Flipping a House

Kip and I have wanted to flip a house for YEARS. But we've never found the right one or had enough money to do it. Finally, with Kip working part-time as a real estate agent, we got our shot. I'm figuring if you're reading this you care about details, and especially about money since everyone always cares about money. So I'll try to be upfront about that. We had some money from our rentals and were able to take out a loan (borrow against one of the rentals) in a way that had pretty much no short-term consequences. So we figured we could flip the house then pay ourselves back. All told, we figured we'd need about 40K to buy the house and fix the house. Then we hoped to sell it for 50K (if you just had a heart attack because you can't buy a mobile home in your city, well, welcome to the midwest; you should move here too; we'd love to have you). That said, the neighborhood was not the hood, but it was also not, you know, a lakefront gated community. It was a working class/rental unit type of neighborhood.

We also figured that this was fairly low-risk since if we couldn't flip it, we would rent it. But that's not really what we wanted to do.

In that neighborhood, we got a house for about 11K. They were asking 17K (and that was a reduced price). We lost the bid the first time to another buyer, but then that fell through and they came to us asking if we were still interested. We were.

The house was a mess, but basically pretty solid. That meant that it needed new everything cosmetic as well as roof and windows and some wall repair, but there was nothing like a moldy basement or water issues (it was built on a slab; we love that). In other words, there was nothing that looked like a small problem, but had the potential to be a huge problem. Most of what needed to be fixed could be seen with the naked eye. That's a good thing.

And here's what we did.

We gutted everything. Out went the bathroom and kitchen. Kip and I did the demo right at the beginning. It saved money and required no skill and not even a ton of time. Also at the beginning we hired people to fix the roof and windows and doors. This was practical because it kept the roof from leaking and the windows from wasting energy as we heated the house, and anyone from breaking in and vandalizing it. We also got some insurance on the house, which was tricky because of it's condition, but Kip got some kind (and I can't remember what kind; sorry; it wasn't normal house insurance).

Also, I should mention that it was important to me that we not do a crappy flip. I knew that at this price point we wouldn't be putting in marble countertops, but I didn't want to just slap down any old junk that would look good for two months and then break. This was important to me from an ethical standpoint and I really didn't want to do the flip if we were just going to put in junk that would fall apart.

 House before:

House after: 

Front living room:

First we fixed the door. (Note: We did not fix this house room by room, but that's how the pictures are so that's how I'll explain it. We gutted, did roof, windows, doors, then paint, then floors, then kitchen, then bathroom, then the one room we were going to carpet, then cleaned up and did light fixtures and the little things like that.)

Next paint, and then they began to lay the floors. The were that cross between vinyl and laminate. We paid people to paint and to to the floors. 

Tell me you don't hear the angels singing. One of the wonderful things about fixing up a house is that you take something ugly that seems worthless (and in fact has very little monetary worth) and from that you help to create something that is beautiful and worthwhile. 

Some other random room that wasn't quite a bedroom because it didn't have a real closet:

After:

Bedroom:

Middle:

After:

Bedroom:

Bedroom:

Bathroom:

Floor and tile and new tub. Isn't that tile lovely. It was also inexpensive. I'd love to have it in my own bathroom. We paid to have all that stuff put in. 

Kip put toilet and vanity in himself, though we had a plumber do a few of the trickier things first. 

Kitchen:

This kitchen was the dumbest thing ever. It had the ugliest cabinets and on one wall instead of cabinets it had this weird "bar" type thing that was just a slab of crappy wood. The kitchen got new everything--cabinets, sink, fridge, stove microwave. We got all the appliances on sale (in stainless steel--again not top of the line, but nicer than the lowest end possible). For the cabinets we went with white, which I loved.

Kitchen cabinets. Oh help: :

Kitchen post demo:

Cabinets: 

Utility room:
For this room we kept it simple. New floor and new paint. It could have used a new furnace, etc., but the one we had worked and we just offered mortgage insurance when we sold the house in case any disasters happen in the first year.

Back living/family room: I hated to demo the bookshelves, but it had to be done:

There was a door-shaped hole in the wall from a fire that had happened at some point. 

Here's a bunch of junk we kept stored for a while.

We also re-did the front deck (You can see it in the top picture). We had it done, but painted it ourselves. 

 It took us 4-ish months to get everything done. We put it up for 60K and sold it for 56K, but with several conditions that made our profit more like 52K. All told, we made 12K off the house. Which we were thrilled about. But then we found out we would have to pay 30% in taxes. Arg. So we were still happy, but annoyed at Uncle Sam. Not the end of the world, but something we should take into account next time we do this. It sold fairly quickly and went to an investor for a rental. The truth is that I really wanted to sell it to a homeowner because I wanted someone to really enjoy it in that way, but we took what we got, and gladly.

And now for my husband plug. If anyone is looking for a house to buy to flip or own, give Kip a call. He has an excellent eye for a good deal and is really good at knowing whether problems in a house are not a big deal or potentially a big deal. Call him!