A word to would-be flippers

[Jonathan David]

If you don't have a mentor, and don't know what you are doing, this is not an easy proposition.  I am closing next week on my fifth flip, and after four months of sweat equity, and about 500 hrs of work between my partner and me, we are going to bank about 15k.  Hardly worth it considering this was a stressful, dirty, risky, part-time job.  If we had to pay contractors to do all the things we know how to do and did ourselves, we'd be upside down on this.  If we had to borrow loan shark money instead of using personal savings, we'd have nothing to show for our work.  So what went wrong, well, as the saying goes, it's the little foxes 

 The appraiser knocked 7k off from the sales price.  The buyer needed thousands in closing cost to make the deal work.  We were frugal, but still went over budget by 10k.  How?  tons of little things that you would not think of unless you are a pro.  When you buy a trashed house like we did, we budged for the big things...demo, clean up, cabinets, bathrooms, carpet, furnace, etc.  

But what about the valves to the water heater that cost 15 bucks each, and the copper fittings, and the solder, and the gas replacement can for the torch, that's a 100 dollar trip to the store.  What about the stair banisters, and the special hardware to install it.  There's 50 bucks.  The cheap faucet on ebay that leaked, which cost 50 bucks and two hours of wasted time.  Closet rods and shelves.  50 bucks.  Electrical wire, the door to the electrical panel that was missing was 175 bucks on ebay because it's obsolete.   The bathroom floor was rotted and cost hundreds to fix.  Gutter pieces, fittings, hoses, knobs, valves, vent covers, trim pieces, paint brushes, screws,...on and on We spent 3k just on dumpsters and cleanup.  

It all adds up to big money that buyers don't notice, appraisers don't notice, realtors don't notice, nor appreciate.  Yet it has to be done.   Yes, we overpaid for the house considering all this, but it's hard to find anything out there to buy.  The banks underestimate the cost of these things, and they are very slow to drop the prices or negotiate.  Everybody thinks flipping is big easy money.   If it were so easy, the gurus would be doing it instead of trying to sell a program about how to do it.  I can hear the know-it-alls saying, you have to get your numbers right.  True.  We are handy, and after five flips I can tell you the price of just about everything at Lowes.  Yet we still went over.  There will be things you miss and don't anticipate.  I still don't know how people do this and have a full time job.    Bottom line, it's harder than it looks, and much less profitable.