Fliperati

I’ll post an update on the progress at my first flip in a couple days (things are going well and I’m all-set for an Oct. 1 open house) but, in the meantime, I had to share this article that I found in my inbox yesterday.  I’m not even a Charles Schwab customer, but I am somehow on their mailing list for articles such as this.  It is a lengthy discussion of the housing market’s influence on the overall economy interlaced with recommendations on how the current “hard landing” should influence your investment portfolio decisions.  I thought it was an interesting read.

Here is one of several charts from the article.  I’m still not sure if the last part of the blue line represents projected or actual data.

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I know it can sometimes be difficult to piece together what I’m up to, so this post is just a general update on the status of my first flip.  In short, things are going okay but I’m going to be working really hard over the next two weeks to clean up the property and start marketing it before the open house.  Yes, this had originally been a 10-week project with an open house slated for mid-September, but you all know that my schedule has been extended by a few snafus and it has now become a 12-week project with an October 1 finish date.  Some of the smaller details like painting the bi-fold closet doors and installing the light fixtures have taken almost infinitely longer than I ever imagined and I’ve pared back some of the more ambitious renovations to minimize damage to the schedule and the budget.  My former contractor’s flake-out was a blow as well, but I found another guy pretty quickly and he has been doing great work since then.  I’m counting on his help to get me through this final week of work. 

Fortunately, there aren’t that many large projects left to be done.  Finishing up the porch railing and installing new spindles on the stairs are the last major “must do’s” and installing a privacy fence is the last major optional job.  The problem is all the tiny details left to be addressed, like painting the trim, re-installing the radiators, putting faceplates on all the outlets, putting all the shelves back in the cabinets, re-hanging the closet doors, cleaning, etc, etc.  I’m going to work really hard to get all this taken care of this week so I can focus on my marketing plan next week.  I’m 90% sure that I’m not going to use a seller’s agent and am instead going to go with a flat-fee open listing on the MLS.  I am also going to do a lot of my own advertising (local and regional newspapers, internet home search sites, signs, flyers, personal visits to local realtors, etc) and I’ve built a dedicated website for this property.  My goal is to make sure everybody and their brother knows that this house is for sale by the middle of next week.  My dream is that the open house is so packed with potential buyers that it creates a sense of urgency around the property and encourages people to quickly submit attractive offers.  I’m considering offering a bonus to the buyer’s agent (3% commission + $1,000 maybe?) to attract maximum attention and facilitate that high-energy open house that I’m hoping for.  We’ll see if my dream comes true…

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I’m finally at the point where non-construction workers can safely walk around my flip house, so I met with a staging consultant this morning to see what it might cost to dress up my investment before it goes on the market.  As you know, I’m already a bit over-budget thanks to the floor and plumbing problems, but I’m still toying with the idea of staging the house because I think it will really help buyers get over the modest size of the property.  I would particularly like to put beds and a few accessories in each of the bedrooms so people aren’t scared away by their small dimensions (the smallest bedroom is only 9’ x 9’).  Personally, I’ve always been surprised by how my perception of a space changes (for the better) after even the most basic furnishings are added.

So, back to my meeting with the stager.  Upon arrival, she spent about 10 minutes walking through the house taking notes and then we went room by room to review her ideas.  I didn’t agree with 100% of her interior design philosophy, but I liked most of her thoughts and would be happy to have hired her on the spot to spruce up the whole house if her price was right.  Unfortunately, Bob Barker was nowhere to be seen and I think I’d have to scale back the staging significantly in order to justify the expense.  I’d prefer to spend less than $1,000 on this phase of the flip and her estimate was more than two and a half times that amount.  She is probably the least expensive stager in the area and I don’t think it’s an outrageous price given the amount of work required, but I’m still not sure if it’s a good investment.  I haven’t seen the formal written proposal, but she should be e-mailing it to me soon.  Once I have that I may go back and try to cut out everything but the basics (beds and a few other items for the smaller rooms) to see if I can I can dress up a portion of the house without breaking the bank.  Feel free to chime in if you have strong feelings one way or the other about the value of staging a flip.

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I had just finished posting the wood floor update when there was a knock on the door here at the flip house.  When I answered I found two very chipper middle-aged women who immediately bombarded me with questions about the house.

