Secret to Flipping Houses

There is a hidden secret to flipping houses that only the most experienced real estate investors know anything about. You're about to discover what most people will never know about flipping houses. I never read about this in a book. I never saw it on a house flipping tv show. This game changing lesson was revealed to me through the real world of real estate. It started out as a hunch after flipping houses myself and then it became more clear to me after coaching and mentoring investors from all over North America.

Unlike most investors, I have had the distinct advantage of being able to review thousands of investment deals over the past decade because of my position as a real estate coach and mentor. An unmistakeable pattern emerged after evaluating hundreds of real world flipping houses deals from all types of areas, in all types of markets from all types of investors. It went against what so many others teach and even what you watch on HGTV . It was never talked about at investor club meetings and almost no investors do it. For many creative real estate entrepreneurs, it can be the missing link.


What is the Secret to Flipping Houses?


Before I reveal this investing breakthrough to you, let's take a walk through of the typical house flipping deal. (Note: The following is a real deal that just came across my desk yesterday)

  1. A property in need of significant work is for sale for $65,000 in a decent neighborhood of Chicago. An enterprising investor connects with his power team and his general contractor tells him there is no way it will cost more than $28,000 in order to bring it up to a level where he could sell it for top market price. His Realtor shows him numerous comps to support a conservative sales price of $150,000.
  2. The profit looks incredible and the investor can't believe his good fortune. He conservatively estimates it will take 2 months to complete the work, even though his contractor swears it will be much faster than that. Then, he adds another 2 months to sell it. His best funding resource is a hard money loan at a cost of 5% interest fee plus 15% per year because it requires no credit checks or down payment and it will also fund the fix up costs.
  3. He negotiates the seller down to $60,000 and after closing costs, he is in the deal at $64,000. So far, he is the happiest guy around. He is even bragging to his friends and family how awesome he is. Buying a home that will sell for $150,000 for $64,000 without using his own cash or credit. He's on top of the world.
  4. The repair work starts off great but soon, delays begin to creep in due to unforeseen difficulties. Some of the subcontractors fall behind and that throws off the schedule of upcoming subs which creates more delays. The investor overlooked a few details and that adds to the cost of the renovation. Week after week, month after month, the owner drives to the property to inspect progress and seems to always find more and more problems. It feels like a never ending saga. Rather than 2 months, it takes 4 months to complete the work. Rather than $28,000, it costs $34,000 altogether.
  5. The now-exhausted flipping houses tycoon puts it on the market for $150,000 and after 2 months, has no bites. His Realtor says he should drop the price and offer to pay for the buyer's closing costs.
  6. After 3 months on the market, he finally gets an offer of $140,000. The offer is accepted but during the inspection, the new buyer finds several problems that must be fixed prior to closing. Another $2,000 in repair work later, the new buyer is happy and they go to closing.
  7. Mr. No-Longer-Happiest-Guy-Around looks at his final profits in absolute shock:$140,000 Sales Price
    - $64,000 Total Purchase Amount
    - $8,400 Realtor Commissions
    - $4.200 Buyer's Closing Costs
    - $1,400 Seller Closing Costs
    - $36,000 Renovation Work ($28,000 estimate plus $6,000 unexpected plus $2,000 to appease the new buyer)
    - $15,000 (5% plus 8 months at 15% per year, or 15% of the $100,000 borrowed)
    $11,000 Net Profit to the Investor

This is a true story. And it happens every day of the week, all across North America. I've seen it a hundred times (literally).

How did he only make $11,000 when he bought a $150,000 property for $60,000? What some people do is take a magnifying glass to each major expense in order to try to assess the problem as being rookie mistakes. Such as:

  1. Estimated value: Maybe you're thinking, it wasn't a $150,000 property, it was a $140,000 property! OK. You're correct. In fact, most people over-estimate how much a property will sell for when they first buy it. Whatever you think it will sell for after pouring over comps, reduce it by 8% and you are usually more accurate.
  2. Cost of Funding: Maybe you think he paid too much to the hard money lender. Perhaps, but he didn't have to use his own cash or credit and all of his renovation costs were paid for by the loan. His bigger issue with the money was that he paid it off after 8 months, rather than 4 months.
  3. Too Long to Fix Up and Bad Cost Estimating: His rehab work took double the estimated time and $8,000 more. That's normal. Even the best contractors miss the mark on cost by about 25% and length of project by a few months. In other words, it always takes longer and costs more than you ever anticipate, even when you are a seasoned pro and have years of renovations under your belt.


