10 Lessons Learned From 5 Years of Flipping Houses
Whenever you hit major milestones in your business, it’s hard not to look back at where you started and how much you have grown along your journey. While we already do weekly and monthly update meetings and then a yearly review, when we hit the five-year mark of our flipping business, I decided to take a look back at our entire portfolio.
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Even with all of our construction experience and after reading dozens of books and articles on the subject, we had no idea what we didn’t know. To this day, we learn something new with every house we buy.
With that in mind, I made a list of lessons learned over the years that have now become part of our systems. Below are 10 of those lessons that I think could help others when they are flipping houses.
10 Tips for Fix & Flippers From a House Flipping Veteran
1. Mind the Double Line
When we read the feedback on a showing from one of our houses, all that the agent said was “Not Interested. Double Line.” At first, we had no idea what she was talking about; then, we realized that the road in front of the house had a double yellow divider line.
In our area, roads in neighborhoods have no divider line, roads in residential areas have single divider lines, and busier roads have double divider lines. This agent’s “double line” comment was informing us that her client would never buy a house on a busy road.
In our experience, sale prices can be affected by approximately 10 percent when they are located on busy roads. Further, it drastically limits your pool of buyers. To this effect, whenever we buy houses on busy roads, we factor in a lower ARV and a longer hold.
2. The Profit Is in the Follow-Up
In our second year of business, we acquired a property solely due to our follow-up. According to the listing, the house had a failed septic and needed stucco remediation. Through our follow-up, we found out that the homeowners replaced the septic and remediated the stucco after the property was initially listed and our original offer was submitted.
Fortunately for us, the listing was never updated, nor was the property’s price adjusted. We increased our offer by a few thousand dollars, and we ended up getting the house.
3. No Looky Loos
We no longer let future buyers in our houses before it’s ready. Ever.
There is always a story as to why they need to see it early, and it is always convincing. The truth is that, most of the time, it is just an agent trying to show their clients that they are working extra hard by finding them houses that aren’t even listed yet. Not only is it a liability, but also buyers looking for a renovated home do not have the vision for the completed project that you do.
We have not had a single early looker translate into a sale. In fact, we even had a buyer look early, say no, then come back when it was completed and buy the house. People do not know what they want until you show it to them.
4. Howdy Neighbor
Good or bad, neighbors can have a huge impact on your project. We always introduce ourselves when we buy a house and give all the neighbors our contact information.
Everyone has heard plenty of neighbor horror stories, but they can also help you out. We had one neighbor spot a potential theft and call the police at 2 a.m. Because of that neighbor, nothing was taken.
We redesigned our original layout to mirror another house on the block when a neighbor showed us their recent renovation. When we purchased a twin house, we asked the neighbor if they were interested in painting their exterior, as it would be cheaper if we did it together. They said yes—even though we were prepared to pay for it for them. 🙂
A little friendliness can go a long way.
While Zillow can be a great tool for quick lookups and they are getting better every day, you can’t always rely on their Zestimate. We bought a house for $235K, and Zillow valued it just over $300K. After our renovation, the house sold in less than a week for over $540K.
Sometimes the best deals are found when you are paying attention to the surrounding market and catch something before Zillow does.
6. Inspect This
Like most flippers, I am not a huge fan of inspectors. It is a crazy, unregulated profession with absolutely no accountability. That being said, they are just trying to do their job (or seem like it) and get paid.
The more items they are able to put in the report, the more it seems like they did a good job. No one would accept a blank inspection report that says the house is perfect. So, why make the inspector work harder than they have to to find problems?
We like to leave a bunch of unfinished, easy-to-fix items for the inspector to find. We especially like code violations that no home buyer would notice but are super easy to fix. Inspectors LOVE their code violations; it makes them feel smart. Some missing caulk in the bathroom, no anti-tip device on the stove—anything that takes a couple minutes to complete.
Want to take it one step further? We even leave a list of the items we have yet to complete for the inspector, so they can include them on their report.
7. Beware of Shiny Objects
It is always safer to stick to the original plan. I know that earlier I mentioned we changed the layout of a house after talking to the neighbor. But nine times out of 10, when you deviate, it does not end well.
If you bought the house and did not plan on finishing the basement, then do not decide to do it halfway through. Making changes usually ends up costing more money and delays the overall project. You will not always get that extra premium you think you will, and a cheaper house sells quicker anyway.
8. Always Submit
Here is where your agent is going to hate you, so you might have to get your license after this. No matter how ridiculous the price, always submit the offer. I looked at a house last week that was $350K; I offered $135.
Years ago, we went to see a house that was listed for $499K. It was outdated but in decent shape, so an end-buyer could have easily moved right in. It was only on the market a week, so we debated whether it was worth even making an offer. But the listing agent insisted. We offered $315K, and they accepted.
9. Talk the Talk
Brandon Turner preaches to always tell people what you do, but I will take this a step further: Make yourself memorable. I have an advantage in that department, since there are not many young women in the construction field—especially who partnered with their father.
We also branded our company with a catchy name, HouseItLook, so even the company name is explicit. We once received a lead on a property that translated into a purchase, just because someone remembered our name from a previous transaction.
You will be shocked how many people know somebody who knows somebody who just inherited a property. If you can hand them your card (you have one right?) and your card sends them to your website (you have one of those, too, right?), you might just be able to sneak to the top of the line before those pesky agent sharks start circling.
10. Seasonal Depression
When we first started out, we understood that markets were slower during the winter, but we did not grasp how much of a factor it is. In our area, school districts are paramount, so most families are looking to be in their new house by summer. That coupled with the beginning of nice weather, springtime usually sees the most buying activity.
What we did not understand was the other negative factors that wintertime magnifies. A steep driveway will seem even steeper in the winter (as people will think of plowing snow or driving up it while icy). A next-door neighbor will seem a little bit closer with no leaves on the trees, and a highway that seemed miles away in summertime is all of a sudden much more noticeable.
If you can help it, try and get your house on the market before all of these issues pop up. But if you can’t help it, plan for a longer hold and more price drops.
The Bottom Line
This list is just scratching the surface of all the “growth opportunities” we have had over the years. Every day we are learning something new, and our business is better off for it. The biggest challenge we face today is not overlooking our past experiences in order to make the numbers on a deal work.
As the market bubbles up and deals become more scarce, it is more important than ever to continue learning from our past so that we are still in business in the future!
Do you have any additional nuggets of wisdom to add?