All Forum Posts by: Alex Applebee

Hello! Thought I would take some time and start a deal diary on my Third Flip. Flip #1 was a success at 19k profit, flip #2 broke even (depressed about that but I'll get around to writing about it someday), and here we are at flip #3. I thought it would be fun to keep a deal diary to see the roller coaster that these projects can be and how plans can change. We are in escrow and should close this week or early next week (just waiting on verification of clear title). My other two flips were in Arizona. This one is in my hometown of Santa Barbara, CA. A weird and insanely priced market. For fun go on any realty website and look at the average cost of a 4/2 house. Regardless of price this is going to be a VERY basic STARTER home. Number breakdown:

Purchase price of $700,000 (Yes, for an unlivable house, insane).

$25,000 paid to the investor who found this deal and passed it on to me because he is too busy with bigger development projects.

Our closing costs should be a few grand, I will post as soon as we actually close. Lets ballpark and say it will be 2k.

Money will be borrowed at 9% from private lender (family member)

Sales cost on back end will be 5% to realtors. 

Hoping to sell the property for $899,000.

My dream timeline will be 6 weeks to get it on the market.

This will essentially be a lipstick rehab, which isn't my favorite thing. My investor (family member) is very anxious to get in and out of this property quickly and wants me to do the absolute minimal possible and throw it back on the market. I think we could get a higher price if I re-arranged the master bathroom, which would require knocking out a wall that connects to an oversized laundry, closing in a passage to the kitchen, and moving some plumbing around. I have experience with all of this, BUT I am respecting the request of my investor. Because I am borrowing from family that adds an extra level of complication and I need to respect that, and defer a little bit more to their expectations/requests than if I was financing on my own money (which is my goal, maybe after this project, obviously in a cheaper area). 

Despite being essentially 900k ARV, this is a STARTER home and I need to remember that. I plan on doing very basic finishes (either cheap bamboo floors that are on sale for .98/square foot or maybe even luxury vinyl at .75/square foot). I'm not even doing tile showers.

I will put in new cabinets (lillyann cabinets), appliances, and granite or marble counters.

A new roof will be going on.

New interior doors (bought online, pre-hung at $39/door, basic 6 panel)

New windows - cheapest bid so far for labor and materials is $6200 (including a large patio door, that is the most expensive) we are doing them to code, so that adds a cost.

Popcorn ceiling removal, a lot of drywall patches

New light fixtures, outlets, switches, updating some outlets to GFCI

new baseboards (.70/linear foot at home depot)

new plumbing fixtures

plumb for dishwasher

paint interior and exterior

tile on floor in bathrooms 

yard cleanup

Basic landscaping

Despite the "starter home" I will have the property fully staged. Santa Barbara is funny like that and I think it will really help get it sold quickly. Another change from my other flips is that I am actually working full time for this one. Luckily my husband has the morning off, so I am recruiting him to check the job in the AM and I am even having him meet some of the subs for bids. I have comprehensive lists I have typed out for him meeting each trade to get an accurate bid. I'll post a picture of that too. This being my third flip I am feeling pretty good going into it, and feel that my organization/planning skills are vastly improved from the early days. 

Now to the fun part, before pictures!

Yes, that is a bullet hole in the door

and that is the bullet in the window frame!

Should I keep the shower handles? Are they vintage or ultra modern?

A New Bathroom trend for sure.

So fresh and clean!

This is the master bathroom

I feel like the barefoot contessa in this gorgeous kitchen! lol ;)

Stove area

Backyard

Problem area in backyard

The car should be removed by the family by close of escrow (house is a probate sale thats been vacant for more than a year I guess).

I will post my cheklists later. So hopefully escrow closes soon and we'll see how this goes!

I found my honest and reliable contractor where I found my pet unicorn. 

I don't know if they exist! I have tried google, yelp, craigslist. Here is the thing, reviews and references can be faked. Why would they give you the number of the person they screwed over for a reference? And thats who you want to hear from!

 Now I just go with craigslist and give them a little bit of work at a time, and when they get sloppy I stop giving them work and bring in a new person. Even guys that do ok on a few jobs you can't trust. it's like they get assured that you'll keep using them no matter what and they get lazy. It is maddening. I should clarify that I use subcontractors, no general contractors. 

If you go with the 70% rule then you shouldn't pay more than 70,900. What will your financing cost you? Was that other house fully renovated, and if so, how nice was the finish? Where did you get your 20k renovation number from? If you got it for 70k and renovated it for 30k (it aaaaaaalways costs more) you are probably ok depending on your finance costs. No way would go near 80k though, it is too close. I would offer 60k and a quick close.