This is the Secret to Flipping Houses


Rather than close on the property, fix it up and then resell it to a retail buyer, as in the above example, instead, simply flip the property to a contractor-investor-buyer. Wholesale the property to a full time contractor who buys, rehabs and resells 1 or 2 properties per year. They save a tremendous amount on renovation costs because they are there own contractor. Plus, when the project impacts their overall profitability, they are more efficient. This deal could easily have been sold to a contractor-investor-buyer for $70,000. Then, the investor would have walked away with $10,000 for less than one month's work. Usually, people don't see the light until they have gone through the above saga a few times. By reading this, hopefully you can learn this lesson and avoid the trap without having to go through it the hard way. The secret to flipping houses is to avoid buying fixing up and reselling the property, but instead to simply flip the property to a contractor-investor-buyer.


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  1. Rodney barnes says

    Like 2 learn more about the house techniques of flipping

  2. Paul Wiseman says

    A couple of loose ends to the above process. What is the best way to finance a great deal with the intention of quick flipping to a contractor? Also, wouldn’t there be some additional expenses, taxes and temporary insurance to cover liability and the property itself?

    • Freedom Mentor says

      You could finance with private funding or Hard Money. You could also work with a mentor to learn more about creative financing all of your deals. Consider making application to become one of my apprentices.

  3. Nojrul I Mozumder says

    You said you have Secret deals only you know. How i can know? how to find Secret deal no one know.
    What class should i take from you then i can know the new technic to find out new deals?

    • Freedom Mentor says

      Are you interested in making application to become one of my apprentices so you can learn how to find these deals?

  4. I am a plumber electrician welder painter architect inventor carpenter roofer landscaper arborist stone Mason artist designer and entrapeneur l am interested in flipping houses and creating wealth.

  5. Deane Bancourt says

    I just needed to throw you a big thanks! you cleared up some things for me.

  6. Bakir Ebrahim says

    Awesome knowledge, Thanks Phil

    I am new too… and am trying to break ice at this time.. I would really like to join your mentorship program..

  7. Awesome!!

  8. Oh man. Now i am definitely going to work with this.

    Acrylic Shower

  9. Got to carry insurance on the property also during the process

  10. Michael Sparks says

    I know places were house have been abandon in middle income nieborhood. some are in pretty good shape. are these kind of houses good for flipping? these kind of houses

  11. truly getting great value from this video. now ama flip to the right people and make a quick nickel. LOVE IT !!!!!!!!

  12. “A quick Nickel beats a slow Dime” <–That's GOLD right there!

    Great training Phil. Thanks!

  13. ilaiah Bigilale says

    Thank you for finding this (house fliping) tool to empower me to find my financial freedom that I am seeking. thank you once again. Ilaiah

  14. Hi Phil,

    I am currently reading your E book and viewing your videos before deciding to jump into the mix, so to speak. The comments and answers to the questions being asked by others are eye opening and quite insightful, very educational. Thus far my choices would be to have a mentor and to be more creative then traditional. I accept your secrets to flipping houses after observing a relative of mine get into so much trouble while investing in real estate. I am currently buying the home i’m living in but would like to pay out the mortgage and move on. However I consider myself a beginner investor. Thank you so much for this opportunity to learn from an experienced mentor and real estate investor and I hope to be one of your apprentice soon.

  15. I learned a practical lesson from the Flipping Houses. Time element is very crucial whether to hold the unit for long or to sell it immediately to a contactor-investor-buyer! It is much wise to earn even lesser amount than the bigger income you are expecting using the system of fixing everything and sell it for more than 6 months!

  16. chester kyle says

    I’m want to flip my first house but I can’t find a contractor investor were can I go or post to find them.and that was good advice

  17. nicole caldwell says

    Hello phil I am interested in flipping houses but I have no idea where to start help me. Thank you.

