Saturday, March 6, 2010

Flipping...Past, Present, & Future

So as I hinted to before, flipping homes has been my source of income since the end of 2005.  I got into the rehabbing world at the time of the upturn in real estate prices.  It was when anyone and everyone had the Midas touch for flipping in real estate....add some paint increase the price $15k and call it a day.  Time was even on your side, we would purchase a property; and four months later, after we had gone over budget in both money and time, we were able to increase the listing price by $20k-$40k...just because we had held it longer than we had wanted! 

Ohh the good ole days...they lasted for a while....until IT happened, the mortgage crisis, well while we in Tennessee remained relatively unaffected as far as home prices went, it was taking longer to sell a a whole 60 or 90 days!! We had gotten so used to putting the sign in the yard and getting three offers by the end of the weekend, we had forgotten what the market should really be like.  However, the homes we were flipping seemed to be immune to this new crisis, our two current properties on the market, Gordon Petty and Tinnan, sold without a hitch, with multiple offers and above asking!

So we thought, what could go wrong with real estate? I mean it was a sure thing right?  Well enter the house from hell...Springview.  I did my research as I always did, estimating costs, looking at comparables, searching the title to make sure it would be a smooth purchase on the court house steps...ohh yes that is right at the time we were buying foreclosures sight unseen for straight up cold hard cash. I mean this house was right under 4,000 sqft in Franklin on 10.5 ACRES....something that is extremely hard to come by.  Yes it was a ranch and yes they had previously tried to sell it with no luck...but I mean I could tell from the outside the home needed some work, it could be easily estimated without going inside...or so I thought.  So I show up to the courthouse steps research folder in hand, ready to put my max bid of $500k on the property, (yes cash) all the familiar flipping faces were there, my enemies...we had bid against each other for years now.  The enormous butterflies in my stomach never seemed to go away on bidding days.  So I stood, and I waited as the auctioneer sold the first property of the day.  Next up, 435 Springview Dr. ohh the butterflies were bursting to get out.  The auctioneer says, "the bank has an opening bid of $349,000," ohh wow this is going to be a long auction I thought, since we are going to be in a bidding war.  I threw out my first bid of $350,000.  I looked around expecting a competing bid from my fellow rehabbers....nothing...$350,000 going once...twice....sold to Mr. Neel.  At this point I was FREAKING out....had I missed something that everyone else had seen?  Or, did they just not know the value of the property was in the $750k dollar range?

Well fast forward two years and more than $200k later, and the house has just gone under contract for.....$510,000, yes a loss, the first one of my flipping career.  Yes the $200,000 is an inflated amount set my my parents (IRS if you are reading this I am actually lying that is the exact amount if not less that we put into the house) but still what happened to the estimated $750,000?  What could possibly have happened? Well to all of you thinking of flipping, when flipping in the upper-end of the home market, GARAGES ARE KEY!! Everyone said what a great price the property was at $749k when I had listed the property just no garage, I was down to $599,000 when we got the lowest ball offer of all low ball offers.  Yet...we took it...ready to get out of this sinkhole of a property, and do what....find the next flip!

Well...I have found it....and that is what has prompted me to document its transformation from dilapidated the awesome classic/modern bungalow it always wanted to be....

No comments:

Post a Comment