Horror House Flip

[Sherylyn Holden]

My husband does some flips with a partner. I handle our STRs mostly, but working with him on purchasing and selling his flips has been a great experience. There are so many strategies for real estate and ways to succeed that anyone can find their own path to success.

Anyone can (and almost assuredly WILL) have a bad deal. It’s not an if but a when. Well he had his when recently and after 6 years in real estate I suppose it was due.

Let’s dive into the specs:

Area: San Antonio, TX - Woodlawn Lake area (Historic District)

Layout: 3/2 Main house with converted attic loft + two 1/1 ADUs

Purchase: $260k in September 2024 with HELOC and hard money

Sale: $420k in December 2025

Rehab: $100k budget > $170k actual

Hold Time: 15 months > $60k in hard money loan holding costs (interest only payments)

The rehab: 

This was a full gut remodel. New foundation, electric, plumbing, knocked down some walls, the whole nine yards! He used a HELOC for the down payment and closing costs and a hard money loan for the rest. Things went awry and he had to start using credit cards, took out a personal loan, and pulled from our IRAs to keep this afloat through the sale. Not fun!

The issues:

ADU - The home has 2 adjoined 1/1 ADUs in the back. But come to find out that the area was not zoned for that so we had to knock down the wall adjoining them and turned it into a 2/1 ADU.

Historic District - This was harder than anticipated. Almost every repair required not only a permit but a Certificate of Appropriateness from the Historic District. And some repairs weren’t allowed! For example, we couldn’t replace the windows with anything other than wood frame windows?? Time consuming.

Timing - With the ADU changes, we had to move the gas meter. Working with the utility company and with it being in a historic district resulted in this taking almost 5 months. This along with the rehab delays was tough.

Market - When we listed the home the market had cooled quite a bit and so it sat for months. We eventually listed it on Airbnb to try and garner some revenue while waiting for it to sell.

Why I think this failed:

This was a HUGE remodel with many major systems being changed. My husband didn’t have the time to manage a project of this scale. Being honest with your time and experience level is important.

He had rosy colored glasses when it came to the ARV and was using a higher end ARV. It was really hard to comp this home given it was so unique with the converted loft upstairs, the ADU in the back, etc. It took a very special and uncommon buyer to come along. Unique homes are hard to sell. He learned to stick with homes with the biggest buyer pools.

The delays and timing wrecked this. It is hard enough to flip when you do the rehab quickly to anticipate market conditions changing. When a flip takes this long you have no idea what the market will look like. Moreover, the hard money loan holding costs were brutal. Be quick and be methodical. Time is money!

At the end of the day. It was a beautiful home. It appraised for $455k but he got an offer and decided to sell at $420k and move on. I’m likely missing some costs but we easily lost $150k on this deal. But we both learned a ton! It’s the losers that shape you. I know we will do more flips in the future and be able to use this knowledge to minimize our risk.

[Drew Sygit]

Just imagine if you'd been trying to flip remotely!

So many newbies think they can rehab remotely to flip or rent and are clueless about reality.