  18. Dan Daglia says

    Phil, You mentor People so they can be on their own in real estate? How do you get started ?

  19. Eugene Conner says

    Phil, I loved your presention on Flipping to a Contractor, Investor Buyer. Well where is the best place to locate these people?

    Thanks very much for responding

    • Phil Pustejovsky says

      I think that question has been asked a tremendous amount of times above and I believe I have answered it in the comments above.

  20. Phil i read your book on how to to become a real estate investor so much great information and i am also listening and i had an aha moment thanks a million for you real estate insight and expertise, i am aspiring to be great thanks again for sharing you are blessed and you are blessing.

  21. Fernando Bonnet says

    Great Article!

  22. ok. I’m with you.
    I don’t want to do Rehab.
    I did learn about Wholesale and Assigning Contracts to a Cash Buyer to do all the rehab, inspections, etc.
    and yes, That’s more my speed.
    I can keep looking for WHolesale deals and assign rather than this long process of Rehab…at least in the beginning
    until I learn more…
    Great ! Stuff.

  23. Paulette Harvell says

    I Phil. I’m a beginner, and what I would like to know is if this is even possible and if so, how can it be done to see a profit.

    I purchased a home for 65K, I still owe around roughly 30k. to the bank. I would like to sell this house and make some kind of profit and pay the bank their share. Do you have any kinds of suggestions?

    • Phil Pustejovsky says

      With the right education, you can absolutely be very effective in this business. If you don’t know what you’re doing, chances are high that you will fail.

  24. Gleason Harris says

    It seems as if there is some unknown secret to flipping a house, when there isn’t a secret at all. it just takes using a bit of common sense and knowledge.

  25. Salva Wright says

    Thanks Phil for that vedio it so make sense. saving time money and headache
    I’m a newby to real Estate Investing.
    the part I don’t get is the second when he resell to the contractor investor.
    Who pay the closing cost?
    how do you find a contractor investor?
    Did he use his cash to buy the house for 60,000?
    Another thing Phil could you give me some ways to get funding for investing.
    who pays the closing cost?
    Thank you.

    • Phil Pustejovsky says

      You assign your contract to the new contractor investor buyer and you collect your $10,000. The new buyer pays the closing costs. The new buyer uses his/her money to buy it. You are just the middle man in this example.

  26. Also Phil, The buyers closing costs??? You don’t figure that out of your pocket!! They have their own and you have yours. This is coming from me a Real Estate Broker for over 20 years!!

    • Phil Pustejovsky says

      When you assign your interest, you have no closing costs. The new contractor investor buyer has his and the seller has theirs. The number of years that you are in this business don’t always translate to more wisdom.

  27. Hello,
    I’m new to this. I want to know do i need to become an investor in order to buy property and do as you say n sell it to a contractor investor? I really want to get involve with this but what if i cant find investor before the closing date? Also i have no money how do i start?

  28. Hi Phil, Getting started is the hardest thing to do when there’s finances involved that you don’t have. I thought . Managed to invested in a ‘mentoring group’. Study the material. Contacted some real estate agents. Etc.. After watching your videos and reading some of the Q/As afterwards, I’m interested in your way of teaching. It’s a different approach . Will be watching, listening and reading . Thank You for taking the time to share your knowledge in the field of real estate.

  29. Michael Williams says

    Hi Again Phil,
    I have a question and I would like for you to tell me what you would do as an investor:
    I joined a networking group that is putting together a plan to help existing and startup entrepreneurs find funding for their businesses. I just recently presented my business idea and plan to the main sponsor, who is also a Real Estate Investor and Mentor. I am a graphic designer with a sports clothing line concept that has a character and silhouette designs. He love my silhouette concepts. I found out in a recent one on one with him that he is also a graphic designer and wants to create a clothing line. The idea and concept that he wants to develop has the same objective as mine. So he is interested in me designing his concept for him and not my concept that I have been working on for 20 years.
    Here is the thing. I want him for a mentor so I plan to offer him concepts for his entire clothing line which will expand several sports markets. As I said this is also the plan I had for clothing concept. But instead of monetary payment I plan to ask him to help me assign and flip my first two houses and remain my mentor.
    Here is the question that I pose to you…if you were this investor would you accept my offer?

