Just wanted to know if you guys know anything about this.
One of my friend recently started making money via real estate (big money). To make a long story short, he told me he was "house flipping" so I did a little research and found out that house flipping is where you buy a house, fix it up, and then sell it for profit.
The thing that confuses me is that that is not what he is doing. If I understand correctly, he helps people sell their homes. It almost sounds like a real estate agent, but it's not. From what I gathered when he quickly told me is this: he signs contracts with homeowners who want to sell their home (and they have equity), and the contract basically says that he has purchased the home from them for a certain amount of money, but then he turns around and sells it (usually within a couple of months) to a buyer for $5000-$10000 more than he "purchased" the house for. And if he doesn't sell it, then he doesn't actually have to buy the house.
Doesn't make sense to me. I'll admit I know next to nothing about real estate, but he is making tons of money by doing something where it also seems like he has nothing to lose (besides the $10 he puts down as a deposit for the homeowners to hold the house for him).
Can any of you further explain it? Is "house flipping" the correct term? It just doesn't seem legal.
Isn't there a show on TLC or discovery channel where they do this? They make quite a profit most times.
EDIT - and on the tv show they buy them. Invest a shitload of their own money. Which lets say ... they take a $120,000 house and invest $50k then sell it for $200k.
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Quote: Originally Posted by RTShadow
i dont know how this happned. i was sittin an lookin at animal porn taking care of bussiness and my cat jump up on the couch with me. I look over an i was so close so i just finish on his face. tottaly turnd me on. what about yu
I know very little about real estate or flipping homes, but you can definitely make a shit load of money if you know what you're doing. My friend's dad does, but he actually purchases the homes and does all of the work himself since he's a contractor. I'm not sure about the way your friend is doing it.
If you decide to do it I'd look into capital gains tax. I was under the impression that if you own a house for under 2 years you need to pay taxes on the profits from the sale.
Last edited by 94thunderchicken : 07-03-2008 at 10:10 PM.
If you decide to do it I'd get into capital gains tax. I was under the impression that if you own a house for under 2 years you need to pay taxes on the profits from the sale.
Yes, i believe u have 2-6 months before the tax applies. So u have that opportunity to fix and sell. theres wayyyy more to it than that though.
Thats what my cuz was telling me. We grew up fixing houses. He got into it and i didn't...
IF the housing market is in an upward motion, and IF you know what you are buying, and IF you are able to do the labor, or get it done for cheap, then you *can* make a lot of money doing it, but right now, there are people out there who are going broke, because of the housing situation as it is right now.
You all said the same thing that I thought he was doing. Buy a house, invest your own money into it, and then sell it for a profit. However, THAT'S NOT WHAT HE'S DOING. He doesn't invest anything. He finds homes for sale on some website, and it shows how much % equity the home has. If it has 30% of more then he considers it a good "catch" and goes for it. Basically, this is what he does:
1. Looks for homes around the area that are for sale and have at least 30% equity.
2. Once he finds a good one, he contacts the seller and acts like an interested buyer.
3. He meets with the sellers, goes over the contract, and they both fill it out.
4. He says he really wants the house, but he need at least 60 days to make the final decision, thus he puts down a deposit with the homeowners to hold the house for him (some buyers have accepted as low as $10 deposit!).
5. Once that is complete, his next task is to find a buyer (because he sure as hell isn't really going to buy the house...and the contract specifically states that he is not required to purchase this house after 60 days).
6. He finds a buyer. Let's say he signed the contract to purchase the home for $50,000. But when he finds a buyer he sells them the house for $60,000. After the decision is final, the title company for the house (I think that's what it's called) completes everything else. His work is done and he pockets $10,000 (and pays taxes on it).
That's how he explained it to me. He's been doing this for about 7 months and he's made well over $50,000. He wants me to start doing it with him, but I know nothing about it yet.
In conclusion, he doesn't invest anything. And if he doesn't find a buyer from the house, all he loses is the deposit he put down (which is sometimes only $10).
There is definately some money to be made doing this.....But its a stressful job.......Not speaking from experience. But my sis is a real estate agent whos sold houses for some flippers in SA town. Where TLC was filming at one time.......
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Last edited by my_little_srt : 07-04-2008 at 05:40 AM.
There is definately some money to be made doing this.....But its a stressful job.......Not speaking from experience. But my sis is a real estate agent whos sold houses for some flippers in SA town. Where TLC was filming at one time.......
His version of flipping seems much easier though. All you have to do is trick the buyer into not realizing it was cheaper yesterday lol
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House flipping?
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