House Flip #2 is On The Market

by Joe Plemon on July 2, 2012

Exterior before

As promised, I am keeping you abreast of each house my son and I flip. After selling our first house flip last fall, we started looking for “House Flip #2”, which we purchased in March of this year.

We learned a lot with our first flip adventure, and we have tried to apply these lessons on our second purchase. What did we do differently?

Focus on elbow grease instead of total renovation.

After: New paint on house, new front door, new stone on landing.

After gutting our first house and installing new wiring, plumbing, walls, ceilings, floors, kitchen cabinets, tub, toilet (well, you get the idea) we decided to look for a house which needs more elbow grease but less structural work. We found what we were looking for, and we made the following improvements getting it ready to sell:

  • Paint the exterior of the house.
  • Upgrade the electrical service.
  • Refinish the hardwood floors.
  • New ceramic tile floors in the bath room.
  • New vinyl floor in the kitchen and utility room.
  • Install mosaic glass tile back-splash in kitchen.
  • Do some drainage work to eliminate a water problem in the basement.

    Completed bathroom: new pedestal sink, new lighting, new ceramic tile floor

  • Upgrade ceiling lights throughout the house.
  • Replace bathroom vanity with a pedestal sink.
  • Replace garage door.
  • Paint garage floor with epoxy paint.
  • New front door.
  • New landscaping in front.
  • New stone on front patio.
Kitchen before

Elbow grease: yes. Structural changes: no.

Aim for a lower price range.

Our logic is that the pricier the house, the fewer potential buyers we will have. Our asking price for our first flip house was $100,000; we are asking $74,000 for this one. This being said, we are not certain that our logic is solid. It may be that those who qualify for financing would just as easily be able to swing a loan for a $100,000 house as they could for a $74,000 house. Also, targeting a lower range market also creates more competition — there are more of these lower priced houses on the market than the pricier ones. I suppose time will tell if our theory holds true.

Kitchen after: new floor, mosaic tile back splash, lighing

What have we learned (so far) from House Flip 2?

Basically, we enjoyed the rehab much, much more. It wasn’t so overwhelming and we were able to wrap it up in a couple of months. So far, we are hoping to aim for more of these aesthetic improvements in the future. We also learned that the site For Sale By Owner (click to see our ad) has raised their prices astronomically. Our cost for Flip #1 was a one time fee of $69.90, with unlimited photos. We thought this price was very reasonable, especially when our eventual buyer told us she saw our on line ad. However, our current ad is a one time only fee of $214 ($184 for the ad and an additional $30 for unlimited photos). Hopefully, this price hike will be justified!

Dining room after: Newly painted walls, new chandelier, refinished hardwood floors.

We also learned that it doesn’t hurt to ask for a contractor’s discount. We asked, and our local lumber yard agreed to a 10% discount on everything we buy for our business (now named Plemon Homes).

You have probably gathered that we are venturing into this house flip business VERY cautiously. It is definitely a part time job for both me and my son, and we are agreed that we will not overextend ourselves…meaning we are taking on only one house at a time.

Hopefully we can get this one sold quickly, and (as I did with our first flip), I will let you know how it turns out.

 

{ 14 comments… read them below or add one }

Peter July 2, 2012 at 10:15 am

Even with the small improvements you’re doing this time around, it still seems like a lot of work. Great job, and I hope it sells quickly for you!

By the way I never saw the final pix of the first house, but just checked it out now. That looks great as well!

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Joe Plemon July 2, 2012 at 2:18 pm

Thanks Peter…we would love a quick sale!

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krantcents July 2, 2012 at 11:01 am

Is this your new career in retirement? Nice job! I would think it should work in this market because of the price. Lower priced homes sell fast. Worst case, you can always rent it out. Good luck.

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Joe Plemon July 2, 2012 at 2:21 pm

My retirement career? Sort of. It is something to experiment with, we are learning the ropes, and we figure we can make more money flipping houses than we can in the stock market. Besides, it keeps me out of trouble. 🙂

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Lance@MoneyLife&More July 2, 2012 at 8:38 pm

Best of luck selling the flip! It looks like you did a good job.

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Joe Plemon July 3, 2012 at 8:27 am

Thanks and thanks.

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MultimillionaireRoad July 3, 2012 at 2:41 pm

Very interesting. you should figure out a way so that we can start following this particular side of your business. maybe a separate blog?
I wish my dad had started investing in property with me! In fact I wish he would now!

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Joe Plemon July 3, 2012 at 3:47 pm

Thanks Multi — It is still more of a hobby than a business, but maybe, as we learn, we can grow it into a business. One house at a time in a slow market may mean only one house a year. But…if the housing market ever heats up again, we want to be ready.

And yes, a father-son venture (or adventure) has been a very good thing. We work well together with very few issues. I have my son convinced, for example, that I am dangerous with a paint brush. In truth, I am. And he, being a perfectionist, does the painting so it will look perfect. Well, I am rambling, but we have a good time working together on this hobby/business.

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RichUncle EL July 27, 2012 at 8:19 am

Good Job on the Renovations. Any info on what something like this costs you? Just curious unless you want to keep it hush hush, I would understand. Also is there anywork in the homes that you prefer to outsource to others?

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Joe Plemon August 1, 2012 at 4:28 pm

Thanks Rich — I will be sharing some financial info on our flip once it is sold, and that will be soon. We recently found a buyer who signed the sales agreement and paid us earnest money. Woohoo!

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Josh @ Live Well Simply July 30, 2012 at 11:16 am

This is definitely a better approach to flipping houses. If you have to replace big ticket items like plumbing, electrical or the kitchen, then you gotta be able to buy the house for next to nothing. 🙂

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Joe Plemon August 1, 2012 at 4:30 pm

Right Josh. The key to making profit on a flip is buying for the right price. If we pay too much up front, we automatically narrow our margins and are asking for trouble.

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Carol@inthetrenches September 8, 2012 at 3:18 pm

Really enjoyed the post. Sounds like so much fun. Look forward to hearing how the sale goes in time and increased percentage for your efforts.

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Joe Plemon September 11, 2012 at 8:50 am

Thanks Carol! It IS fun, but is also a bit nerve wracking when paying utilities, insurance, taxes, etc while hoping the house sells. But I have late breaking news: we closed on the house a few days ago! I will be writing on the sale soon!

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