All Forum Posts by: Alex Applebee

 I need to do a whole post on this. Or book. Short version: lying, stealing, not showing up, not finishing work, making a mess and trying to charge me to clean it up. shoddy work. 

 I did not live in the flip. Safety measures were that I did not go to the property at night, and when meeting subs for bids I usually told them what I wanted and they walked through alone, or I would have all exterior doors open, wouldn't walk into any room where there was only one exit, etc. Not in an obvious way, but I was careful and aware. My husband and I were constantly in touch when on I was on the property. Also subs did not know I was a woman beforehand, I would set up appointments via text and my name being Alex is totally androgynous. 

When I had my stand off with a sub and it got tense I had my husband with me. He kept trying to get us to walk into the house with him during the argument and we refused, having the discussion out on the sidewalk in plain view. I also had to call the cops to do a drive by that evening after that sub I fired commented that "He wouldn't do anything to the property, but he couldn't say what his guys would do." I also had good relationships with the neighbors on each side of the house and across the street and gave them a heads up to keep an eye out and call me if anything weird happened. 

 Ohhhh, the HVAC. The HVAC initially wasn't too difficult. I found a GREAT guy (if you are in PHX message me and I'd love to send him some business.). He rented a crane and put it back on the roof where it had originally been. He did have to build ductwork in that addition because there was none, and also as we were turning one large space into multiple rooms so this is something we would have had to do anyways. He replaced some interior parts and we were good to go. initially.

Well, then my second crappy sub comes along and I hired him to do A LOT of work (bad idea, now I dribble work out to people in tiny doses.) So he gives me this song and dance about how we still need a register and return in the kitchen, but luckily he can fix it for $375. I was a little skeptical of his reasoning, but after a long spiel I believed him and told him to get it done. Well after quite an ordeal a few weeks later I fire him. When in escrow we did the home inspection. The inspector comes back with photos of the ducts to the back of the house being cut off completely and then re-routed and ziptied together to go to the kitchen. I would dig up the photo if I had time right now. So I called my A/C guy back out and he fixed all the damage done by the sub. I had to totally replace the duct cut open and ziptied together. The good A/C guy takes a ton of pride in his work and he was so upset over what had been done to the ducts you would think the other sub had set his mona lisa on fire. So that's the HVAC story. 

The private funding was through a family loan. The family member finances other people's flips, although doesn't personally flip houses. Of course family lending comes with it's own set of issues, but I am extremely grateful.

 I re-worked the existing footprint. The back had an old addition that was basically a giant room that made no sense. I turned the space into a breakfast nook, master bedroom and master bathroom. 

 Thank you. I did replace the windows (twice, thanks to terrible subs). The curtains are $3/panel ones from walmart. Cheap way to dress up a property. 

 He was working full time, and we we love eachother but don't work well together, lol. He did help out the day I needed the truck and thought picking up 26 bags of quickrete and dropping them off at the house ourselves wouldn't be difficult. never again.

I closed escrow on the sale of my very first flip back in January. Craziness of life got in the way and I never got around to posting about it here. However, I figured it was time. I SERIOUSLY credit BP for some of the success here. I probably could not have made it happen without this site and J Scott's book. I have not been a very active poster (which I am trying to remedy!), however I have spent a lot of time on here reading and absorbing everything I could. 

The process of the deal and the steps to get there were a long one, starting at the end of 2013 getting my real estate license. I did this just so that I could get MLS access and the freedom to run my own comps and look at properties on my own schedule. Saving 6% is great too.

So my flip was financed through a private loan at 6%. I purchased a 1,580 sqft 2/1 fannie mae foreclosure, built in 1948 in Phoenix. I'm (or, was when this started) a 26 year old woman who knew nothing about construction. No pressure. I converted the house into a 3/2. Re-did basically everything except the roof. Including the framing of a master suite and bathroom in the existing footprint of the house. I sure jumped in with both feet, ha.

Did I make mistakes? YES. Did I overspend? PROBABLY. Was it perfect? NO. I would do so many things on this project differently the second time around. But I am SO glad I did it, and made it happen. You can read all you want, but you just don't know until you are in the middle of the process (wanting to cry, pull your hair out, sweating profusely because it is phoenix in the summertime and 116 degrees and what were you thinking flipping a house?!) that is when you learn what you are made of, toughen up, get creative, and get it done. Whatever you think you know about getting it done, you just don't know until you do it.

The toughest part was learning to manage subcontractors. I did not use a general contractor. I definitely got taken advantage of twice. This was expensive, and I was NOT happy about having to pay someone to rip out and fix crap work. However I needed to learn that lesson. Now my paperwork is tight and my tolerance for their BS is non existent. 

I purchased the property for $104,000. Sold the property for $210,000. Before you get too excited, my profit was only $19,000 after expenses, holding costs, closing costs, and getting ripped off by subs. HOWEVER this was my FIRST deal, and I did it all alone. Start to finish took me 6 months. So this project took longer than I thought, cost more than I thought, but I still made money, because I bought right. You really make your money upfront. Here are a few photos, and at some point maybe I'll come write a more detailed post of the highs and low of this experience and add some more pictures. Still, go out there and make it happen, if I can do it, you can do it. I did a second property in Scottsdale and now I've moved back to California and I hope I can get something big rolling.

