![]() Acting as your own agent means you will not have to pay commissions to someone else. If you are serious about making a living flipping homes, consider getting a real estate license. "Managing the construction and managing the timeline is the most valuable resource that you have," he said. He suggests arming yourself with knowledge about home renovation and construction. "In every deal there's almost always going to be budget overruns or delays," Denchfield said. Successful flippers figure those variables into their budgets. Predicting how long it will take for a property to sell is tricky at best. Home renovation projects almost always turn up surprises. "A lot of flippers underestimate exactly how much they're going to need to complete it." "The biggest mistake house flippers make is running out of capital," Denchfield said. ![]() Then there is the cost of renovations, as well as marketing and selling the property. In addition to having the funds to buy the property, you need to shoulder the carrying costs, including property taxes, insurance, homeowners' association dues and mortgage payments. Make your profit, move on to the next before growing your scale."ĭenchfield said the most common mistake flippers make is not having sufficient assets to go through the process. "If it's your first flip, see it through to completion. That is especially true for beginners, whom he urges to go slowly. Don't bite off more than you can chew," he said. Flipping 101Īs extreme as Menaged's case was, Denchfield said it offers lessons for anyone trying to play the house flipping market. But it tragically came too late for his primary lender, Densco founder Denny Chittick, who committed suicide in 2016 after suffering massive losses. ![]() He was ordered to pay more than $33 million in restitution. Now, Menaged is serving a 17-year prison sentence after pleading guilty in 2017 to conspiracy to commit bank fraud, conspiracy to commit money laundering, and aggravated identity theft. "Everything that was tied to Scott was tainted with some sort of fraud, some sort of lies," IRS criminal investigator Denise Lucero told "American Greed." "It just always seemed to be, does this guy stop?"Įven a downturn in the market was not enough to stop him, until authorities finally caught up to him. In a ghoulish turn, he even took out lines of credit in the names of dead borrowers, stealing their identities using Social Security death records. He became so successful, he landed a spot on the Discovery Channel reality series "Property Wars" in 2012.īut when he became overextended in 2014, Menaged turned to fraud, lying to banks and other lenders in order to keep up his empire - and pay for his lavish lifestyle. In one of the most extreme examples, Phoenix businessman Scott Menaged set out to be the king of house flippers, buying up foreclosed properties with abandon following the 2008 financial crisis. The consequences of playing the market wrong can be severe. ![]()
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