    • Phil Pustejovsky says

      No. Why would I teach you to flip houses as well as mentor you in the clothing business? They are two totally different businesses. Furthermore, the two “deals” you have are probably not that good of deals (no offense) because almost no beginners have great deals in their pocket so he would have to throw out those two deals and then start from scratch with you on how to find good deals. Also, keep in mind that EVERYONE has “great ideas”. The difference is that very few people find the time and energy to execute on those ideas. So this “mentor” your talking about who hasn’t launched his own graphic designs and clothing line is a big red flag for me. If he is a true business operator that is successful he would either have already launched it or thrown it out. Be leery of someone who can’t execute.

  30. Michael Williams says

    Hi Phil,

    Have been reading your blogs for a while now. I am about to get into the Real Estate game, I want to start by flipping 7 houses in one year so that I will get good at making deals and dealing with people. I plan to assign those seven properties and then flip to investors. I recently moved to Atlanta from Memphis Tn. I walked away from my house in Memphis-I bought it in 2006 for 60k got a loan Mod 2008 and another in 2011. I still owe 55k but the house appraised for 36k. It is now in per-forclosure. I want this to be my first deal – Is there any creative financing for this situation? If not I will just start over. I am subletting it to a friend for a very small fee and she understands the situation.

    • Phil Pustejovsky says

      Just rent it out for as long as it lasts in pre-foreclosure. Nothing else creative you can do since it is your own property and you can’t profit from that legally. But you can rent it out and collect the rent without making the underlying payment if you want to.

  31. how do you find the investors to sell the house 2

  32. How do you know when if you’re being too cautious, even when you’re run the numbers?

    My sister and I inherited an 885 sq ft. 2/1 condo Stockton, CA, 12 hours’ away from us and in a neighboring state. The assessed valuation is $50k. One sold in May for $53k. Two have been on the market for weeks for $60k and $69,900. I’ve been told by two realtors that it’s difficult to get loans in this complex because there are so many renters. Typical rents are $650. The HOA is $225, but that includes water. The real estate values are expected to rise 9% in that area, but considering how low they are now, that’s not much appreciation.

    Except for what may be an old leak in the shower ceiling from the upstairs unit and a leak under a sink, what’s needed appears to be cosmetic, including carpeting in the bedrooms and living room, and new kitchen countertops because of burns in the formica. The bathroom and guest vanity sinks are chipped, too, and also may need new faucets. Additionally, we’d need a new kitchen sink, faucet, and painting. We’ve had the condo professionally cleaned and are waiting for the repair estimate, but it could be $5-7k. The handyman/project manager, who also has rentals/flips of his own and has worked in this complex previously, said that unfortunately, there’s a 2 of 5 chance in that complex for the renters to trash the place. I own rentals in SoCal, but they’ve been turnkey. I’ve never rehabbed.

    I had looked at buying my sister’s interest and using it as a rental, but now I’m not so sure because of the quality of the area. It would take a large chunk of the money I’d have to work with, as well. My options are: us selling it together, as is (and clearly we wouldn’t get anything near $50k; one local realtor said to ask for $37k); buy my sister’s interest, fix it up, and sell it; my sister and I fixing it up and selling it; or buy out her interest, fix it up, and use it as a rental.

    What would you do?


    • Phil Pustejovsky says

      Not own a condo for long rental purposes. Always a bad idea. Either rehab and flip to a long term investor buyer or flip as is.

      • With these figures, though, would you sell it as is or put a few thousand in there (how much?) and sell it? Holding onto this long-term is off the table.

        BTW: We have a couple of rentals, both in very nice areas and both have property managers. One is a condo. We’ve had absolutely no problem with it over the past year, and the tenant is likely going to stay for a second year. On the other hand, the house has had a few problems. I was reticent about buying a condo for investment, but it’s been the little property that’s keeps paying off.

