All Forum Posts by: Jon Graham

@Jon Graham

Congrats on some amazing work! I am wrestling with this same issue. We've almost completed 4 flips, with each one having a rehab budget over 100k and an ARV over 500k. Each project has taken a minimum of 4 months to complete. Of course, I expect both our budget and timeline to improve as we gain experience, but this is where we are currently.

The first thing that comes to mind with your question is the time value of money. Another thing is the availability of houses in various markets and conditions. If I could, I would build a business where all I did was minor cosmetic upgrades, maybe some staging, and back on the market within 2 weeks on houses built after 1990 in high demand areas with low days on market. In my mind, that will probably produce the better return over time. The problem is finding a steady stream of those to build your business around.

My plan is to do both the minor cosmetic rehab and the full gut jobs, with hopefully some wholesaling and real estate development mixed in. So far, all I've found are the full gut jobs.

Good luck! Let us know when you figure out your next step.

@Jon Graham the money is important!  Otherwise, we can't keep doing what we're doing.  Your project is stunning, by the way.  

That's the beauty of real estate, there's no right or wrong way to do it as long as you're making money! 

For me, doing a full rehab is where the joy comes from.  Knowing I'm providing a quality product to a home buyer is the  only way I can do flips in good conscience.  Now, there have been occasions where I have bought properties that were newer, and therefore needed less of a renovation.  In the end though, the purchaser ended up with a great product and that's what matters to me.

Beautiful work!

It really depends on the neighborhood and the price point. If you're reselling in an entry level area and all the recent comparable sales are all in average condition and are selling quickly, you may not get the return you're looking for by going all out. Low sales price is going to be the key selling point here. 

But for nicer areas that have higher price points and longer Days on Market, all the bells and whistles are a must to stand out.

Let's start here - there are a TON of really bad home inspectors out there. As you probably know, you can get a home inspector's license through online courses. Many/most newer home inspectors either washed out in construction or were never in it to begin with. Those of us in the remodeling or home building trades don't have a hell of a lot of use for home inspectors. (And yes, there are some good ones out there, too. But experience leads me to believe they're in the minority.)

After seeing enough inspection reports that made me cringe, I adopted the following approach, and it works pretty well. Realize that the whole real-estate agent intermediary approach keeps buyers and sellers distant from one another, and it's harder to establish a connection, so I try to get past that.

• I put together an actual letter and send as PDF or JPG so the buyer's agent has to give the whole thing to the buyer. I'm very cordial, colloquial, I'm on their side.
• I tell 'em what a great house they're purchasing, how much I love this particular house.
• Then I talk a little bit about home inspectors qualifications versus people who are really in the trades. I kinda ruefully tell them that we see this a lot - inspectors who just don't know what they're looking at, and who are trained to point out every tiny thing, lest they be sued at some point for missing something.
• I go point by point down their repair request. Anyplace there's real concerns and I'm agreeing to fix it, I acknowledge that as something the inspector got right. If it's something that was valid to note, but I'm still not going to fix it, I just tell 'em that at this price point, that's not something I can do.
• Anyplace where the inspector screwed up, I provide background info and actual facts to make them feel OK about the house. Buyers are scared, and they're relying on the inspector. If I just say, "He's an idiot!" they don't believe me. If I present myself as us being in this together, and give them really good info, now we're working as a team to get this done.

This approach has been very successful for me (used it again just yesterday, in fact). And if you do it right, you even get the buyer's agent on your side - the BA wants to sell a house. Why not sell the one already under contract, rather than start again with lots more showings?

If you're not a contractor, you may need to get some time with your contractor(s) to get their input on the report and do the letter that way.

Now, all that said, if the buyer is just making stuff up because he's got buyer's remorse, that's harder to turn around - but even in that case, a nice letter reminding them of all the awesome stuff about the house can help quiet down buyer's remorse sometimes.

Good luck!