Investor · Thornton, CO · Member since 2013 · 22 posts · 2 votes
Hi Everyone, I am brand new to BP and Real Estate Investing in general. My main focus at this point is long term rentals (I signed my very first rental lease agreement 2 weeks ago), but I will likely try to do some flips to help fund future long term rentals.
My question is that you see these shows (and I realize they don't show all the details of what flipping a house really entails), and they just KNOW that they can take this wall down or add this feature or that feature.
I was hoping someone would have great blogs or books or forums that would help teach me to see what a property "could be" and to find vision.
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
13y
(Just my opinion), but be careful about this. I run into people on a regular basis that tell me that they would "love" to rehab and flip houses. In reality, what they would really "love" to do is to be an interior decorator. And they have gotten the two professions confused. If you go into flipping with the mindset of an upscale decorator, you may find yourself losing money instead of making it.
For whatever reason, it seems that women are more likely to fall into this trap. I can see it in their eyes and hear it in their voice when they tell me that they would "love" to flip houses. For the men, the trap that they tend to fall into is "doing the work themselves".
Now, can you make money by making houses "pretty" and "adorable"? And can you make money by doing the work yourself? Yes to both. But be careful. Stay focused on the numbers. Think of the house as an Excel spreadsheet instead of a canvas. Think of yourself as a spec-home builder instead of a custom home builder.
Before you ever make the offer, determine what needs to be done to bring the house up to the quality and design of similar homes in the neighborhood - maybe a little nicer. Then back-out your purchase price based on a conservative ARV of the neighborhood. Don't expect to sale a 150,000 house in a 150,000 neighborhood for 300,000 because you have added gold-plated fixtures, ivory countertops, etc. But hey, if you can get it cheap enough that you can install some gold-cover stuff and still list it for 149,000, then go ahead. But, the TV shows are not very much like real life in my opinion. At least not like my business.
Angela S.,
First, welcome to the Best Real Estate Forum on the Net.
J Scott, a very frequent contributor to this site, has his own site:
http://www.123flip.com/ It is loaded with information, it should be of great help to you.
As far as moving walls, adding features, etc., I can't be of any help to you with that.
Rockford, IL · Member since 2013 · 330 posts · 62 votes
13y
It basically comes down to knowing the end market (i.e. your potential buyer). If you do not know what the buyers are looking for, check other homes that have been rehabbed and are for sale in the area. Or assuming you are working with a realtor tell him/her of your plan and ask them. They should know what sells and what doesn't. Don't make a promise but indicate you would be open to list the house for resale with them after improvements.
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
13y
(Just my opinion), but be careful about this. I run into people on a regular basis that tell me that they would "love" to rehab and flip houses. In reality, what they would really "love" to do is to be an interior decorator. And they have gotten the two professions confused. If you go into flipping with the mindset of an upscale decorator, you may find yourself losing money instead of making it.
For whatever reason, it seems that women are more likely to fall into this trap. I can see it in their eyes and hear it in their voice when they tell me that they would "love" to flip houses. For the men, the trap that they tend to fall into is "doing the work themselves".
Now, can you make money by making houses "pretty" and "adorable"? And can you make money by doing the work yourself? Yes to both. But be careful. Stay focused on the numbers. Think of the house as an Excel spreadsheet instead of a canvas. Think of yourself as a spec-home builder instead of a custom home builder.
Before you ever make the offer, determine what needs to be done to bring the house up to the quality and design of similar homes in the neighborhood - maybe a little nicer. Then back-out your purchase price based on a conservative ARV of the neighborhood. Don't expect to sale a 150,000 house in a 150,000 neighborhood for 300,000 because you have added gold-plated fixtures, ivory countertops, etc. But hey, if you can get it cheap enough that you can install some gold-cover stuff and still list it for 149,000, then go ahead. But, the TV shows are not very much like real life in my opinion. At least not like my business.
Investor · Thornton, CO · Member since 2013 · 22 posts · 2 votes
13y
Bryan L. - that is some great advice too, and thank you.
I think you're 100% right as I start down this road, I am excited to pick all the finishes and my husband is interested in doing all the work, so you have that nailed. I am really trying to educate myself as much as I can to help us find middle ground in both directions.
One saving grace (but also could potentially be a problem) is that I am a 100% type 'a' accounting professional. I money pinch and save like nobody's business, and although love nice things, I am big on not splurging on much of anything. I always tend to think that 'cheaper the better.' This ends up going the other direction of your "gold plated fixtures" unfortunately, and is where I may fall victim to not putting the money where it's needed to really WOW a buyer upon entering the home.
But thanks to folks like you all I am learning (slowly) but still learning for sure.
Joshua Dorkin thank you for building this site, I don't think I would have tried to go any further with REI than just 'dream' about how I wish I could do something like that someday. Today is my Someday!