        • Phil Pustejovsky says

          You would sell to a contractor investor buyer and not ever close, just assign your equitable interest.
          As for your condo, just wait until the HOA does a property-wide assessment of $10,000 each unit for a new roof or whatever. Condos can be a nightmare for long term rentals. The good news is you haven’t hit that wall yet. But it’s coming 🙂

  33. Hey Phil ,
    I’m a resent architecture graduate in the state of New York . It has always been my dream to get into the housing market one day . Ive worked in construction since I was 16 , I’ve done exterior and interior work. I went to school for architecture because I though it was a better education then construction management , but ultimately I want to become a builder. Right now I’m starting an architecture mill work shop in Long Island . I design and fabricate high end cabinetry work . I don’t have a website as of yet but I have a portfolio that I could email to anyone interested . Anyways I seen a few of your videos and your the fist person that’s giving good useful information from what I seen online so far . I think your theory makes seance and at the end of the day we all know secrets to different industries and methods to get things done faster and more cost affective . After I’m done with my investment in my business I’m going to start saving up money for my first project and I would like to find another invest that has experience in the housing marked. Any thoughts or suggestions ?

  34. What I want to know is how you find a 150k home for only 64k… I think that’s more important than how you handle it once you have it…

  35. Hi Phil,

    Thanks for all your amazing videos- you are a great teacher and it’s apparent that you know your stuff and love to teach/share it!
    I have a question: when flipping houses, do you recommend a beginner flipper like myself obtain a realtor license? especially for rehab flips? I ask because I am running into roadblocks when attempting to tour properties without a realtor and I imagine it would save a few bucks on the selling end after a flip. Thanks.


  36. Kofi Adu-Bekoe says

    Phil is right, however how do you find this rehab contractors.

  37. Jimmy Tsang says

    Is your concept of flipping houses equivalent to buying and selling real estate option contracts, similar to playing with stock market options?

    • Phil Pustejovsky says

      Not exactly. Stocks and creative real estate is like comparing apples to oranges. There are so many differences, it’s hard to try to create similarities.

  38. HapsaiGeorge says

    Thanks a lot
    phew i learn a lot …..

    Thanks again………

  39. Scott Wilson says

    If you flip for $10,000 to a contractor you would still have closing costs and some other incidentals right?

  40. Hi Phil,

    This was awesome video. I am new to real estate investing. How can I become one of your mentee?

    Thank you,

  41. Ok so if you go ahead and flip to a contractor and the seller is welling to go down to $60k would you still go through with a hard money loan or it be best to pay out of your pocket?

  42. Kim Melendez says

    If I was to find a contract investor buyer, how would I secure the original property? What type of funding would be the most beneficial? In the example hard money loan was the best.

    • Phil Pustejovsky says

      You secure the original property with a purchase contract with the seller. The funding will depend on how you structure the deal. The best funding is no funding at all.

  43. NickStango says

    If I buy it for $60k and flip it to another investor, how do I avoid closing costs? And if I don’t want to use my own money to buy it, what about the cost of the hard loan? or is this a scenario were i get a contract to buy without using a broker and then just find an investor who will buy the property and make the finders fee so to speak?

    • Phil Pustejovsky says

      You can assign your equitable interest to the new buyer and get your money as a fee at the closing between the original seller and the new buyer.

      • Michael Williams says

        Will you need a buyer lined up before the assignment contract is signed? If not, How much time do you have to find a buyer (investor) to assign my equitable interest?

        • Phil Pustejovsky says

          You do have to line up a buyer. Your length of time is before the closing date on your contract with the sellers.

    • Terrence Tinnin says

      were can I find hard money lenders who doesn’t required a credit check and a down payment?

      • Phil Pustejovsky says

        Most hard money lenders require a down payment until you really build a solid track record. As for credit, most true blue hard money lenders don’t care about the credit score.

  44. Carey Usher says

    First of all, Thank you for posting the information and allowing access to the E books. I”m reading still. I am learning a lot from your book and will read the others. I also read up with others as well. Any information on creative Real Estate is valuable.

  45. Seneca Hampton says

    The video made perfect sense. I am just stuck on one piece: if this was a hard money loan wouldn’t your real profit only be $3,250? Seeing how you still owe him 5% and 15% per year? I just want to make sure I am following, this is good stuff.

    • Phil Pustejovsky says

      Which direction are you referring to? Flipping it to contractor investor buyer or Buying, Renovating and Reselling?

  46. ps – are you a hard money lender?

