[Kolyan2k]

I am guessing it's kinda too late for that.....I spoke with a contractor today. Basically he said he bought a few houses last year and sold them recently. Renovated for 6-7 months and sold at huge profits. One was 600k, sold for 2.4 million, other was 400k and sold for 2 mil. 600k house was just an addition and 400k was a complete demo. To my calculation that's roughly $140-150k per month profit on 1 house. How is this possible? Those profits are nuts

Ps. I've seen buy and sell prices and it's not bs. I don't know how much he spent on renovations, but roughly 600k for addition and maybe 800k for a house sounds about right

[RickFLM4]

Not the right time to be getting into that right now IMO. Rising interest rates are starting to affect demand and labor / material shortages are making improvements costly and time consuming.

[M_Six]

There's a McMansion near us that's been under construction since December. And it's for the daughter of the primary house builder in this area. Even they are having problems with materials and labor.

[Kolyan2k]

Originally Posted by RickFLM4

Not the right time to be getting into that right now IMO. Rising interest rates are starting to affect demand and labor / material shortages are making improvements costly and time consuming.

Yeah, that's what I thought last year and apparently he made roughly $2 mil without even working

[Kolyan2k]

Originally Posted by M_Six

There's a McMansion near us that's been under construction since December. And it's for the daughter of the primary house builder in this area. Even they are having problems with materials and labor.

He just finished 3rd house, no issues, this one not for flipping. Profiting from construction only. Said he has few other projects as well

[chassis]

Contractors are "in the business" and have relationships. They have lower costs for labor, materials, and possibly in transaction costs (RE agent, etc.).

Dealing with real estate is his business. If you have a day job, real estate is another to-do added to your list.

Profits in the OP's example are driven mainly by the market and also by the contractor's cost structure.

You don't have his cost structure if you are not in the business. The market seems to be softening now, and this affects all participants.

[KevinC]

Tom Vu can show you the way!

[Kolyan2k]

Originally Posted by KevinC

Tom Vu can show you the way!

Funny you posted that. He came to USA like 5-7 years ago guy is in his late 20s

[Kolyan2k]

Originally Posted by chassis

Contractors are "in the business" and have relationships. They have lower costs for labor, materials, and possibly in transaction costs (RE agent, etc.).

Dealing with real estate is his business. If you have a day job, real estate is another to-do added to your list.

Profits in the OP's example are driven mainly by the market and also by the contractor's cost structure.

You don't have his cost structure if you are not in the business. The market seems to be softening now, and this affects all participants.

Word on the street is that IT quiting jobs to become full time contractors. Not joking.

[Kolyan2k]

I've been drilling my friends for years to build houses, no one is interested, not even contractor/builder friends. Everyone says too dangerous, not worth it etc.

[Kolyan2k]

Screenshot

[sygazelle]

Originally Posted by Kolyan2k

I am guessing it's kinda too late for that.....I spoke with a contractor today. Basically he said he bought a few houses last year and sold them recently. Renovated for 6-7 months and sold at huge profits. One was 600k, sold for 2.4 million, other was 400k and sold for 2 mil. 600k house was just an addition and 400k was a complete demo. To my calculation that's roughly $140-150k per month profit on 1 house. How is this possible? Those profits are nuts

Ps. I've seen buy and sell prices and it's not bs. I don't know how much he spent on renovations, but roughly 600k for addition and maybe 800k for a house sounds about right

Rule of thumb: Any time anyone brags about how much money they make, there's a good chance they are lying. If the numbers they are talking about seem unreal, then there's a very good chance they are lying.

[Kolyan2k]

Originally Posted by sygazelle

Rule of thumb: Any time anyone brags about how much money they make, there's a good chance they are lying. If the numbers they are talking about seem unreal, then there's a very good chance they are lying.

Didn't brag. I pulled all numbers myself. Posted screenshot above of one property. Single family house, renovated and addition was done $1,780,000 profit minus building expenses

[icomania]

I agree the same, Not the right time to be getting into that right now IMO

[Kolyan2k]

Originally Posted by icomania

I agree the same, Not the right time to be getting into that right now IMO

Yes that's understood with current rate hikes. I am just saying $150k per month managing a construction project....it's just unbelievable. That's on top of other concurrent projects

[dreamingat30fps]

Do it YOLO!!!! The other fools on here don't know shit! All you have to do is buy low sell high. Buy a pos for $300k, throw up a little paint here, little drywall there, turn a 2 bedroom into a 3 bedroom and sell that bitch for $800k! Easy $500k profit! No brainer!

I'm available if you need further consultation. Very reasonable rates!

[e90335e36m3]

Originally Posted by chassis

Contractors are "in the business" and have relationships. They have lower costs for labor, materials, and possibly in transaction costs (RE agent, etc.).

Dealing with real estate is his business. If you have a day job, real estate is another to-do added to your list.

Profits in the OP's example are driven mainly by the market and also by the contractor's cost structure.

You don't have his cost structure if you are not in the business. The market seems to be softening now, and this affects all participants.

Agreed. If it was that easy, everyone with some extra $$$ would be doing it. The biggest challenge is relationships, not only with realtors to be first on a particularly appealing property, but finding honest, cost effective and reliable contractors to perform the work. Maybe it's my bad luck but on my rentals, but contractors seldom keep their word, are always late and when all is said and done never end up being as cheap as anticipated. Mind you, we are talking about minor inter-tenant stuff like repainting, fixing A/C or floor. Can't imagine a major renovation project. Things will always come up. Add to this the market volatility and issues we are facing, you're asking for trouble. The one thing rentals have made me realize, is that I'm way out of my depth when it comes to flipping. I think OP has convinced himself that it's as easy as it looks on TV. However, Flip or Flop isn't how it works for the 99% of people attempting this business.

