Believe Me: All real estate flippers are NOT equal.
There’s a LOT of so-called expert real estate flippers out there who watch some get rich quick show like how to become a millionaire or Flip This House. After a few episodes, they are ready to take over the world.
Like most well run businesses, the people who do well are those who have a business plan, pay attention to detail and know their market. Unfortunately, we often see homes that need some renovations and are purchased at a good price, only to be given a quick fix or band-aid before being put back on the market for top dollar.
The idea is a good one. Buy low, sell high. That’s the name of the game, right?
Here’s a scenario we came across recently.
An investor with a few hundred grand laying around decides he feels like making some quick cash playing the flip this house game. They buy the home in a nice neighborhood, throws some paint on it, move a few walls, add some new cabinets, some wood-looking tile and some faux stone on the front of the home.
The home was purchased for $331k and then re-listed for $495k approximately 2 months later. Comps in the area say you should probably be $20-$30k less than that number to be at the top of the market.
While much of the work that was done appears to be significant improvements to the home, the attention to detail department failed miserably. I have included a couple of small examples below. Both examples probably wouldn’t take much of a budget or even a lot of time to complete. Now that the home has been listed for sale for a little over 2 months, maybe it’s becoming more obvious that changes should be made.
Both of the examples below are from the front yard. Think “first impressions” for a potential buyer. On the left, you’ll see the poor landscaping and remnants of construction materials. The photo on the right shows the “trimmings” from the new stone on the front of the home. Would it take more than 5 minutes to clean these up? Would these two things help make a better impression for people as they walk up to the front door? I left out the water leak at the front hose bib, but it was another example of a marvelous first impression due to the lack of attention to detail.
Don’t get me wrong, the home absolutely looks WAY better than it did when it was purchased a few months ago. Much of the work was tastefully done and the upgrades certainly add value to the home. I just felt that there were small things that could have been done to help people with their decision to purchase this home.
Maybe add a touch of landscaping near the front patio? Maybe clean up the paint and grout chips? You know, just in case some people think that small details actually matter...
The buyers we showed the home to felt the same way. They mentioned that they were turned off by the home as soon as they walked up to it. Even when we discussed how easy it would be to make some of these minor repairs, they seemed to wonder if the rest of the work was just “slapped together.”
Around here, we prefer to dot the i’s and cross the t’s.
The next flip that we are doing is coming up later this week, and you can bet that the small details will be considered along with the large ones. If you are looking to invest in real estate or would like to become a “real estate flipper,” you should probably keep some of these things in mind. Give us a call to discuss your options.
We eat, sleep and breathe real estate, and we’d love to help you with your next home purchase, sale or flip.