  47. So do you generally shoot for making $10K per deal? And do you actually buy the house and then sell it to a contractor/investor, or just get it under contract and then assign the contract?
    Thanks for all the great tips!

    • Phil Pustejovsky says

      I don’t have a set amount I am looking to earn. Each deal is different. You save a ton of money by not closing on it, but instead assigning (or selling) your equitable interest.

  48. what are some creative ways to market to retail buyers?

  49. Hi Phil,

    I am really loving this blogs learning a lot. I appreciate what you are doing. Thanks.

  50. EARLhALSTEAD says

    Phil, you are the “bomb”(smile)

  51. Alex J. Franklin says

    Hi Phil,

    Why is it….I have never, ever heard anyone, including Flipping Shows, Tutorials, even you…..ever mention the amount of “TAXES” paid on each deal??? We know that Property, and Transfer Taxes are included in closing cost. But what about Capital Gains, State, ect. Is it no one, I mean no one is paying Tax on flips???

    • Phil Pustejovsky says

      If you earn income, expect to pay income taxes. Whether you are flipping houses, selling cars, performing medical services and/or every other profession, the gov’t is going to take their cut. If you don’t want to pay income taxes, one way to accomplish that is to not earn income.

      • I honestly wish you had this inomrfation and several of your different blogposts in a movie page, do you make many video tutorials? I enjoy most of your main topics and it genuinely demonstrates that you really put a bit of effort into them. It is really nice to at last explore a blog which the writer cares about. Do you allow other sites to use your material? I would love to give you people some credit for your stuff? We would particularly want to include this one if it’s alright. I’ll just bookmark this post in case you can’t find time to get back to me.

  52. I talked to my landlord about this oprtion and she strongly tried to discourage me from going this route, because of the risks. I know that there are risk in anything that we do but is there a way to minimize the risks or avoid them all together? She brought up that sometimes after you get the contract for the house the potential investors pull out for whatever reason, then you are stuck with making a house payment for a home that you dont live in or can do anything with, until you do find a buyer. Another point she brought up, that I did not know about, was that I could buy a house from someone and that house is in the process of being forclosed on. She said that this was against the law. So in this instance I am stuck with a home that I cant sell, I have broken the law, and a list of other things that I could have to deal with. Any help would be appreciated.

    • Phil Pustejovsky says

      Sounds like your Landlord is worried that you may become their next competitor 🙂

      1. Is there a risk in a buyer backing out? Yes! Are there ways to reduce that risk? Yes! Watch my video Biggest House Flipping Mistake.

      2. Stuck with payments? Huh? How do you get stuck making a house payment when you neither agreed to take over the the payments nor do you own the house? Sounds like this person is just trying to make up things to scare you.

      3. Against the law to buy a property from someone in foreclosure? Watch my video, Is Flipping Real Estate Illegal?. Each state is different, but you may want to google “Your State Foreclosure Prevention Act” to double check if there are any special rules to follow when someone is behind on payments. Plus, oftentimes, we do these deals and the person isn’t in a foreclosure situation.

      I hope this helps!

  53. I have been working with people with alot of money and I have expressed my feeling about how it is my dream to buy and sale real estate . I just can not seem to get anyone to help me,so I am going to save until I get enough money.See I ran across a deal that would get me started but I need 15,000 for 2 properties that just need cosmetic .What would you do?

  54. Hi Phil,

    Thank you for a very informative article!

    You said that at the end, even with all of the extra hardship, the investor still used none of his own money. So I was wondering if you could elaborate further on how the funding was stuctured for this particular deal (like the max term and max percentage of ARV allowed). It would be a great knowledge info for starting fix-and-flippers.

    Here are my questions:

    1. How did the investor obtain the extra time and funds needed for the rehab, buyer inspection contingency repairs, and extra 4 months (extra 2 mo. to rehab, 1 mo. to list, and 1 mo. to close) of carrying costs? In many cases HMLs only lend for 6 months with no extensions and will not give you anything above the original % of ARV agreed on.
    2. Did he negotiate a maximum percentage for the loan at 70% of ARV and had the extra draws (above his original $28K rehab estimate) readily available? If the funding was maxed out at 65% of ARV (a more usual norm now), based on investor’s original $150K ARV estimate he would run over the loan amount by $2500, not even counting the extra 4 months of carying costs, and would have to dip into his own reserves, therefore further reducing the $11K profit.
    3. Was he ever in a risk of losing the property to HML due to possibly exceeding the term and/or original amount of the loan?

