From District Manager to Full-time House Flipper (Florida)
Many people dream about flipping a house but never do. Real estate investing can be much more intimidating than taking a part-time job or buying a few stocks with your savings. Because of fear of the high level of commitment, most people never get past the initial step of purchasing a distressed property. Accepting this risk and rehabbing a property, however, can be very rewarding.
One of Rehab Financial Group's borrowers, Clive Davidson, is someone who got past his fear by easing into the house flipping business. Clive and his wife had always talked about flipping a house and thought they could pull it off while making a profit. They decided to buy and rehab their first investment property while keeping their day jobs -- treating the flip as a lucrative hobby.
By starting slowly, they learned all about flipping a house. From building a team of contractors, to understanding lending rules, to finding the perfect house to flip, they got a low risk education in house flipping. It was much easier to view their trials as learning experiences and not failures because they still had paychecks coming in from their day jobs. It wasn't an all-or-nothing risk.
REI TIP: Don't quit your day job. . . at first.
Once they felt confident in their process and had some success under their belts, Clive and his wife decided to roll the profits from their first few flips back into the business. By splitting their cash reserves between two properties and finding a lender to cover the rest of the purchase and rehab costs, they found a way to flip multiple houses at once.
The confidence Clive and his wife gained from flipping a few properties made him feel comfortable finally leaving his day job. Not only did this give him more time to focus on building their real estate investment business, but he no longer had to travel for work and would be more present for his young family. Clive played his cards well and used the business to not only make money but improve his lifestyle.
In order to be a full-time flipper, Clive says he aims for 12 flips per year. While that's his goal, he often falls short, due to things like becoming attached to certain aspects of the project or trusting the wrong contractor to finish the job on time.
At any one time, Clive has 4 property flips underway to try and stay on pace. He's become an expert at project management, scheduling contractors to overlap if possible. He thinks any flip should take less than 6 weeks to do the work needed on the property.
In order to account for the variability in the business, Clive takes a minimal salary and rolls the rest of the profits back into the investment. He's found even more savings by getting his real estate license and avoiding a lot of fees on both ends of each deal.
Tips and advice from Clive:
On finding profitable properties to flip:
- "Don't look at price range, look for what it’s worth."
- "Houses built in the 90's are a great opportunity. They don't need rewiring or have other major work done, but can still be improved a lot so it's easier and more fun."
- "Buy smart. It's harder to find good properties than you'd think."
- "Don't be afraid of a larger buy price if the profit is there."
- "If you think you can push the ARV because you do a great job, that's where you get into trouble."
On building his team and hiring help:
- "It’s hard to find a balance between speed, reliability, and craftsmanship."
General tips from Clive:
- "More cash up front can save you money at the end."
- "You can't be emotional with it - it's just numbers."
- "Time your sales right, no one buys a house in December."
Clive's Favorite Investment Property: (Featured Photos)
Hampton Falls, FL
Purchase price - $132,107
Repair Amount - $36,740
Sale Price - $254,000
Clive flipped this house quickly. Although he had an offer in the first couple days, he had to wait to complete the sale due to a 90 minimum ownership rule. It ended up working out in his favor though, as several more, better, offers came in before he was able to accept the first, lower offer.
Facade Before and After:
Dining Room Before:
Dining Room After:
Living Room Before:
Living Room After: