Fliperati

I know I’ve been neglecting the blog lately, but it was pretty hectic leading up to the open house as I was running around trying to market the property on my own and finish up all the small items that needed fixing before showing to potential buyers.  The open house went well, but it wasn’t the explosion of buyer interest that I had fantasized about and I’m going to continue working hard to get the word out about this property.  In the meantime, here are some of the first before and after pictures so you can get a sense of the final result.  Overall I’m very please with how all the renovations turned out and now I just need someone to fall in love with the house and take it off my hands…

Front of the House Before 

Front of the House After

First Floor Before

First Floor After

I’ll post a ton more before and after pictures soon.  I plan on doing an “Anatomy of a Flip” series where I summarize the changes made in each room and the approximate cost of the renovations.  Hopefully I’ll snag a serious buyer soon and will have more time for blogging…

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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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Sorry for the dearth of posts lately but, as you might have guessed, I’ve been working overtime trying to get my first property ready to put on the market next month and haven’t had much time for blogging.  It doesn’t help that I have a mini vacation scheduled for next week (planned long ago) and I’m squeezing in some extra work this week to make up for time that I will lose will I’m sitting on the beach.  Also, this is supposed to be a real estate investing site focused on flipping houses and I’m trying not to let it completely transform into a renovation blog while I’m rehabbing this house.  Unless Fliperati readers clamor for more details about my day-to-day labor at the house (like how I taught myself how to install a sub-floor and lay ceramic tile in the kitchen this weekend), I’m going to resist the urge to discuss the renovations in excess.

That said, I wanted to share an article I came across last week in the New York Times that had some encouraging real estate news (from a flipper’s perspective, at least).  While most real estate journalism these days had been focused on weak housing data and apocalyptic bubble bursts, this story was comparatively uplifting because it covered the high demand for houses with old school character and new school amenities.  When complete, I hope my property fits that niche and attracts tons of the wealthy, not-a-second-of-spare-time home buyers described in this article.  I particularly enjoyed a quote from one of the real estate brokers describing how people want things that look charming and rustic but function like new:

“The ideal is what I call the Pottery Barn formula house: shingle-style exterior, white Carrera marble kitchens and the white subway tile in the bathrooms, so it looks like the background in the catalog. It’s trite, but it’s so sellable.”

Although I have been trying not to make my house that trite (see past posts about spending a bit of extra time to preserve some of the original details in the house in lieu of simply buying new stuff), I did strongly consider subway tile in the bathroom or the kitchen and I definitely want my flip to be in the “so sellable” category.  I’m more than happy to abandon any further originality at this stage in the game to make a healthy profit on this project.  Rah Rah Pottery Barn!

p.s. I also loved the many investment banker references scattered throughout the article. 

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I don’t think I’ve discussed this in detail before, but the plan for my first flip is to do the majority of the labor myself.  There were multiple reasons behind this decision:

• I have time to work on the property now that I have quit my regular job
• I want to learn as much as possible about the labor required to renovate a house so I have a better understanding of the true amount of work that goes into flipping property
• I want to improve my sense of the labor required for certain jobs (demolition, laying tile, painting, etc) so I can better estimate costs if I choose to hire them out in the future
• I want to maximize my profit on this first flip by minimizing my renovation expenses

Although I think it’s very important to learn about the labor required to flip a house, the profit portion of the equation is really what’s driving my DIY attitude.  My experience so far has shown that finding and purchasing a desirable investment property is the most difficult/uncertain part of the process, so I figure I ought to maximize the return on my current project rather than rushing out to start the process over.  Of course, there are certain tasks that I consider beyond the scope of my novice capabilities (drywalling the entire house, replacing the roof and building a new garage from scratch, for example), but I am trying to do as many of the simpler tasks as I can.

I believe this strategy conflicts with popular flipping doctrine, which seems to encourage leaving all the renovations to the professionals while you focus on getting more deals in the pipeline.  However, I figure I’ll have a fair amount of time to seek out my next property while my first flip is under contract, so I’d prefer to take the DIY approach and increase my profit margin on this particular project.  I’m feeling good about this strategy so far, given that I’ve come a long way in the renovation process without spending much money (barely $3,000 to date).  Also, the only projects that are behind schedule are the ones that I’ve had to hire out (the drywalling and the garage), so the DIY approach has been good for my timeline as well.  This has required a lot of back-breaking labor, so there’s definitely a chance this strategy will change in the future when the excitement of the first project wears off.  In the meantime, I’m enjoying learning new skills and tackling repairs I had never dreamed of doing in the past.

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Fortunately for me, my sense about the very first contractor that came by the property turned out to be correct.  I had a whole circus of people come through to give me estimates on the drywall/plaster work and the first guy (let’s call him Clyde) was by far the best of all.  That doesn’t necessarily mean his price was the best (in fact it was probably the 2^nd worst), but he was definitely the most honest, rational and trustworthy of the bunch.  The loser contractors ran the gamut from cheap sleazeballs to eccentric “drywalling artists.”  One of the crazier guys ate up over an hour of my time walking through the house, touching (almost massaging) each wall as we went along taking measurements and discussing the amount of work required in each room.  By this point I really didn’t care to learn every nuance of the drywalling process and simply wanted to hire someone who would do a good job at a fair price. 