    It also would be interesting to know if the loan was with interest only monthly payments or a no-payment balloon.

    Thank you in advance,


    • Phil Pustejovsky says

      Hard Money Lenders are more stringent on beginners than those that have been doing successful and profitable deals for a while.
      In the example I provided, the person had done several deals with that Hard Money Lender.
      1. The Hard Money Lender provided weekly draws as work was completed and there was enough of a pad/cushion to cover the monthly payments.
      2. The Hard Money Lender ended up providing draws that slightly exceeded 65%.
      3. No.
      Build a great relationship with a Hard Money Lender and you may be surprised what they will do for you that they won’t do for others…just don’t tell your friends how flexible your hard money lender has become because once you do that, you will have killed the golden goose 🙂

  55. Phil – you really are a good teacher. These videos are so enjoyable I actually laugh out loud sometimes. I can tell you love this. Thanks.

  56. Hmm it seems like your site ate my first comment (it was super long) so I guess I’ll just sum it up what I had written and say, I’m thoroughly enjoying your blog.

    I as well am an aspiring blog blogger but I’m still new to the whole thing. Do you have any tips and hints for first-time blog writers? I’d
    really appreciate it.

    • Phil Pustejovsky says

      Only write about things you really, really, really know well. The problem with the internet is that anyone can post anything, and oftentimes what sounds accurate is completely wrong. So my suggestion is to write less but write about something you are certain.

  57. Great info as always, but where/how do you find the contractor investor? Been tryin’ to find them!

  58. hI Phil…I have a couple of questions… you have to own the house in order to flip it, 2..can i put a pending contract on a house a flip it…and 3..can i sell a house and give the buyer a car when they but. thasnks

    • Phil Pustejovsky says

      1. in most cases, you must at least have equitable interest, not necessarily be the owner of record, which would require you get the deal under contract.
      2. You can put a binding real estate contract on a property and then you may be able to flip it, provided you follow the laws for your state. See my article “Is Flipping Real Estate Illegal”
      3. A car would be considered personal property. Personal property is oftentimes included in the sale of a property. If the buyer is getting a loan, that car wouldn’t be added to the appraisal so you wouldn’t get credit for it but if the buyer is paying all cash, you can raise the price to include the car.
      MOST IMPORTANTLY…get an attorney and ask him these questions.

  59. Hi Phil, The secret of flipping houses is very instructive and i thank you for sharing it with us.

    I am a newbie,how can i become one of your mentee’s

  60. Hi Phil, Excellent blog! I’m learning so much.

    I’m trying to get into the house flipping business and I want to figure out if it’s possible to go into business with my contractor friend who has redone my entire house. How would we split profits? He would like a percentage of what the house sells for but I don’t know how that would work. I would be putting all the money in (inheritance money) and he would be doing all the labor minus subcontracting to an electrician and plumber. He does pretty much everything himself with his workers.

    • Phil Pustejovsky says

      If you are putting in the money, you control the deal completely. DON’T split profits or partner up in any way with a contractor. Instead, once you find the deal, get three bids from three different contractors. Don’t play favorites. Then, whichever one you hire, hold them accountable and assume that everything they say is a lie. Even if it is the truth, at least you’ll take the extra time to verify what they said before taking it at face value. Hiring contractors is NOT for the faint of heart. In most cases I have seen over the past decade, the contractor makes all the money in the deal because they are professionals at sucking all the profit out of the deal.
      On a more important note, most people shouldn’t ever get into the business of hiring contractors for real estate deals at all. Contractors take most newbies to school. ESPECIALLY if your money is coming from an inheritance. If you read this article, hopefully you gathered that buying, fixing up and reselling is usually not as profitable as finding and flipping to a contractor investor buyer.

