I've been flipping houses for 10 years now. It was April 2005, when I made a career change from being an executive recruiter to flipping houses. It took another two year to learn how to make a living at it. I cannot begin to tell you how much I've learned in these last 10 years.As a country, we've had the most devastating housing crash since the Great Depression. It's been a journey with ups and downs, but I can honestly say the relationships I've made along the way (whether it be a seller, a buyer, a neighbor, a realtor, a subcontractor or anyone else who has come into the fold) have been the most pleasurable part of the entire experience.
What is Flipping?
House flipping is when a person buys a property that needs repairs, remodels the entire thing and then it's time to sell the house. Many of us have enjoyed all of the cable shows that depict the design aspect of how to flip houses. I've always said that these shows don't portray the whole story. So much more than that goes into flipping a house. It takes hard work, lots of money, time, skill and patience. Even with all of that, we are at still at the whim of the housing market.
Finding the Right House
Ultimately, it's about finding the right house. I find joy when I hear people's positive comments during one of our open houses. I've enjoyed seeing buyers walk through the house and be inspired by the remodeling, whether it's the tile choices, the color schemes or the finished hardware. But, a flip isn't just about picking the right tile. It starts with finding the right house, developing the right budget, hiring the right contractors, staging and going through the resale process.
Evaluating a Property
Before I decide to buy a property, I have to evaluate the property's value after it's been remodeled and is ready to be put back on the market. And there are many questions that must be asked.
- How long is it going to take for escrow to close?
- What will be the be the carrying costs during that time?
- What's the worst case scenario?
- What repairs need to be made?
- How much will unknown repairs cost?
- What types of materials do buyers in this neighborhood like?
- What is the contingency plan if the real estate market starts to soften?
One of the biggest lessons to be learned is that you have to buy the property at the right price or you cannot build a business properly. I know that I have lost my share of thousands of dollars by not working on the numbers properly. It's hard to sell a house!
I never take shortcuts when I'm remodeling a house. I want the buyers to always feel as though it was remodeled by someone who thought of themselves living in it. And in this day and age, you also have to do everything to code. That means pulling the appropriate permits and doing everything the right way. There's no sense in trying to cut corners, it will only come back to bite you. Besides it's the right thing to do in the first place.
Value to the Seller
And I think with all of that being said, that is where the value comes to the seller, as well. Buying a house that may need repairs is appealing to me, but not to most people. For many sellers, not having to do any of the repairs and knowing that the sale is going to go through is the best value of all. The work, money, time and coordination that goes into fixing a house can be overwhelming, even for someone who has remodeled 50 houses like me. You never know what's going to happen during the process. The worst thing that can happen is running out of money and not being able to finish.
Even with that being said, it has to work for both sides. The seller has to feel right about the sale, especially the price. Selling a house is a big deal and I treat it as such. I can't tell you how fortunate I am to have met all the homeowners during this last decade who have welcomed me into their homes, showed me around and shared it with me all they knew about their house. It's been a pleasure working with so many wonderful people and I have enjoyed bringing a level of competence and professionalism to allow them to feel good about the sale.