House Flipping – 1 – How to buy a fixer upper!

Fixing up an old run down house has been on my wish list since I first watched Fixer Upper on HGTV.  Seeing Chip and Joanna take a home that nobody else believed in and turn it around with creativity seemed like a blast… but how could I do that??  I have no construction background, and nobody who’s done it before to help me.  I couldn’t find any great “how to” books or a golden nugget to tell me how to find a good project house and flip it.  Well, in July of 2017 I took the leap of faith and bought a run down house, and successfully fixed it up!  It was a lot of work, and a lot of fun.  This is how I did it…

First Step:  In order to make this work I was going to risk everything I had saved up, so I wanted to be as sure as possible in the project I chose to take on.  To mitigate the risk of loosing everything, I chose to buy a house only in an area I’d want to live in.  Worst case scenario, I get stuck with the house – can’t sell it for a profit – so I just keep it and live there.  I decided the Highlands was for me.  If you are new to house flipping, I suggest you buy a house in an area you’d want to live.

Second Step:  After deciding where to look, I needed to confirm that the area was a good investment, and find out what price range to look in.  The best way to do this is to work with a good Realtor.  Since I am a realtor in the area, I already new the answers to these questions, but it’s important for you to talk with an experienced local agent.  The other, and arguably more important reason to speak with an agent is to stay ahead of the game.  I set up an auto home search to email me asap when a potential project home popped up in the area.  This proved to be essential as the house I ended up getting I had to make an offer on 1 hour after it came on the market….and I wasn’t even the first offer submitted!

Third Step:  Estimate your budget and come up with a good margin.  With no construction background and no house yet, I couldn’t be too accurate with a budget.  Everything I heard and saw in the area made $100,000 seem reasonable.  Note – this is totally different for different areas, based on the home prices and age in the area.  On top of the $100k budget, I also wanted to have a $100k margin for error and hopefully profit.  So I was looking for a house I could buy in the Highlands and sell for $200,000 more, after fixing it up.

Forth Step: Patience. It took a few months of looking and passing up deals before I found the right deal for me.  There were a couple that temped me, but they didn’t fit right into my criteria.  Just because something is a good deal doesn’t mean it’s the right deal for you!

Fifth Step: Jump!  I got an email notification that a house matching my criteria popped up.  I immediately dropped everything and scheduled a showing.  One hour after the house hit the market, I was inside studying it…. and it was a MESS!  But, the numbers worked… so I jumped!  One hour after walking the house (two hours after it hit the market) I made a full priced offer…. and there was already an offer in before mine! The sellers ended up receiving 30 offers in two days, and I was right in the middle of a bidding war.  Luckily it was under my budget, but I still had to push my limit.  Ended up going under contract for nearly $50,000 over the original asking price, but the numbers still worked and it was the right project for me.

Here’s a pic of the back just to give you an idea.

DSC07625

Sixth Step: Get bids from subcontractors and finalize budget before closing! Before I closed on the house (but after going under contract), I met subcontractors at the house to get bids for everything that needed to be done.  I used a website called Thumbtack.  They have contractors for everything, and they have review from previous clients.  I met with several contractors for each job to ensure I was getting a good bid.  It’s important to have all of your bids in prior to closing on the house so you know if you’ll be able to stay in budget.

Seventh Step: Closing! Sign the papers and get to work.  My next blog will dive into getting to work.

Here are the before pictures:

Front of house. DSC07637-2Living Room.DSC07611Dining Room – All that wall paper!!!DSC07614KitchenDSC07618-2Downstairs bedroom – Wall paper everywhere and a weird bathroom set up.  That’s the shower on the right and a little toilet room on the left. DSC07617Upstairs bedroom – More wall paper… ceiling tiles…DSC07632Upstairs bathroomDSC07634Upstairs bedroom.DSC07628Creepy basement!DSC07622Garage in back. DSC07624

Call me if you’d like to look into buying a house!

Tripp Howell

970-219-0679

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