“Are you the owner?  Are you fixing it up?  Will you be living in it or renting it?  When will you be done?”

Apparently they noticed the construction waste in the side yard and were wondering if I was fixing the place up for rent or for sale.  I told them I would love to keep it and rent it but was planning on selling it at the end of the month when the renovations are complete.  One of the women is moving to Jersey from Pennsylvania and she and her friend are out trolling the area looking at rentals, although she said she was also considering buying a place if she found a house/neighborhood that she really liked.  It seems like my property fit the bill and she is bringing her husband back this afternoon to take a walk-through.  They seemed very excited about the house and were extremely complimentary about the work that had been done so far.  While I don’t think anything concrete will come out of their interest in the house, it is encouraging to get such positive feedback from real-life prospective buyers.  I’m definitely anxious about the final outcome of my first real estate investment, so this was much-needed encouragement.  I’m interested to see what the woman’s husband will think and I really hope they come by before I leave this afternoon.

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You would never know that I had planned on having all the original floors in my property refinished if you saw the mountain of brand new oak strips sitting lazily in the dining room (which, through the magic of the internet, you can see pictured below).  Did I win this wood from a timber baron in a high stakes poker game, you ask?  Unfortunately not.  (Note to self: play poker with more timber barons).  The wood is in my dining room because the refinishing crew discovered that the entire ground floor of my flip house is peppered with deep, dark stains sent from hell to ruin my otherwise perfect renovation budget.  No amount of sandpaper or stain is going to get rid of these marks (the exposed nails from excessive sanding are there to prove it).  I don’t think I could easily sell the property with nasty black spots throughout the first floor, so I have broken down and bought new wood.  This has been by far the largest unexpected expense I have encountered over the course of this project (setting me back an extra $2,000), but I think the new wood is going to look awesome and I might even earn some of that money back.  My only concern is that the new wood will not harmonize well with the more rustic original floors upstairs.  The floor guys think they can stain it a similar color and I’m hoping that it meshes well in the end.

Also, even though I usually do tons of research before making any major purchases, the new wood was a snap decision and I hired my refinishing crew on the spot to do the new floor installation as well.  I know that any new flooring will take some time to acclimate to the temperature and humidity of the house and I can’t afford to delay the project any further, so I did my best to negotiate a fair price with the existing crew to make sure the job would get completed as soon as possible.  I’m already behind schedule thanks to Clyde’s flakiness and because my countertops have been on backorder, so I’m trying to do some damage control and prevent this flooring problem from delaying me any further.  I knew these issues would come up and I’m (pleasantly) surprised that there haven’t been more problems, so I’m trying to take it all in stride.  The target open house date is now September 24^th and it’s going to be a marathon of work to get everything finished in time.  Cross your fingers for me…

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I’m definitely in the final stages of the renovation process, but it is still overwhelming to think about all the jobs – large and small – that remain to be tackled before the house is ready to show.  Although having the floors refinished was originally going to be the last major project, I still haven’t dealt with the front porch (needs new bead board on the walls and a railing around the perimeter) or the back fence.  There are also a million smaller projects that are constantly ignored in favor of more obvious tasks.  For example, the crumbling medicine cabinet doors (see picture) continue to elude repair and I haven’t figured out how to put new spindles in the upstairs railing. 

It doesn’t help that my once beloved contractor has managed to destroy his spotless record by flaking out on completion of the shower tile job.  He finished 90% of the work and conveniently went “on vacation” the day after I paid him and was supposed to return a week later.  The remaining 10% of the job (touching up the grout and installing the shower trim) has now been sitting unfinished for more than 3 weeks.  I’ve tried to tempt him back to the house by soliciting estimates for work on the fence and the porch, but it’s been three days since I gave him the go-ahead on these projects and I haven’t heard a peep from him.  I was pretty crushed by this turn of events because I had high hopes of hiring Clyde to play a larger role in future investments.  While he certainly wasn’t a master craftsman, he had been doing very solid work in a timely manner at an excellent price.  His recent absenteeism has been a nuisance, but I’m not going to let it derail the last stage of the renovations and I’m moving forward with or without his help.

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