The Real Estate Flipping CoachBefore & After
Renovated Craftsman Bungalow
I use to pass this home every day going to my home. I had often wondered what was going on with it. It sat on a big, beautiful, double lot surrounded by big beautiful oak trees. The home looked abandoned. Clearly, years of neglect. Ohhhhh, how I could see her in her glory days!
With it being in such a hot neighborhood I couldn’t understand why the owners let it sit there rotting. It was only a matter of time until vagrants would become squanders and what a mess that would be for the whole community. Everyone talked about this home. It was….well….sad. Sad to know that this was once a fine home owned by one of Wilmington’s elite. With years of neglect, it was hard to imagine it as anything other than a tear down. Well, that’s what “others” thought. Not me!!! I saw a real gem. I decided one day that I had to be the one to restore this home back to its glory. It needed me! It wanted me to show everyone that tearing down a home because it was ugly was simply foolish, especially with such good bones.
Off I went, with all of my passion to find the owner. It didn’t take long, maybe two months. I was determined. She would not call me back initially. I learned she was in foreclosure, so why would she not call me back? I sent her letters. Out of the blue she responded.
We met and I learned she had run out of money. She thought it was going to be easy to flip it and net a big $50,000, at least that’s what the flipping shows said she could make, but instead she was about to lose the home, her credit, the time, money, and heart she put into it. She had held onto the home for years always hoping to gain the funds again to finish it, but it never happened. Wouldn’t you know, life happened.
The car broke down, the taxes came due, an illness appeared due to the stress of finances. It was a mess. And most importantly, she was embarrassed that she and the home had gotten into this position. She felt like a failure that she ran out of money and the flip didn’t go how she thought. Little did she know how common this is in flipping. Of course, the seminars, tv shows and speakers don’t want you to know that!
After a number of meetings we agreed on a price. We signed the contract, and she vanished. Once she realized someone had the vision to see it through and it wasn’t as bad as she thought, she now started talking with other investors. She clearly thought she could get more money. Luckily for me, they wanted to take advantage of her situation and make absurdly low offers.
Once an investor thinks you ran out of money, a lot of them go in for the kill and don’t want you to make anything. Their greed replaces all forms of logic. When someone is in trouble, especially when there is a ton of equity, you should be fair and help people by letting them walk away with money. Helping others actually does help you. People talk and refer people to you.
I guess she realized my offer was the best and came back to me. Now this again is where investors make a mistake. They would have now tried to get the price lower due to the duress she put them through by shopping it to others. I did not. I honored my contract. I don’t take this stuff personally. And most importantly, I have a lot of opportunities so if one or two deals don’t work out, I am okay with it. The problem is too many people have scarcity mentality and they don’t see the big picture. I can walk away and not force someone’s hand to sell to me because I am not desperate for a deal.
I am able to pay more because I get more for my houses. I had already participated in 25 flips in that community so people knew me and I had a buyers list built. My reputation sets me apart from the majority of the rehabbers so my holding costs are not that high because my houses sell fast, and for top dollar.
My expenses were consistent with other houses for that size house that I had restored, and I knew it was a money maker. It had what so many others didn’t. It had a garage. It was a double lot. It was a beautiful lot. The bones were great! A lot of the demo was already done and I love that! Why? Because someone else has already dealt with the hard and expensive part. Plus, you get to see what you are actually buying. You can see the studs and there are less surprises. It is so much easier to redesign a floor plan when it is bare bones. Time to market is a lot faster. Plus it is easier for the trades to do their work, which for me, reduces costs.
We closed and I was so excited! Word got out that I had started a new project and I was approached by someone on my buyers list. She asked me if I would do the home for her and her family. I refused. I was concerned that if she didn’t get the loan and I customized the home to her taste, it would be harder to sell, but more importantly hurt my reputation. I couldn’t take the chance. She said she would trust me and let me do what I wanted if I would let her family have that home. They had already lost out on three other homes I had done. She loved my work and trusted me to do another awesome job. Under contract we went!
We pulled our permits, started the work and made sure it was ready by the closing date. I will never forget when they came to town to see it. I had my whole crew there. We had staged the home and put their daughters’ name on big painted block letters in the room she had picked before we started our process. We had painted it her favorite color, so yes I did do a little, tiny custom work. How could I not, this was the most precious little angel and I wanted her to feel like she had a say in the process.
I wish I had videotaped their expressions. They all cried, which of course made me cry. We were all a crying mess! Even my big, tough, burley Contractors got emotional.
Most flippers are in this for the money and nothing else. For me, there is so much more I get out of this process besides money. It isn’t just about creating a home for a new family in the community, or raising property tax for the city, or increasing sales for the neighborhood. It wasn’t even about the amount of people we employ. It is about so much more. It is about taking what was lost, and finding it again. It was about giving others the vision and confidence to restore these homes. It takes small steps, one house at a time, to give flippers the belief they need for them to see the value in restoring homes versus tearing them down. Without someone believing in these neglected historic homes, they would be torn down or blight would happen because people would move away leaving these homes to rot. The historic charm that makes Wilmington wonderful would be lost.
If you choose to flip, just know it won’t be easy. Well, it gets easier as you get more experience and confidence under your belt. You have to start somewhere, so don’t take on the biggest, nastiest project. Start small and learn. Have realistic expectations. Pay your dues and don’t try to go for the home run when you have no experience. The amount of flippers that lose money is astounding, so don’t buy into the hype that flipping historic homes is easy, it’s not. At least not in the beginning. And let people make money. Don’t be so greedy! Remember, hogs get slaughtered!
In the News
- Restored ‘babe cave’ with a floating bed in downtown Wilmington. Historic Preservationist
- Restored Queen Anne bungalow on Dock Street. Keeping historic charm.
- Elite Real Estate Investor Interview. Interview with Business Innovators Magazine
- Why Get Involved in Real Estate Investing. Interview with Delinda Harrelson
- Historic house ‘flipper’ chooses restoration over renovation. Flipping houses
Flipping Houses Book Series
- Real Estate Investing UNCENSORED: Real Answers From The Flipping Coach
- Elite Real Estate Leaders Volume 2: An Introduction To Elite Real Estate Leaders!