Why Some Fix and Flippers Fail
Being a fix and flipper doesn't require you to take a whole lot of risk, it also doesn't require that you have a couple hundred grand sitting in the bank to get started.
We're standing in front of one of my properties, it's got a thirty-thousand-dollar potential profit and it's only going to take me three or four hours to complete this thing.
Fixing and flipping is an industry where people see it on TV a couple times, they go try it, and then making a lot of mistakes. Just like anything, fixing and flipping requires training in education. Let's use the example of a heart surgeon. If you or I were to try to go out and do heart surgery, what level of success do you think we'd have? We'd probably kill somebody. What's the difference between you and me and a heart surgeon? Training and education.
Just because you saw it on TV once doesn't mean you can go try it and be successful.
There's three types of investors out there, the first type is the move-in guy. This is the person that thinks that they need to move into the house and work on it themselves in order to make it happen. Now, I'm doing five to seven fix and flips at a time and the only reason I'm able to do that is because I leverage other people's time. This is a business you have to scale. Nobody's going to become a millionaire off of doing one fix and flip, or even one at a time. You have to scale and you can't scale if you're moving into every property.
The second type of investor is what I call the debt guy. This is the person that understands that it's a good thing to use other people's money while doing fix and flips, but only knows how to structure that money one way and that is to borrow it as debt. Well, the problem is if you end up spending more money, then you can’t sell the property or you’re upside down, can't refinance it, you can't turn it into a rental, one deal ruins your career.
Now, the third type of investor is what I call the educated investor. This is the person that takes the time to study and learn the skills that it takes to become an effective fix and flipper, a lot of times learning from people who are very experienced in the field themselves. The educated investor understands how to scale their fix and flip business while structuring their money in a way that allows them other exit strategies, like refinancing or turning their flip into a rental if necessary. They can do more than one at a time and one bad fix and flip doesn't end their career.
If you want to know more about how to become an educated investor, reach out to me, go ahead and send me a message on Facebook, I'll get back to you, we can start talking.