Posted by Jean
But what if you simply can’t ignore the calling to follow your passion? That’s what happened to Liz Haynsworth, an attorney who left her 9-5 to jump headfirst into something she loved—flipping houses.
For this week’s Wednesday Welcome, Liz—who chronicles her life of flipping houses (and being a new mom!) on her blog, It’s Great to be Home—shares with us her tips for being self-employed and making a living through renovating real estate.
I come from a long line of conservative rule-followers. In my family, we have bosses and think that being self-employed is akin to voluntarily jumping out of an airplane without a parachute. We like stability and routine and paychecks. In a nutshell, we work for “The Man” and we like it.
Or at least, that was the case until about 5 years ago when my husband and I threw caution to the wind, quit our jobs as attorneys and jumped head first into the tumultuous real estate market. We became real estate brokers with our own brokerage, started representing clients, and began renovating and selling investment properties – we’re scheduled to start our 9th flip next month. Over the past 5 years, we’ve managed to pay every bill that has come our way, save for retirement, pay for our cars in cash, and comfortably raise our growing family.
You might be wondering why I’m telling you this. Well, I want you to know that while making a living flipping houses might sound like a risky proposition it doesn’t automatically doom you to a lifetime of walking a financial tightrope. If you properly plan for this new career you can be just as financially secure as you were in your office job – but the potential monetary upside will now be limitless.
Have a safety net: There’s going to be a period of time before your new career of flipping houses starts generating money. Your safety net could be in the form of savings, or it could mean that you continue working your 9-5 job while you work nights and weekends figuring out how to fund your flips, lining up contractors, and actually finding those houses that are diamonds in the rough. Either way, make sure you will be able to pay your bills until your new gig takes off. When we made the leap to self-employment in 2009, my husband had a more flexible job than I did so he began working full-time in our new client-based real estate business while I continued generating a steady income at my day job. A few months later, once our real estate gig was beginning to pan out, we both felt comfortable losing the security of guaranteed paychecks.
Get your real estate license: If you’re a house flipper, being a licensed real estate agent is a no-brainer. Not only will you have access to more potential flips, you will also be able to buy and sell your properties without paying a commission to someone else – so the investment you’ll have to make in your license will ultimately translate into more money in your pocket.
Figure out financing: This is a biggie that will keep a lot of people out of the house-flipping game – how are you going to pay for your flips? Unfortunately, there’s no “one size fits all” answer. For some people it will be a small local bank that’s willing to make non-conforming loans. Or maybe you’ll need to find silent partners to bankroll your flips. Possibly you start small and buy flips with your savings, working up to higher-end flips as you become more successful. Whatever the answer is for you, make sure you have financing in place before you buy your first flip and wonder how you’re going to pay for the improvements.
Be passionate: When you’re flipping houses you no longer have a boss holding you accountable. So, it’s important that you be truly excited by your new opportunities because the only person that will be motivating you to get off your rear and make things happen is you. In our case, we operate as a husband-and-wife team and we’re able to motivate each other (for the most part). But if you’re going to be flying solo think about meeting with a peer in the real estate biz every so often to talk about goals and what you’re doing to meet them.
Be known as one of the good guys: Once your name gets out there as a flipper, you create your own reputation – so make sure that it’s a good one. It’s so important that that the owners of the homes you purchase feel confident that they’re dealing with an honest businessperson, and it’s absolutely vital that the buyers of the homes you flip know that you have done the job right. No one wants to buy a lemon!
Become an expert in your field: Once you’re earning a profit it’s tempting to get complacent, but constantly pushing yourself to try new things and learn all the ins and outs of the flipping business will bring you success in terms of competency, money, and opportunity. For example, over the past few years we’ve begun to act as our own general contractors for our flips which saves us some money and forces us to learn even more about the business. We’ve also pushed ourselves to branch out in terms of how we find our flips and the types of investments we’re willing to make – rental properties, anyone?
Diversify: Even once you’re making money flipping houses, there may be periods of time when the income just isn’t flying in. If possible, it’s wise to safeguard against lulls in income by having multiple streams of revenue. For us, there are months at a time when we’re pouring money into our investment properties without any return – our work as real estate brokers helps us bridge those gaps in income. We’re also betting that the rental properties we’re in the process of buying can provide some passive income for those leaner times.
While making the transition from a steady income to flipping houses can be really scary, if you have that bee in your bonnet I hope you’ll take the necessary steps to make it happen. Once you do, I bet you’ll never look back.
About Liz: When Liz Haynsworth started her blog It’s Great to be Home, she was a newly-married lawyer, fresh from renovating she and her husband’s first single family home. Fast forward several years later and she’s making a living flipping houses with her hubby, and slowly getting the hang of being a new mom.