Flipping homes

I agree with the article. We look for a house below market in obvious need of work in a good neighborhood. Working on our first one now.

FS

Good article I've been rehabbing house for many years. Just a note of caution to the investors going this route,make sure you check everything. Up north where we get very cool weather,the banks let the power get turned off and then the water pipes freeze. When they thaw out the water destroys everything,drywall,floors,and more. So if you can have a contractor check it out with you,save yourself future headaches.

Flipping houses isn't easy. you have to make sure you have someone that knows about repairs, to get a good repairs cost. Don't spend all the money you make on bills yet!

Yes, it can be a challenge, but that's why we get paid the Big Bucks!! Right?!

DC when we can find them, the banks around here are still in a holding pattern with releasing the REOs.

Jill & I have been flipping houses for 10 years, since we move to Fl. in 2001. These have all been basic rehabs, whether bought from banks or private sellers listed in the MLS. They have had kitchen replacements consisting of new cabinets, counters, appliances, flooring, plumbing & lighting fixtures; new bathrooms consisting of vanities, toilets, flooring, re-glazing tubs, medicine cabinets etc. New paint & carpet. These products purchased at Lowe's or Home Depot run 7K to 10K. We do our own labor/installation. Of course if the house needs a new roof or central A/C we have that installed by a licensed contractor.
Normal return on our investment is 20% to 55%.

They are holding here also, but I've been able to find a few that are about to come on the market. I've currently been getting in faster than everyone else and getting accepted. I've just closed 2 with the same lender within 18 days, so I'm trying to build a rep with that lender now. I want it to be that when they see my name, they know that I'll buy cheap, but that property will be gone. I've been also sending messages to the asset manager, just basically letting her know that if they give me a great price, I'll take a lot of them off her hands in this area.... It worked on # 2. So I'll keep using it.

@ Gary: I see that you're pretty much doing the same thing to each property. Are you basically using the same colors,counters,carpet etc? I saw a "guru" suggesting that. I thought it sounded good and working on it myself, but figured I ask a veteran. Of course, I know that some properties will just require different things, but wondering about your basics..

DC I have been doing the same thing for many years,and Gary is doing it the right way. I aways put new kitchen and bathrooms in it makes a big difference when you sell it.

I keep all the colors the same in each house.I do buy all my paint from Sherwin Williams its better paint and they keep a record of everything you buy, which is real good if you are renting and you need to freshen up a house with out repainting everything.Just have them put the address on your orders. Pro-mar 200 is the best deal and great paint.

Thanks Jim!! I'm taking notes!!

Now are you guys getting your cabinets from Home Depot also or do you order them from somewhere. I know an investor here that uses a company, just in case something happens with them. He says if they are installing, then they pay for damage. I was thinking that it would still be cheaper if I did it and just pay for another section if something gets dropped.

I'm thinking that I should probably put this on the save 25% thread. I'll copy and paste it over there..

Yes most of the rehabs have the same cabinets, appliances, paint & carpet colors. Sometimes we'll vary depending on the property values. We usually buy kitchen cabinets from Lowe's, off the shelf & assembled. They have a nice selection & sizes. The great thing about Lowe's or Home Depot is you can get 10% off coupons & buy everything at once(coupon good up to 5K of materials) &
they even offer 12 to 18 months interest-free financing ... this way you can have the property sold before to materials are even due.

Thanks Gary. Didn't think of the interest free financing.. May have to explore that one.

It's also very easy to get additional 10% coupons for Lowe's. Just go to the post office & ask for a change of address kit, inside is always one for Lowe's. If it's the same person at the post office I ask on behalf of my tenant. Also keep in mind that Home Depot & Lowe's accept each other's coupons or promotions. This helps keep the material costs down.

I didn't know that, gc. So, if a good cordless drill is on sale at HD for $60, I could get it at Lowes for the same price?

I have to say i'm not sold on that.

A house that is ugly and distressed and not sold is sitting there for a reason; its ugly.

And if you buy it and fixed it up, you still bought an ugly house that might not still sell.

Its like the old saying "you can put syrup on hsit, that don't make it pancakes"

To each their own

I will buy the ugly house in a nice area only if it has the potential to be made into the nicest house in the area. This consists of knowing exactly what it needs to bring it to that level, buying right, and not exceeding your repair estimates.
It has to be the right ugly house or like Elix said, you are just stuck with an ugly house!

Michael Mangham
MD Home Acquisitions LLC

Anyone knows this is the way to go. The nice houses around it will bring up your value once the rehab is finished. And you can't say it will always be the ugly house, that's the whole point of rehabbing is to improve it, anything can be fixed you just have to make sure your calculations are correct and that you get it for the right price. Also if it's in a desirable area people will want to be there just for the area. You can fix the house, you can't fix the area.

Just my opinion.
(If you don't mind)
If your renting it and can make it somewhat pleasing, okay great. If trying to resell/flip it without an easy low cost design change to make it a charmer you still have ugly and ugly payments you had no business eating for some time because it is just a prettier ugly, but none-the-less ugly house. Vandals tend to pick on those ugly places especially after they've been fixed, a reality of life. Word adaptation definition should be a charmer that needs TLC. Now one of those that can be brought back to life, yes!!

I agree. I wouldn't buy an ugly house cause the word is out there it is an ugly house and was hard to sell.

Mary

If you know what your doing they don't stay ugly, and you got it for a great price.

If the price is right, the property looks good & is sound, you can sell it.
I'm no expert, but the sales of our last 30 houses cleared over $ 600,000 so we must have done something right.

You guys sure did , great and heres to another 30.

I just did a very ugly house that would not sell priced $80,000 under market! It stayed there with every one knowing it was the ugliest house in the entire area for over 120 days! Realtors gave up showing it etc. That is when I (as an INVESTOR) bought it for $120,000 under market. You will NEVER get that kind of margin on a pretty, move in or light remodel property!! I put $50,000 into it and had it sold in less than 90 days after I closed on it. After commissions, closing costs, vacant property insurance(in case there is any trouble)No vandals came around because it used to be ugly but I had insurance just in case. Anyway, net profit of $45,000. Darn old ugly house! Now the neighbors love me!!
Oh and by the way, my buyer had no idea it used to be an ugly house and would not have cared anyway because it is now the nicest house in the area at the best price.
As Gary said, you just have to know what you are doing.
Also to top it off, these are the properties my investor/buyers are looking for. It just has to be the right ugly house!

Michael Mangham
MD Home Acquisitions LLC

Right On ! Great job !

No mas......no mas

You crack me up. I respect your opinion 100%

Michael Mangham
MD Home Acquisitions LLC

Ugly house in a bad area bad deal. Ugly house in a great area great deal.

Steve.