My Experiences Flipping Houses in the Real Estate Market

Like many of you, we watched all the infomercials on making money through buying and selling real estate. They make it sound so easy and lucrative that it's hard to resist, so we decided to at least investigating the claims a little further.

We did our homework and researched the claims and the companies, talked to folks in the business, and even went to a few seminars. When we felt we were ready to take the plunge, we jumped in with both feet and sent our money off for the books and CD's and "how to" manuals.

In the past five years, we've bought three pieces of property with a specific intent in mind each time.

The first purchase was a small 2 bedroom one bath brick house with fenced in back yard, about 20 years old, in a small town. The intent was to fix up a few minor things and turn it into rental property.

The second purchase was a huge parcel of land in a rural area with two houses one on side of the road and 40 acres of raw land and a barn on the other side. The intent was to refurbish the existing houses and flip them right away, and then build a new home for ourselves on the 40 acres across the road.

The third purchase was a 3 bedroom one bath brick house with a barn in a rural area on 10 acres of land. The intent was to refurbish and flip immediately.

I mentioned our intent when we bought these properties because the grass looks really green and profitable until you hop the fence and buy the "grass" ... then reality sets in when you see all the brown spots and weeds.

Renovating houses is hard dirty work ... and location does matter ... so do your homework and check everything twice before you sign on the dotted line to buy any kind of property.

We bought our first piece of investment property about six months after purchasing the "how to get rich in real estate" propaganda. It was a small 2 bedroom one bath brick house, about 20 years old, and needed a little TLC. We did all of the repairs ourselves, which saved us a bundle. We rented it out for 2 years and learned the hard way that we were not meant to be landlords. We made about $18k profit when everything was said and done. Not bad for our first attempt to be real estate tycoons.

We waited about a year before buying our second property, and knew right off the bat that we definitely did not want to be in the rental property business again. We were very lucky that the two houses sold quickly and we made enough profit to pay off the loan on the 40 acres and barn. We slowly made some improvements and were getting ready to build a house on the land, then my husband got laid off from his job. Our plans changed quickly and we put the property on the market. It took about six months before we were able to sell it, and we ended up with about $12k profit. So we didn't go in the hole and learned a few more lessons along the way.

Three years later we decide to give the real estate market another try. This time we got stuck with a major money pit and still have it today. The housing market hit rock bottom about 3 months after we bought this property. We didn't go our homework well enough and got caught with a lot of repairs that we didn't realize needed to be done. The location of the house is much too close to a major highway and the house sits really close to the road. The layout of the acreage is not good and there is a shared easement with the house next door. We eventually had to turn this into rental property and have had problem tenants every year. We knew we didn't want to be landlords again but had to get some kind of income from the house since we haven't been able to sell it. We've had it on the market at least four times - we've tried for sale by owner and going through real estate brokers. It's just not selling, but then nothing is selling in our area right now.

This will be the last property we buy as investment property. There are better easier ways to make money than this, in my opinion.

Flipping houses is hard work and is risky, especially in today's housing market. Getting stuck with a house you can't sell and having to pay and paying two mortgages, home insurance, taxes etc. is hard on your pocketbook too.

So if you're thinking of entering the house flipping business, do a reality check before getting all starry eyed over the dreams that those infomercials are selling. Buying and selling real estate is not a job for everyone.

Good luck to those of you who try, and kudos to those of you who are doing it successfully!