(24 days to possession)
What do I know about property flipping? Precious little. As for training or background, I watch a lot of home shows and I read the property sections of the big international papers. The ones that tell me adding tennis courts to my country estate will improve its worth. Useful stuff like that. Any further rules I employ or espouse are of the common sense derivative:
Do the best you can with what you’ve got.
Wanting to know more about flipping, I started reading a how-to book – and soon stopped. Its financial section assured that you needed absolutely no capital. Its main thesis? You’ll only make a profit by outsourcing everything.
“Baby! Your time’s worth more than that,” I think a hairy guy with a hairier chest & gold medallion tried to tell me.
What I don’t want to know about flipping
I had to wonder how (or who?) was funding this contracted work with no capital. Flipping houses, and the broader ‘real estate investing’, come with a lot of sleazy connotations. Like get-away-from-me gross. Not to mention stereotyped suspicions of quality. Are flippers duping buyers into shelling out extra cash, or are they providing a much-needed middle step and giving buyers what they want? The book suggested that flipping is meant to be a game of numbers – you’re never to let your emotions get involved. Then that’s clearly not the game I’m playing. I couldn’t do this project if I didn’t love the Ugly Baby.
Blood, sweat and tears? Or Bloody Marys and hot yoga?
I wonder if flipping property could – or would – become a trend? One that all the cool kids do? After all, there are now two dedicated flipping shows on TV and the derivative Sarah’s House isn’t too dissimilar in aim.
The thought might appeal to many. The profit, to most. The actual work? Unlikely. Take Vancouver, where a normal office worker would have only evenings and weekends free to renovate. I think Paolo & I sit in the very slim minority.
What’s different about flipping an apartment?
Certainly a different beast than a house. Even more so when you ludicrously think you can live it in at the same time. Maybe we’re not even flipping, so removed is our situation to the definition:
Buy an actual house, pay someone else to do the work, finish quickly.
But we’re twenty-something Vancouverites, and we’re not getting our paws on a house any time soon.
Do the best you can with what you’ve got.
What we’ve got is 1x ugly apartment. This is what I know of flipping.
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Full photo credit to DaMongMan via Flickr Creative Commons
Hey, you want a s'more? Some more of what?
My husband and I frequently talked about trying to flip a house over the years, but we’ve never taken the plunge. Good luck with your venture!
Thanks ever so much Julia! Our plunge is more of a face-first dive (splat?) – we’ll see, hey? Cheers!
We’ve never flipped a house, but we have lived in them during renovation.
And survived?! This bodes well!
Lauren, love the pic and great article.
I think the essence of flipping is about making every decision a business decision – right from the get-go. Emotion is the enemy of the flipper. Ethical profit maximization is the goal. Flipping starts by selecting a property where you can actually make money. Then, it’s about knowing where to get the absolute best deal on products and services and negotiating those deals to even better results – picking only those things necessary to improve the value of the house to a realistic buyer.
Most folks who flip get discouraged after house #1 because they don’t realize that its really a LONG TERM prospect. In the first flip you learn a LOT, just like in every business. In your first flip, you don’t have a network of contractors or suppliers. That takes time and relationship and.. well… flipping experience to build up. You can’t negotiate all the best prices because you aren’t a volume buyer.
One of my friends parent’s has been flipping for 10 years, about a dozen to two dozen properties a year. She has a large, reliable network of contractors and suppliers that will bend over backwards to keep her business. She targets 20% profit on each house after renovations, and usually averages about that return. But, even she’ll admit that it took time to build all those connections and to perfect the “system” she uses.
I’m looking forward to watching your success!
Fred, thanks for summing up ‘the road ahead’ so very eloquently. I’m glad you touched on ethics, too, as a ‘Potemkin’ apartment would be much cheaper and quicker to produce. Having just walked past a bank this evening offering “astonishing 2% term deposit rates,” the long-term commitment is clearer than ever. I can do it my way, or run to the banks & watch, glumly, as they do it theirs.
Thanks again Fred, really appreciate your insight.