With buyers I call the house "lovingly renovated" which is true. Makes buyers feel warm and fuzzy, and I DO care about my projects. But to everyone else I call it a flip and call myself a house flipper or an investor if I don't want to get hit up about their "extensive" knowledge from watching HGTV and how I should partner with them and they'll just pick out colors for half the profit (this excludes my architect buddy on here who I would partner with and let pick out colors for a share, lol!). I know the quality of the project I produce so I guess the negative press doesn't bother me because it doesn't apply to how I do things. In my past career I was a Respiratory Therapist, the most under appreciated and mischaracterized/labelled medical professional out there, so I guess I'm used to poor press? I'm a flipper and the uneducated masses can kiss my....kidding ;) 

What are your favorite lesser known tricks to get a flip to have that wow factor? for cheap of course!

On my last project I had got a deal on some cheap travertine for about $1.69/square foot. After installation I had someone come out and polish the floors, resulting in the stone having a high gloss. That cost me .75 cents a square foot. Looked gorgeouse and made my cheap travertine look fare more expensive than it was. It was a slightly higher end flip.

Anyone care to share some fun tricks?

 Interesting. I guess this is a good example of why it is so important to know your individual/local market!

Your time is worth money. You have to calculate what you are worth per hour, and then did you really save money? On my first flip I picked up construction materials myself to save delivery fees (and learn the actual cost of things). After about 45 minutes in traffic and another 40 minutes sweating in the 110 degree heat in phx while my husband and I unloaded 16 bags of quickrete, I decided that it was worth the $75 i'd have spent on delivery. Or just making my subs go pick it up. I of course had to relearn this lesson about 5 more times, and vow going forward just to pay people to do it, no matter how tempting it is to say "oh, I can do this for free no problem."

Like they say in one of the podcasts, do you want to work on your business, or in your business? My guess is that you are not flipping houses with the dream of being a construction worker.

Wow, that makes me dream of summer days lounging by my.....stagnant pond??? Not so much. Also, my understanding is that pools do not add value even when they are not disgusting. Too many buyers do not want all the hassle associated with them, so they are net 0 when figuring out ARV.

 No foundation issue, I had that checked out, paid for a structural engineer. The walls were plaster and slumpblock which is common in phx. 60+ years of settling caused some cosmetic cracks. I put new windows in and repaired the cracks. 

 One thing I learned on this was how not to schedule some things (PAINT ON MY BEAUTIFUL FLOORS, UG!!!!). All investors have their own way, but here is what works for me. This is not necessarily the order I ran this job in, to my detriment. I have some comments here and there about that. So this is how I ran my second flip after learning my lessons (i'll post about that someday). Also this is a little complicated to answer because it depends on exactly what flip you are doing. Any walls to frame? do that after demo and before your rough out plumbing. Lets just call this a really basic flip list.

1. Demo - I also make them bring their own trailer VS have a dumpster on site. I oscillate on this, but when I had a dumpster on site, I had a lot of neighbors dumping their projects in it (a whole bath and tile surround one day!). I don't want to pay for other people's trash haul off. Also, on the flip side, I had dumpster divers digging through and I think that could be a liability issue. Each trade is neater if they haul all their own trash off the project every day as well. In the future I could see getting a roll off dumpster again, but in a larger property that is fenced or something.

2. rough out electrical/rough out plumbing - usually they wont be in each others way, at the same time any new windows/doors that need to be installed can start going in. The electrical and plumbing will usually just be repairing/moving what I want moved, none of the finishes. They can also be working on outside cleanup, roof etc.

4. Probably start the tile prep for the walls in the bathroom (just the backerboards that always need to be installed/replaced) Also patch any drywall that needs fixing. 

5. PAINT. Yes, paint now. I would rather go and touch up paint here and there, which you'll have to do anyways rather than scrub paint off my new finished surfaces. Ask me how I know this. Really this is just painting the walls. The baseboards will not be in yet. And don't let them give you grief about not being able to paint until the baseboard is installed. BS. I've had subs whine at me about this, I gave in, and then had paint all over my freaking floors. I have never met a painter that didn't make a mess even when he swore he was super careful in prep. So, back to the baseboards - after the flooring is installed they can put all the baseboards outside on saw horses, spray them down in no time, then after they are dry, install, caulk, and do any touch up. Done and your new floors don't have paint all over them. Your welcome. ;)

6. Probably tile the bathrooms while they work on the floors throughout the house.

7. Have runners taped down to protect your floors (unless you do tile or something, then you're good.) get those baseboards in

8. Cabinet and counter install

9. finish plumbing and electrical

10. landscaping, once the outside looks good get your real estate for sale (coming soon) sign up, but don't let people in until you're done

11. appliance install

12. clean. touch up paint. stage.

13. hope it sells!

I am sure I forgot something, but hopefully that lines it out a little?