Before you quit your day job, understand that it is not as easy as it looks.
You come home from a long day at work and while channel surfing, you come across a show in which guys are buying run-down houses, fixing them up and reselling them for huge profits before the first mortgage payment is due.
Wow. What's more, they claim they make as much money on this one house as you have in the last year.
They don't look or sound any smarter than you are and they're raking in the cash. You start crunching numbers and before you know it, you're thinking about a career change.
Before you quit your day job, can we talk?
It's not as easy as it looks on TV. There is a boatload of competition out there, which means that the obvious deals are gone in a heartbeat. The pros will tell you that they make their money on the front end by buying properties for at least 30% below market value. Finding those houses takes time and once you find them, you'll need to move fast. And no matter what the late-night gurus say about doing this with no money down, it hardly ever works that way. That means you'll need access to cash to do the deal, not to mention the rehab.
"The masses believe in the dream that's been promised to them, that they'll be making a fortune in the next six months," says Todd Tretsky, Managing Partner of CRE- Finance. "They don't have the basic know-how. If it were as easy as they make it seem, 10 million people would be flipping real estate."
What's there to learn? Todd Tretsky explains "I wish people understood that they need to have adequate savings in place to pay the bills while money is flying out the door for cabinetry, plumbers and plants. You need more cash to carry the house, the insurance, the utilities and the maintenance. You won't get a contractor to renovate a house for no money. People go to trade shows and buy these books and tapes on how to buy a house with no money down. I've never seen someone actually do that."
Tretsky's advice to individuals who are considering going full-time is to keep your job, make a little bit of money and pay yourself back, building up your cash reserves. Go with experienced partners on your first couple of deals, then make the jump yourself.
Hopefully, by the fifth or sixth house, you don't need me anymore and you're buying houses for cash. That's important because as soon as you (quit) your job, you can't get a loan.
Tretsky states "I know plenty of guys who do two, three, four houses a year, keep their health insurance and do this on the side," he says. "Many times, they can double their salary."
Call me If you have any questions regarding property flipping, commercial real estate or are seeking financing, please contact Todd Tretsky at 212-257-7305 or visit my site at ToddTretsky.com