[e90335e36m3]

Originally Posted by dreamingat30fps

Do it YOLO!!!! The other fools on here don't know shit! All you have to do is buy low sell high. Buy a pos for $300k, throw up a little paint here, little drywall there, turn a 2 bedroom into a 3 bedroom and sell that bitch for $800k! Easy $500k profit! No brainer!

I'm available if you need further consultation. Very reasonable rates!

Do you also provide consultation on the stock market? This buy low, sell high premise sure seems like a winner. Where do I sign up?

[iminhell1]

So do you have a general contractors license?
No?
Well then I guess you're dead in the water from the start.


So once you get that then you need to hire a builder.
What's that, there's a construction worker shortage and huge backlog of work for the existing to do? Well shit. Guess that 6-7 months must have been in the works for a wee bit longer.

You asked the wrong questions.

[Kolyan2k]

Originally Posted by iminhell1

So do you have a general contractors license?
No?
Well then I guess you're dead in the water from the start.


So once you get that then you need to hire a builder.
What's that, there's a construction worker shortage and huge backlog of work for the existing to do? Well shit. Guess that 6-7 months must have been in the works for a wee bit longer.

You asked the wrong questions.

You don't need GC license. A home owner or builder can pull building permits. It's also one of the easiest licenses to get here. I am not even sure if he has that license.
Builder shortages I am also aware off. I have a builder friend that worked on my house. I don't even ask him for prices, he is too honest to overcharge me. Sure can take longer then 6-7 months, say a year, but that's still roughly 1.2 million profit.

And yes, I did speak to him many times about buying land and building new houses. He is afraid and would rather do that for customers. (He is building a house now). PS. Also just recently got his license. Was never needed so he dragged it for many years

I spoke to buddy who's into real estate, told me that sure it's possible to make that money, real estate has been crazy past few years. People buying 2-3 million dollar houses and demo them completely. People bid on properties by as much as 500k over asking.

[zx10guy]

Personally, I think you're taking a huge risk thinking about going into flipping property. As mentioned about the time lines and delays, I've done some major renovation work on my home. Had a two story addition added along with having a good chunk of my basement finished as part of this project. There were some cost over runs and definitely delays that put the project a couple of months past the promised completion date. This was all well BEFORE the current craziness in the construction market. I think the work I had done was around 2004/5.

Recently, I was trying to get work done on my house that was more maintenance upkeep. Had some rotting wood trim around the front door and garage. Had a guy lined up that worked on my neighbor's house to prep it for selling. He committed to doing the work but was back logged. Said maybe in a month. Well that month went into the next month and eventually, I just gave up asking for status on when he was going to come out. I went back to the GC that did my addition work. I should have gone with him in the first place as I thought I would get a better deal going with a one guy operation. The GC came in around the same price and had painting thrown in that the other guy didn't have as part of his quote. Even my GC took about a month before he could get to me and he has a staff of full time employees that includes painters and electricians.

The final construction phases are being completed at my vacation home. I've seen at times work come to a halt for a decent stretch of time. One can only assume it's due to material supply issues. The builder for some of the homes and was the builder for me is Ryan Homes. If a large builder such as them are having supply issues, do you think a small flipper is going to be able to jump ahead of the line to get materials?

All of this is to say someone starting out is not going to have the established connections as mentioned by others where subs are going to give you priority on their schedule. The guy you've mentioned that is making bank has several projects going. The subs know that they can get continued work from this guy with multiple projects. Are you going to be able to run multiple projects starting off?

The other thing you have to consider is the loan (unless you have the cash in the bank to bankroll a flip entirely). You'll need a construction loan which carries different interest rates and terms over a standard conventional loan. And you have to factor in if you'll be able to deal with delays with carrying costs. Every day that house sits...even completed is money out of your pocket in paying that construction loan.

All that said, I'm stunned that a house in my neighborhood just went under contract recently at a listing price of $795k only being on the market for a week or two. The most recent completed sale in my neighborhood was a couple of months ago for $665k. So in some sense, the insanity is still continuing with real estate at least in my area.

[e90335e36m3]

Originally Posted by Kolyan2k

You don't need GC license. A home owner or builder can pull building permits. It's also one of the easiest licenses to get here. I am not even sure if he has that license.
Builder shortages I am also aware off. I have a builder friend that worked on my house. I don't even ask him for prices, he is too honest to overcharge me. Sure can take longer then 6-7 months, say a year, but that's still roughly 1.2 million profit.

And yes, I did speak to him many times about buying land and building new houses. He is afraid and would rather do that for customers. (He is building a house now). PS. Also just recently got his license. Was never needed so he dragged it for many years

I spoke to buddy who's into real estate, told me that sure it's possible to make that money, real estate has been crazy past few years. People buying 2-3 million dollar houses and demo them completely. People bid on properties by as much as 500k over asking.

Maybe I missed it, and I think someone else alluded to it, but you can't just take what you see on Zillow and assume that each house made $x amount in profit by some subtracting the last 2 sales. For all you know that $600k gross profit is only a $40k net profit. And even the contractor you're talking to is the most honest guy in the world, he may have gotten lucky with his first few homes. The one you step into first may not be as lucky. I never got this, if I've figured out the recipe for success, I'm not sharing it with any which person, why would I willingly create competition for myself. Not sharing my contractor list, not sharing my realtor list. The only people I see sharing recipes for success do it with online courses. I'm Jeff Lerner, I am a coffee shop millionaire but I didn't do it working for the man, I didn't do it with a trust fund, but I did find a major short cut. Let me teach it to you because I want you to be a millionaire too. Give me a break.