Comments on: Flipping Houses for Fun & Profit

By: Jim C

Jim C — Tue, 19 Dec 2006 22:06:12 +0000

I always wondered why shows like “Flip This House” did not show you what the real estate commission was. I guess I still wonder about that! But it is interesting to see that they don’t. I suppose if folks saw how little money the flippers were making it would not make for good ratings.

Investing $1.2 million to make $40,000 is just plain stupid. You could invest that money at 4% for 6 months, save yourself 100% of the work and 100% of the risk, and make $27,000.

There is still money to be made in flipping real estate, but it takes a realistic approach and some common sense!

By: Marco

Marco — Tue, 15 Aug 2006 14:44:37 +0000

Nice to see people know how to wrap a house…

A lot of people aim the wrap at others who have difficulty getting finance, but aren’t necessarily short of cashflow.

Yep, they’re your main customers.

If you do decide to wrap a house you are providing a (valuable) service to these types of people.

But before you do get yourself locked into one of these contracts… (as the landlord) you have to question - how did these people get into such a bad financial situation in the first place? And do they deserve the second chance?

And in return for taking such risks, you the investor should be paid (handsomely).

By: Rob

Rob — Tue, 15 Aug 2006 08:33:18 +0000

I see - that’s kinda a cash flow variation of the flip.

Another cash flow strategy I have seen is to buy the house, then sell the option to buy it at a predefined price at a future date taking into account interim “payments/rent”. It’s basically futures trading for rental property.

By: John Chow

John Chow — Tue, 15 Aug 2006 08:14:52 +0000

Ahh I see! The old “Be the bank” type of strategy. Another example of this can be done if you buy a property for less than market value. Say you got a $100,000 place for $75,000. You can get a $75,000 mortgage on the house and buy it with nothing down. Then you flip it quick for $100,000 by offering nothing down. The buyer would assume the $75,000 mortgage and take a 2nd mortgage from you for your $25,000 equity. Now he is paying off the 1st mortgage and you’re getting 2nd mortgage cash flow every month.

By: Rob

Rob — Tue, 15 Aug 2006 08:04:46 +0000

A lot of people aim the wrap at others who have difficulty getting finance, but aren’t necessarily short of cashflow. Bankrupt entrepreneurs etc. The lease/buy contract is heavily in favour of the wrapper in terms of defaults etc.

By: John Chow

John Chow — Tue, 15 Aug 2006 06:52:52 +0000

Wrapping a house would be impossible to do here. Housing prices are simply too high. You’ll never get a tenant to pay enough rent to cover the mortgage payments, unless you have a huge down payment.

By: Rob

Rob — Tue, 15 Aug 2006 06:47:52 +0000

Wrapping a house is basically taking out a loan to buy the house and then locking a tenant into a lease/buy agreement at a slightly higher interest rate than you are paying. It means you can be cash positive from day one.

It seems to attract a lot of sharks though so be careful.

By: Justin

Justin — Tue, 15 Aug 2006 01:56:09 +0000

I love Flip this house show (A&E), I hope to do this one day. Big risks can pay off!

By: John Chow

John Chow — Tue, 15 Aug 2006 00:57:49 +0000

Wrapping a house is new to me. What is it? The only wrap I know when it comes to real estate is the wrap around mortgage.

By: Marco

Marco — Tue, 15 Aug 2006 00:53:30 +0000

Thanks for another great article John!

Sounds like a good opportunity: we should all just dump this web content business and just go flip houses!

Have you heard of wrapping a house? Maybe if you really want to make a load of money, perhaps you can flip the house then wrap it up for someone.