Clyde turned out to be the man for the job and I was even able to negotiate a substantial price reduction (although to be honest I probably would’ve paid more than his original asking price to get him on board).  He said he and his crew would start this morning at 8:00 and I couldn’t believe it when his van pulled into the driveway at 8:00 on the dot (he was very punctual when he provided his estimate as well).  They have been working hard all day and have accomplished quite a bit.  The medium and small bedrooms both have new sheetrock on the walls and the wacky closet they once shared has already been split into two neat and clean new closets (in a 1/3 – 2/3 ratio with the larger bedroom getting the larger closet).  I’ve just been trying to stay out of their way, which has given me a chance to get lots more work done outside (would you believe they had put an acoustic drop ceiling on the porch too?  it’s gone now.).

I haven’t discussed this with Clyde yet, but I’m considering asking him to work with me upfront when I find another house that I would like to purchase and flip.  This is obviously very premature since I haven’t even finished the renovations on my first flip (or seen the finished product of his work), but seeing the speed and efficiency of a team of workers (vs. just me) has gotten me thinking down the road a little bit.  If his progress continues at the pace they worked today, then I’ll be able to comment on the finished product much sooner than I thought.

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I have neglected the outside of the house in my drive to finish all the interior demo work and get the place ready for fresh drywall/plaster, but the delivery of the dumpster this weekend forced me to spend some time cleaning up the front yard area.  Since the dumpster will be picked up tomorrow, I had to spend much of today outside in the insane heat pulling the storm windows off the porch, taking down the aluminum awning, ripping out the iron railing and taking down the chainlink fence.  I didn’t have any trouble removing the chainlink part of the chainlink fence, but the fenceposts themselves were (and continue to be) a much different story.  They took the time and effort to pour concrete around the posts when they were installed, which to me is like using super glue to make macaroni art.  It’s going to take more work than I anticipated to dig them out, so they may not make it in the dumpster tomorrow — especially if it’s still a million degrees outside.

Here is a picture of the current state of the front of the house, along with a “before” picture for contrast.

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Even though I started this project with a full renovation plan, there is no handbook on which improvements to make and which to skip when flipping houses (contrary to what many property flipping book writers would have you believe).  The plain and simple truth is that there is no real estate guru waiting for you at your property with a list of improvements to make for maximum return on your investment.  You are on your own when it comes to deciding what to change and how to change it.

This leaves a whole universe of possibilities open.  Do you invest the time, money, and effort to change the layout of the house if the existing floor plan is awkward, or do you just spruce everything up as best you can without worrying about the layout?  If the flip property is in a borderline neighborhood, do you spend the money on nice surfaces and fixtures and hope you attract greater value to the area or do you simply use the least expensive materials you can find to make it feel new?  Do you knock a kitchen wall out to create a more open feeling or would the new owners prefer the more traditional, segmented layout?

These questions are all the more difficult when the probable answers conflict with your personal preferences.  For example, local buyers may expect carpeting in all the bedrooms of the property I am currently flipping, but I think the house would be much nicer with hardwood throughout.  Also, most of the houses on my block have enclosed porches, but I think an open porch would be infinitely more appealing.  In both these cases, my preferences match how the house was originally constructed, so I’m banking on finding a buyer who will appreciate a restorative approach.  Using the original construction as guidance for my renovations also resolves the debate about opening up the kitchen and altering the floor plan because hopefully the new buyer will prefer the classic layout.

I may not be making the right bet with a lot of these choices, but time is money (very literally in this case!) and I desperately need to start moving forward with the actual renovations (which I had been reluctant to start before making a final call on big questions like layout, flooring, porch, etc).  The big issue now is getting good contractors to start working on the jobs I’m planning to hire out.  More to come on that subject in another post.

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I hosted a small “house wrecking party” this weekend at my flip property and was able to convince five very dear friends to come out and help me with some of the remaining demo work.  There was no compensation beyond the hamburgers we cooked on a small grill in the backyard and the cheap beer in the fridge, but you would have thought I was paying them big $$ based on the quality of the work they did.  The six of us accomplished more in an hour and a half than I could have done in an entire day.  Projects tackled included:

• Removing the wood paneling and trim from the front porch (an area of the house that had not been touched prior to this weekend)
• Tearing out all the tile in the tub/shower area
• Ripping up 85% of the old linoleum and sub-floor in the kitchen
• And, of course, a few more man-hours of staple removal

I took a lot of pictures to document the work of my free-labor crew, but it was a pretty hot day and nobody was looking very pretty after a few swings of the hammer, so I promised I would refrain from posting any images.  That’s the least I can do after everybody worked so hard and did such a great job. 

I highly recommend the house wrecking party as a way to jump-start a project when flipping property.

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Okay, my title may be a little over-dramatic, but I’ve committed myself to preserving all the original woodwork on/around the stairway and the task of removing all the staples has eaten up a lot of time that would have otherwise been spent on the million other projects waiting to be attacked.  I swear the carpet installers must have been drinking when they laid the rug on these stairs because there is no semblance of order or logic behind their use of staples.  It’s amazing how nice the wood looks after all the staples and stray nails have been removed, but it’s extremely tedious labor.  However, it does provide a nice break between more back-breaking tasks like ripping the kitchen floor up and taking out the bathroom tile.

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