Before: Don't be fooled by the "rock" exterior. It was plastic and cracked all over and hideous in person.

Nice A/C duct work there, though an open window. Pretty Fancy.

ok the couch looks hideous. It was all I had! I did just give it away, I wont stage with it again I promise, lol.

The former kitchen opened to a giant empty room in the back, that you accessed by walking into a large closet?? I sold the retro oven.

Also on a side note with ARV, watch out for using "pending" properties as ARV comps. This got me into a tight squeeze on my second deal (that after being on the market twice as long as I planned, is finally under contract.) Anyways the neighborhood I bought in is kind of a funky little development surrounded by much more expensive neighborhoods. Only 1 house had sold in it for the last year and a half, and the house next door to the one I ended up buying was in escrow. So I called the agent to find out what it was under contract for, as did another realtor I know. He gave use two different answers (which should have been a red flag!). He told me they were in escrow for 450k, told the other realtor 430k, and both those numbers worked for me so I put in my offer and got the property next door. Well the property closes a week later for 410k. UG!!! Why?!

Luckily I have a few things working for me and I try and get this property closed at a higher price than that: The market has gone up, the cheaper property has smaller square footage (a little), smaller kitchen, cheaper finishes, and was redone in 2007 and then a rental. Also a more dated and closed in floorplan vs my open concept floorplan. I also have 10-15 other comps that are more expensive than my property in nearby neighborhoods, that are very similar houses. I however know that I can't be lazy and I am going to have to work for my appraisal. I like to give a long list of comps beforehand to the appraiser and be friendly and polite about why I think my price is not only justified, but maybe slightly undervalued. With evidence. Shout out to the bigger pockets podcast on that I listened to yesterday.

Moral of the story, beware other realtors, and dont use pendings for ARV. Learned a lot on my second flip, don't be scared to dive in. My third will go better.

I've learned the hard way, by the time they are no-showing and you are wondering if you should fire them, you probably should have fired them long ago. Anyways, looks like you got great advice on this thread. DO NOT let your project be held hostage by flaky workers.

One thing I have learned. I never give anyone very much work, and never hint at more work being possible if they do a good job. I give a small piece of the project to a person. If they do well, I will give a little bit more. Once they start slipping it is easy to get rid of them and bring someone else in for the next portion. Even guys that I have used multiple times I still only parcel out small projects at a time. This seems tedious, but EVERY time I have given someone a larger project they stop being hungry for my work and quality or speed slips. So for a plumber I would start by the first and smallest step in the bathroom, and as he has proved himself and is wrapping that up, trickle out a little more work. I don't care if the sub doesn't like it that way. I am not here to be friends with them and they work for me.  I started out trying to be nice to my thinking that if they like me they will work harder and not rip me and my project off. HAHAHA! No.

Let me rant on paperwork if you don't mind. Remember, as others have said, always have a paper trail, hard deadlines, DOCUMENT. I took a page from my days working in hospitals where we charted EVERYTHING, and if it wasn't on paper, it didn't happen. Let them hang themselves with paperwork. I have gone from using just a basic scope of work and independent contractor form to using a very detailed scope of work that includes agreed upon fines for missed deadlines and a messy jobsite, independent contractor form, contractor contact information sheet (address, email, phone), a "payment receipt form" every time I pay them they sign, a "change of work order," and a form that states that they understand all the forms they are signing. Every page is initialed by them so that we aren't playing that game of "I didn't see that". Photographs and text communication is your friend. I intentionally scare them with paperwork right up front. There are always 20 more subs to take this ones place if they wont sign, and I'll tell them that if they complain. I went from having nightmare workers with messy job site, wanting $$ for unfinished work, arguing about what costs are, to almost no problems. Best of luck! Hardest part of flipping is the subcontractors. 

Averaging price per square foot is not a good way to go. Also know that this is something SOME realtors try and use to beat you down on your price when selling. It isn't an accurate way to calculate values, and it isn't really the main factor in appraisals. 

One realtor tried to use this to justify a sales price of 190k on my first project. He told me how my place was so overpriced and would not sell at list price, nor would it appraise. I however knew the comps and what the property was worth, and sold it for the list price of 210k, backed by not one, but TWO FHA appraisals (due to selling the property for more than twice what we bought it for.) MLS is the way to go. I got my realtor license specifically for this. I have no interest in being a realtor, but I like saving 6%, doing my own comps, and walking through other properties on the market at the same time as mine. This lets me see my competition, and what is really a comp and what is not (magic of a good photographer hides a LOT.)

I am only on my second project, but I have no idea how or why people do this without getting your license. Too many realtors out there are full of hot air and will tell you whatever you want to hear, or whatever their client wants to hear when beating you up on price. I like having my own REAL numbers to help me stand my ground.

Good luck!