You can’t polish a turd. That’s what my Dad said to me. On prom night. Gee, thanks Dad.
One thing I’ve learned from being in the fix and flip business is that you may not be able to polish a turd but you can put lipstick on a pig. And in certain cases some extremely expensive mascara and cover-up.
Currently, I have six houses on the books, three of which are in escrow. The other three are active on the multiple listing service. The acquisition price for each of these properties ranges from $140,000 to $486,000. My rehab costs vary too, from $14,000 to $48,000.
The three houses I have in escrow cost me the least to buy, and remodel:
- 37th – Purchase price $140,000, $23,000 in repairs
- Melinda – Purchase price $184,000, $15,000 in repairs
- Gemini – Purchase price $278,000, $15,000 in repairs
And two of the three active listings I have cost me the most to buy, and fix up:
- Frye – Purchase price $340,000, $37,000 in repairs
- Cosmos – Purchase price $486,000, $48,000 in repairs.
So by now you’re probably thinking that I’ll make more money on the higher end flips right? I mean that’s what I thought. Well, three price drops and 44 days later I’m looking at a loss on both of these deals.
And the three lower-priced deals that I have in escrow? Together they will net me the highest return on investment I’ve ever had for a fix and flip.
Warren Buffett has a saying. Actually, he has a lot of sayings. But one of my favorites is “Don’t lose money”. I’ve learned that the best way to not lose money fixing and flipping is to do a lot of deals. Since 2009, I’ve flipped 60 deals and lost money on six of them. Because I made money on 54 the six losses didn’t hurt that bad.
Plain and simple – it’s a numbers game. Now go get your lipstick.