Two House Flipping Rookies compare notes after 3 deals.

Today I had lunch with my long time friend, Ron Roberts, at Boston Market.  About 5 months ago I had convinced Ron that it was a perfect time to start buying and fixing houses.   I had dragged him to one investing seminar and that’s all it took.   We’re both contractors who had been away from real estate investing for many years, but it didn’t take much for each of us to see what a great opportunity real estate in this economy was for an entrepeurial, creative type person who knew their way around home improvements and remodeling.    That describes us, so we both borrowed some money and bought several houses.   We had chosen different areas, and different approaches, so I was looking forward to comparing notes.

It was a great lunch.  When we arrived, I had him beat with my first three homes sold at a profit, whereas he had already sold two but was worrying about his third.    During lunch he looked at his phone and took the call…… “Sell it,” was all I heard.    His broker had just received an over full price offer.  (but with seller paying some of buyers costs,  we’re finding a lot of that in our market)   So two grateful new house flippers, each with our first three houses sold, returned thanks for the food, our friendship and the opportunity that we had been presented with.

We had done a lot of things differently and a few things the same but had wound up with very similar results.  I’m all about Green and Energy Savings and Saving the Planet, so all my houses have every green and energy efficient thing you can think of in them.   As I’ve mentioned in previous posts, I know I have to do a superior job at curb apeal and Wow! factor to get the client to buy all that Green.   Ron, on the other hand just focuses on the curb appeal and Wow! factor.   I’ve tried to convince him to join me in saving the planet with no success yet, but I’ll keep trying.   That’s what I do.   You’ve been warned.

Ron sold in the 100 to 125 range, whereas I had chosen a neighborhood that sold from 140 to 190.   One thing that we both did was surprise our buyers with over the top finishing touches in the kitchens and baths.   I chose granite counters and glass tile backsplashes.  Ron made a custom vanity from a nice piece of furniture.   We both listened to clients who were so tired of looking at cheaper bank owned homes.   They were cheaper, but they came with a long list of fix up before they would be anywhere close to what they bought from us.    It was a breath of fresh air for them to walk in to homes that looked like brand new model homes on the inside.

I bought all my homes within a half mile radius.   Ron’s were all several miles apart.   It is turning out that staying in a tight radius has lots of benefits.   Saving time and fuel is obvious.   But even more important, now that I am making sales and appraisals are coming in at way over the median price in the neighborhood (which is being brought down by the REO’s) we are creating our own comps for the next ones that sell.   Ron is convinced of the tight radius approach so he is using his market testing to choose the area to camp out in.  Surprisingly he got by far the most phone in the area that he had expected the least.

All of our homes were simply “off the shelf”  bank owned homes listed in MLS.   There are lots of other ways to find homes that may be essential in different times but right now it’s too easy to just buy the listed REO’s.  I used one broker for purchase and sale.   Ron used a broker for all the purchases  and worked jointly with the same broker to make his sales.

We both made some of the same mistakes.   We paid too much for our first houses.  But not too, too much and we learned quick.   We both took too long.   But we’re getting faster each house, as the team and the systems come together.   This business is at least a little bit forgiving and allows you to make a few mistakes.

Surprisingly we made about the same percentage,   around 10% after they averaged out.   Not the 20 that we would like but hey, you have to pay for education one way or another.  House Flipping 101 taught us some lessons and still let us make money and have a whole lot of fun while going to school.    We’ll shoot for 20 on the next round.   I think we may make it.  We’re a lot smarter than when we started.   We’ll have lunch in a few months and I’ll let you know how we did and how I’m doing at talking Ron into going Green….

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  1. Chris Moran

    Nice writing style. Looking forward to reading more from you.

    Chris Moran

  2. Allen Taylor

    Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

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