Is it wise to take out a loan to start flipping houses in Virginia?

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I want to start flipping houses, yesterday! I’ve read up on how many people started and it seems that they begin with money they had saved or profit made from selling their own home. Well, I can’t sell my own home for another 4 years. I do have some savings but if I deplete my savings, I won’t have money to fall back on to make mortgage payments while I am waiting for the house to sell. Therefore, my only other alternative (that I can think of) is to get a loan from the bank to buy a property. My concern is, what are the chances of making a profit from the sale, after I have paid the bank their money back with interest? Has anyone started out in the business like that and found it successful? Any other suggestions?

  1. Reply
    February 18, 2011 at 8:40 am

    I am a title agent in WI and I have many investors that start out with loans. Actually I have one investor that buys all of his homes to flip with a loan from the bank. What your best bet to do is, buy a house and sell is to someone on a land contract. Meaning they would be sort of renting it from you with the intention of buying it within the first two years of occupying the residence. That way they are making the mortgage payment for you while they are renting and at the end of two years you make a nice profit of about $ 10,000-$ 15,000 without having to do anything to the property and no out of pocket expenses except maybe a little painting or carpeting. Look into it, it’s very profitable this way.

  2. Reply
    February 18, 2011 at 8:47 am

    The short term market right now is very risky for a quick turn around. Holding periods of 5 years+ is where the risk rapidly declines. I posted an article about this in my blog…check it out for more details.

  3. Reply
    February 18, 2011 at 9:42 am

    I am in the same position as you. Your options are very limited financially. If you own a home with alot of equity and are willing to take the risk that is pretty much your only hope. Foreclosures are priced right for investment but you many of them are in such bad shape that you cannot obtain bank financing and they may not have C/O’s etc (basically you need cash). As far as profit you can make alot of money but you need the cash to back you up for mortgage paymenys, closing costs and renovations also don’t forget about the agents commission (out of sales price).

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