How was your first flip like?

Question

If you guys remember how your first flip was like, did you run into any surprises? was there anything you wished you knew earlier? what was the biggest lesson? I am starting out myself and i am hoping to know what to expect on my first flip. Thanks

Scott E. · Answer

A few lessons from my first flip...

1. Having a good general contractor saved the day. It was a gut renovation and he guided me through the ENTIRE process. This was huge because I went into it with zero construction experience.

2. I should have hired a designer. The finishes were hideous. The house ended up brown on brown on brown on brown. I thought I was being conservative.

3. Having a good real estate agent also saved the day. The agent who helped me find the deal was also the agent who helped me sell the deal when I was done. I ran my underwriting by her before I even bought the property to make sure she had confidence in my ARV.

4. Pay attention to the neighbors before you buy. You can fix the house you bought but you can't fix the neighbors. My neighbor had a huge RV parked in his back yard. Real nice guy, but the RV was an eyesore when you were in my back yard. This came up a lot when I was trying to sell the place.

David Ramirez · Answer

My first flip was a rollercoaster ride! Here's what I learned: Don't mess with the layout or add any square footage because getting permits can be a hassle and it's hard to budget for. Plus, there's always some unexpected stuff that pops up, so make sure to budget at least 15% for miscellaneous expenses. And when it comes to contractors, get multiple quotes and don't pay too much upfront. Keep on their case and communicate well to avoid any issues. Hope this helps you out!

Larry Turowski · Answer

@Alazar Wubet I remember my first flip vividly. It was a fairly low risk deal in therms of investment, a mostly cosmetic flip about an hour from me.

I definitely lucked out in finding a contractor who was honest and did a nice job.

I bought the house in the winter but didn’t close until the beginning of spring. When I went out after closing, for sale signed had popped up everywhere!  Yikes!  It was in a depressed area and worse than I thought. I definitely started worrying.

My biggest lessons were 1) rehabs take longer than planned. This has consistently held true. I plan for it now but even doubling the time to finish I get from my contractors is often still not enough. 2) leave some margin for unexpected repairs. I did, fortunately, and definitely did have a couple of unexpected items outside my scope of work. 3) visit often to check on progress.

I was fortunate and it turned out well even if it took 3 or 4 months longer than expected. I’ve had others, even just recently that haven’t turned out great or that I’ve even lost money on. Don’t put all your eggs in one basket. But do something. The experience is worth a lot. I’m at the point now where I can ballpark my rehab costs and make an offer in 10 minutes of looking at a property.

Annette Hibbler · Answer

Our first flip was a HUD house back in 2011. Major damage to second floor do to fire. Whole house needed remodel. 3BD/2BA 1200 sf house in a C+ neighborhood. We used contractors for the major stuff, then a "handyman" for cosmetic repairs we didn't know how to handle ourselves. Never trust a contractor you don't already have a long history with. Lessons we learned:

1. Always get 3 quotes. Choose the middle one. Make sure deadlines and expectations are in writing! Get an itemized list at all times. None negotiable!

2. Always show up at unexpected times to check work and progress. I caught one handyman in a boldface lie. I went to the property in the AM and no one was there. I suspected the guy was charging us but not showing up since I couldn't see any progress for several days prior. When I arrived, no sign of him. So I called him and asked how the work was going. He said he was at the property working hard and making good progress. I again asked him, "oh, you're at the property now?" He totally lied to me over the phone. I waited for him at the house and the moment he showed up, I stayed there and made sure he put in a full days work then fired him at the end of the day.

3. Always at 10-15% in your budget for extras.

4. Learn to roll with the punches. There's always going to be something you didn't expect come up. It's just the nature of the game.

5. Stage the first level of the house and the front exterior. First impressions really do count! Homebuyers emotions are a huge factor in selling a house. I took some furnishings from my own house and bought a few more items at discount stores. I used these furnishings again, and again for staging other flips. Visit sites like Houzz.com and sold properties on Zillow for inspiration.

6. Pay attention to the details! Homebuyers ALWAYS notice the details.

7. Pay a professional painter for main living areas. Use one neutral color for the whole house. Typically, we use Benjamin Moore colors "Modern Gray" with a contrasting warm white color for ceilings. Modern Gray looks really nice against medium or dark wood trim, cabinetry and flooring. Avoid paint colors such as blues, purples, reds, yellows in kitchen and living areas. Never settle for plain white walls throughout the house. That screams "amateur" like nothing else.

