Is a sharp eye for detail a blessing or a curse when flipping?

Question

Hey Guys,

I went to an open house at a recently finished flip today and left a little perplexed.  This was by a company that has about 12 houses on the market in the state.  Just by their scale I would have to say they must know what they are doing.

I was not overly impressed with the details of the rehab.  The kitchen and bathrooms were done to a fine detail including the tile work, but the laminated wood floors felt very bouncy and cheap when walking through a $600,000+ house.  The painters did not prep the drywall very well and they had some thin spots in the color.  Floor transitions and the quality of the carpet install were also lacking as well as some other things I would call detail problems.

If I were running the rehab I would have required better paint prep and detail before going to market.  I know I will have to rein in my eye for detail to stay on my budgets but I would have thought 600,000 would be when the real hardwood and thorough paint inspections kick in.  I do think this company must know what they are doing based on their inventory, but this has left me thinking...

Is having a good eye for detail a blessing or a curse when flipping?

I look forward to hearing what your experiences have been.

Ned Carey · Answer

That in itself is an indication they do not know what they are doing. The fact it takes 100 days for their properties to sell is not an indication they are willing to wait that long. It is more likely an indication the market doesn't want to buy that crap.

Doug Ferguson · Answer

That is very funny and probably going to be very true.  The current house is new to market.  It will make for a good flip to observe and learn what the market supports.  I am excited to get MLS access so I can see what other flippers are doing.  This is the only one I have stumbled upon on Redfin that I could tell was a flip.  60 hr class exam is in the morning...

@Lee Badragan I sold a 2 unit in Baltimore city that I lived in and renovated to a fine detail and I had a similar selling experience.  Buyers realtor actually asked if asking price would still get it done.  I was second guessing holding the property.

I was hoping to repeat the same quality on my first flip deal in hopes of quick sales and a good reputation.  I am glad to hear this is a model that works for others.

Lee Badragan · Answer

I am very detail oriented and expect high quality work. Drove both myself and my contractor crazy on my first flip, but once it was done, the house was under contract within 2 weeks of listing it and closing happened in another 3 weeks. I almost had an offer on the first showing! Made a killer profit too, so in the end I think it was worth the pain of insisting on a job well done. The lesson I learned is to try very hard going forward to work with contractors who have a similar focus on quality and detail, so work won't need to be re-done and incur further costs and delays. I know that's easier said than done.

Ned Carey · Answer

It would scare me to have that level of finishes on a $200K house. I can't imagine getting away with it on a $600K house. Now if it is a $750-800K neighborhood and they are selling at $600K that might make sense.

Not necessarily at all true. Just because someone is big does not mean they are smart.  How do you make a small fortune in real estate with no knowledge and experience?    .     .      .    Start with a big fortune.

Account Closed · Answer

i see these kinds of rehabs too, even in markets with $600K+ houses.  But most are cutting costs on "subjective" rehab/remodel choices.  Not poor paint jobs or noticeable flooring install problems. The teams I know who are doing the minimum and getting ARV are bit masterful on the details that the buyers might notice.  They don't ignore anything that won't pass inspection, but they never do more (like replace a working older working HVAC or replumb still functioning galvanized piping). They'll pretty much repair anything that can be repaired.  Not too many J Scott in rehabs under $500K in our parts.

J Scott · Answer

The number of houses they have on the market doesn't mean a whole lot.  I know a lot of investors who have "come out of the gate strong," and quickly ramp up their purchasing, only to find that their approach wasn't optimal and suddenly they have a lot of inventory sitting around.

The bigger question is how many properties have they previously done and what their typical DOM is for those resales.  That will tell you whether they likely know what they're doing or not.

In general though, if you're looking at properties in Baltimore County (where it appears you live), anything in the $600K+ range likely warrants a reasonable attention to detail and at least mid-to-upper grade finishes (real hardwoods, for example).  So, the information that you provided above would be enough to make me question whether they really have done these types of houses successfully in the past.

That said, there are some rehabbers who are very good at doing the absolute minimum to get their houses sold at ARV (even if it takes a little longer to sell).  I'm not very good at knowing exactly where that line is, so I tend to go a bit above and beyond to ensure that my buyers aren't left shaking their heads and walking away.

Account Closed · Answer

@Doug Ferguson  I applaud (and share) your keen eye!

Doug Ferguson · Answer

Indeed the house was in an upscale Baltimore County  neighborhood.  After a little more research it looks like they are  comfortable with properties sitting as evidenced by their 100+ DOM  listings.  I am glad to hear I am not crazy for wanting to error on the  side of clean details.  I don't know if I have the stomach for that much waiting on a regular basis.

@K. Marie Poe  Would you say $500k is an averaged priced home in your area or more on the upscale.

Anyone else?  I know I am not the only guy who has a keen eye for details!

Is a sharp eye for detail a blessing or a curse when flipping?

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