know they'll say oh well I can go in and I can fix it up for X or Y yeah well you're not counting profit on your remodel job and you would have made it that profit had you been working for somebody else on a remodel job so make sure you don't make that mathematical mistake in your estimates on your and on your business plan on your flips so I would start out just doing some flips and get some money piled up that you didn't own like I was talking about and then once you get some money piled up and if you want to some side remodel jobs for some people do that and if you want start working for some real estate investors do that or maybe you go in with somebody that's a real estate investor and they give you a piece of the profit in return for you doing the remodel and they buy the house with their money in that way you're not in debt there's a lot of ways to skin this cat rather than you're just going down the bank and borrowing money to flip houses which is a really good way to go bankrupt not just because I did it but because a whole lot of people flip this house is bankrupt more people than just about any other program out there and it's just not as easy as it looks and so you get in there and actually do some flips do some other stuff and learn the business and then when you've actually got real money that you put into the deal you'll do a lot better deals because you'll have some experience under your belt hey guys Rachel Cruz here hope you enjoyed that video from the Dave Ramsey show if you want to watch another great video check out my video three things you should consider renting right over here or click the link in the description below you

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Keywords: How Do I Begin Flipping Houses?, dave ramsey live, dave ramsey show, dave ramsey, dave ramsey live stream, debt free scream, dave ramsey debt free scream

Id: ebLwhUGnpTE

Length: 6min 53sec (413 seconds)

Published: Tue Oct 11 2016