8. Always remind yourself, it's not your house! You're not living in it so your personal tastes don't come into play here.

9. Take note at what is selling in the neighborhood. Look at homes that sold in the last 6-12 months. What do the interiors look like? Take note of the layout (open plan?), wall colors, etc. Look at the finishes, lights, faucets, etc.

10. Design the house to be in keeping with the neighborhood. Paying for luxury finishes in a blue collar neighborhood is a recipe for disaster and you'll loose your shirt in the process. Keep the homebuyer's budget and expectations in mind at all times.

We chose much of our cabinetry for kitchen and baths from IKEA. They have many beautiful cabinet finishes and their showrooms can give you some great ideas to conserve space. The cabinets are well made and look high end without the high end prices.

Ryan Klamer · Answer

My first flip:  oh it was glorious and tough.  Everything took longer than expected.  I figured I could work from sun up to sun down and remodel the house in a month 🤦‍♂️.

Our first flip was a home I bought in 2020 for $175k.  We stayed there for 2 years realized we had a ton of equity in the home like most others and decided it was time to sell.  We as in my wife, 4 kids, and 3 dogs and our partridge in a pear tree.  [jk about the partridge].

So the first month I spent moving our stuff out of the house.  60% of our stuff went to marketplace, goodwill, or the dump.  The other 40% went to either storage or our in laws where we were going to stay for awhile until we got into the next one.  Everyday with a truck and trailer I unloaded our 2600 sQ ft 4 bed home one piece at a time and after a month it was done. Next step was to get some help from the contractors.  First we fixed a lot of damage on the roof from where a tree hit.  Then the gutters.  Then we had lvp flooring put down over our existing flooring where there was water damage.  We painted every wall nook and cranny.  Scrubbed the house from top to bottom.  I’m sure there was some stuff I left out but you get the point we got the house looking good again.

This all took about another month with proper scheduling and elbow grease. Next we needed to start talking with a broker.  We were looking to get 300k out of our home.  This next part is important because this is where I made a crucial mistake.  We spoke to our broker they gave us a CMA [Comparative Market Analysis] for those who don’t know the jargon.  It’s basically a brokers opinion of the value of your home compared to active listings and closed listings that are comparable to your property.

Like most homeowners I thought my home was worth more than it was and did not like my brokers CMA.  My broker suggested I put my home around 265k and bid up from there.  That was the important part. I did not want to bid up because I did not understand what that truly meant for us as homeowners.  I thought it meant we were under selling our home and after we had put so much work into it.  It was a tough pill to swallow so I spit it out.

I wish I would have done it this way because what I did hurt me more than it helped me.  I did not like my broker or their CMA not to mention they spent 30 minutes at the property and I could not get them to come back so I also didn’t think they were that interested in helping list my home.  I called another Broker we will call them broker B.  Broker B brought me a CMA that was almost identical to Broker As CMA the only difference was broker B was going to let me list at the price I wanted the 300k.  Not just that Broker B spent hours talking with me on the first visit and told me we would be sold within a week or 2 so they were it for me.  Woohoo I had won right!? Keep reading and find out.

We got pictures taken and went live to list the home at 300k.  We got lots of showings the first 2 weeks which was exciting right?  But no offers.  Another 2 weeks went by more showings! No offers.  For those of you who might not know when a home is getting a lot of showings and no offers it generally means the home is overpriced which it was.  Now I should also mention that I had all of my money tied up in this house and was about one month behind on all of my bills just to help understand the stress and foolishness of my situation at the time.

We reduced the price to $275,000 only 10k above what broker A had said and After 1 month on the market we finally had one offer.  We accepted and got under contract thank goodness right!  The buyer tried to pull out of the contract 2 times and the only way we could keep them was by covering their closing costs.  That’s what happens when you don’t have many offers and your house is sitting on the market you lose value and negotiating power.

Closing was delayed a few times and after one month moving stuff out another month remodeling one month sitting on the market and another month and a half being under contract we got to that closing table at 275k paying 10k in the buyers closing costs.  And we were very close to 3 months behind on all our bills.  If we would have done what broker A suggested and listed at 265k we would have had many more offers way more negotiating power and probably would have gone to at least 285k and paid no closing costs to the buyer not to mention close at least a month faster.

That’s my first flip story sorry it was long but it is truly what happened and is my experience and I hope that it was helpful to anyone who read it.

Thanks

How was your first flip like?

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