      • Bob Jackson says

        You hit the nail on the head! Contractors can suck out the profit quicker than dropping 3rd period french. I happen to do my deals with all my cash or I buy down the loan amount by at least a 20 percent down payment.The banks want that for investors. I do 95 percent of all the work. When I see something that I cannot tackle I have a contractor friend who I pay and we both are happy.
        Your stuff is on the money and each evening I sit and listen to you to see if I can improve on any topic.

        I have a saying that you make all your money on the buy. I find that is so true. One tip for anybody is: do not buy into the hype about making money flipping houses from some TV show because they are nonsense. I could talk for hours on how much bull crap the shows are. Two trips to Home Depot does not make you a contractor. LOL

        Keep up the good stuff and I will see you each evening.


        Bob Jackson

  61. Great article. Where can I find hard money lenders like the one in this story?

    • Phil Pustejovsky says

      Great question. My team has painstakingly developed relationships with the top hard money lenders in this country over the past decade and for those in my apprentice program, when they have a deal that fits for hard Money, we introduce them to the appropriate hard money lender. There used to be nationwide hard money lenders in the real estate boom but they all went bust. The ones that survived were the local or regional folks. These days, Hard Money lenders are extremely picky on who they work with. Ultimately, the biggest issue they deal with is uneducated investors. They abhor ignorant investors because they don’t ever want to foreclose, they want to easily collect their interest and deal with good people who have their act together. Ironically, they rarely have an issue with “having enough deals.” Hard Money lenders know there are deals everywhere. The far more rare jewel is a wise and intelligent real estate investor to work with. Since many of our students are new in the real estate game, we bridge that knowledge gap for them and our students can borrow our relationships. Basically, our hard money contacts know that if my team and I have vetted the deal and will be available with any questions, they are far more comfortable. I hope this helps answer your question.

  62. Jonathan Arguello says

    This article is Simplistic Genius! Thank you for the great tip. I was wondering: How would one get in touch with multiple “contractor-investor-buyer”?

    Thanks again,
    Jonathan A.

  63. Denise Violetta says

    Another great article, Phil! You’ve hit the nail on the head on that subject for sure.

  64. Chris Basker says

    I am getting out of the military this month. I have no experience with flipping houses this way. I just know the physical work. I will have some money to start with but not enough to buy an entire house without a loan. What is the best way for to start?

    • Phil Pustejovsky says

      Thank you for serving our country and protecting the freedoms so many take for granted.
      In order to begin in real estate investing when you have little to no money or credit, you want to take the Creative Investing Approach.
      Check out this article, Creative Real Estate vs. Traditional Investing

      • Michael Lee says

        Michael Lee. I graduated with real estate business degree, with honors. I need help , I graduated back in 1980. I live in Dalls county.

    • Jeff Sampson says

      Hard money is the easiest if your in the right area for the loans while hard money can be difficult to find when you find a good source stick with them. I am a professional contractor and finding money is tough

      • I want to be the hard money lender but have no idea how to find responsible experienced flippers. How do you find them?

        • Phil Pustejovsky says

          I create them. I hard money lend to the people I have mentored. The biggest issue that all hard money lenders have is working with experienced investors who know what they are doing.

  65. Richard Woodford says

    Thank you for the information and sacrifices you made to attain it.

  66. Great topic. I love your enthusiastic way of teaching!

  67. Tracy Edwards says

    This is an exceptional article. Many people do not realize the significance and the time taken to rehab a home and as mentioned, 99.9% of the time it runs over and cost even more than you ever anticipated as the article clearly illustrates. I will certainly add pre-habbing to my arsenal of real estate knowledge In order to keep my profits moving and my costs as low as possible. As always thank you for enlightening and usable information from those that are working in the trenches.

  68. What a wonderful idea……I’ve seen so many fix and flips/buy and holds, etc. but hadn’t looked at contractors like that before. Thank You!

  69. 100% agree with this article. I have rehab and pre-have many properties, and by far the pre-hab is the best investment bar none. By merely emptying a home, basic repairs, and doing some basic landscaping I have made the most efficient profits. Once I have done this I can find investors who are willing to pay more money now that they can see what needs to be done. There are way too many houses to buy that are rundown and filthy that creates opportunities for investors. Good luck

  70. Ilya kosenkov says

    Phil Pustejovski’s blog is the best!!!

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