How to Break the House Flipping Rules

I recently chatted with Dan Link of Accurate Home Inspection, LLC.  Dan is not only a home inspector, but also a veteran home flipper.  Through his experience doing many houses over the years (and as he’s quick to say, learning through some mistakes!), he created his 10 Rules of House Flipping.  And they’re pretty darned good.  In fact, if they were carefully followed, you’d probably do very well financially as you flip multiple houses.

So as we started looking through this list, some really resonate.  And we know we should be following them, but after all, rules are made to be broken, aren’t they???

Truth be told, we really, really break some of these rules.  So I thought I’d start there:

Rule #4 –Don’t get emotionally attached to the house.  This is probably our biggest offender.  Since we spend days and weeks in these houses, we tend to fall in love with them. I’d be perfectly happy to live in any of them (and Richard still talks wistfully about the 2 car garage on the last one – particularly with all the snow we’ve had this year!). 

Photo - Jamie Salomon

Which takes us right to Rule #3 – Don’t over improve the house.  When you really love a house, you start to think about all the things you want to do it. And you sometimes lose perspective. So, should we have put marble floors in these houses?  Couldn’t we just have minimally updated the kitchen/baths & safety issues and put the house on the market?  Well, maybe. And maybe we would have a better profit margin.  But our goal is to create a beautiful home for a new buyer.  So we just don’t want to get by with the minimum.

Which leads us back to Rule #1 – Know where you are and where you are going before starting.  Now, we always start with a very detailed plan.  We use a detailed plan as the foundation for every project we've done.  Before we even make an offer, we know the investment level we plan (with a healthy contingency that we always need), the carrying costs, and the anticipated sales price for when it's finished.  And thus far, it’s never worked out that way.  We run into surprises (or we change our minds on something) and our investment is higher than planned, so it takes us longer to complete. Go figure!

Now we don’t break every rule, some of these we really try to follow.  For example, Rule # 6 – Be involved in the process everyday.  We are on site 7 days a week (and with the frequent furnace breakdowns on our current project, that means late night and early morning ‘check ins’ when the outside temperature dips into the single digits).  And no matter how detailed our planning, there are decisions that need to be made on the spot – every single day!   For example, we had planned several recessed lights in the house.  Well surprise, surprise, 2 of them ended up being right under an engineered joist – so we needed to come up with a different plan quickly, or delay getting the electrical done. 

Rule # 5– Look in the dumpster to know where your expenses get out of hand.  Wow, is that ever true!!!  We are on dumpster #4 on our current project and it’s filled with all kinds of things we didn’t expect – the bathtub that couldn’t be saved, the plywood flooring that we had hoped would be hardwood under old linoleum.  Can you hear the cha-ching, cha-ching sounds????

Dumpster #4 on Our Current Project

The final rule that really hit home for us – Rule # 7 – Plan on putting it on the market below competition.  I don’t know if we price below market – but we think our homes are very fairly priced. It really doesn't make sense to price high, the market knows what a house should sell for and will figure that out for you.  In our case, our houses have sold in less than a week and over asking price.  So while we ‘set’ a price, the market determined what it should be.

So what do you think of the ‘rules’?  Do you break them or follow them?

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Farewell to the Cottage - Before & After

Exterior - Before

We turned our little Cottage (previously known as Diamond in the Rough) over to its new owner last week.  It was such a dramatic transformation, I thought we'd share one more time (one of our readers reminded me that you can never share too many before and after shots!!):

Dining Room - Before

The living room saw lots of changes with walls and doors removed - opening up to the dining room and the former front porch.  

Living Room - Before

Living Room - After

Open Floor Plan - Before

Open Floor Plan - After

Kitchen View - During

Kitchen View - After

Kitchen - Before

Photo:  Jamie Salomon

Powder Room - Before

Foyer - Before (it was the porch behind the windows)

Foyer - After

Hallway - Before

Hallway - After

Front Bedroom - Before

Front Bedroom - After

Back Bedroom - Before

Back Bedroom - After

Bathroom - Before

Thanks for following our progress through this entire transformation.  We are so happy for the new owner.

Exterior - After

Want to see more updates on SoPo Cottage projects?  Like us on Facebook for more photos and ideas!  We're always working on a project.

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Diamond in the Rough - Before Photos

Yikes - is that a bathroom in the kitchen?  Why, yes it is.  And it's the only bathroom in the whole house!  We've closed on our new project and are realizing what a big project it is.  Remember, we bought this house without an inspection, so we're in the process of discovering what we've acquired.  It should be an interesting couple of weeks as we learn more.

We will be eliminating this bathroom, moving a powder room to an alcove off of the kitchen and putting a whole new bath on the 2nd floor.  So lots of big changes to come.  BTW - that's antifreeze in the toilet bowel.  The house was winterized, so there isn't any running water.  

Ah you ask, but what about those big water stains on the kitchen ceiling?  If there's no bath up there, where did they come from?  Excellent question!  We suspect that the heating pipes froze and burst, but that's a mystery we'll solve later this week.

And what's with the funky 2x4's on the window over the sink?  Looks like the window got broken and that's how they do the repair.....there's plywood on the outside.

If you're a fan of knotty pine - this is the house for you!

Dining Room

Upstairs Hall

The living room escaped the knotty pine treatment.

Future Bathroom - note the knee wall on the back of the room.....more about that next.

Master Bedroom.  Again, there is a knee wall at the back of the room.  

Master Bedroom 

What's behind that knee wall space?  Closet space with a shared dresser!!  The dresser has drawers that open from both sides.  But, it's only accessible if you're a lot shorter than Richard and me!

Last but not least, here's some pics of the basement.

This must have been a rec room at some point in time.....Richard's standing in front of the bar.  Note the wood stove and Player Piano

This piano is beyond saving.....but I thought I'd put it on Craig's List to see if anyone could salvage some parts.  It was manufactured by The Aeolian Co, New York, NY.  The song on the roll is 'Raindrops Keep Falling on my Head'.  Wasn't that from the early 70's?

So please stay tuned, we've got a lot of work ahead of us, but know that this Diamond in the Rough can be a real beauty when we're finished!!!

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Progress Update - with Before and 'In Progress' Pics

The whirlwind of activity continues, as we get the house ready to put on the market.  The eternal optimist, I think we have 2 weeks to be ready, Richard is guessing 3.  We keep checking things off the to-do list, but then adding new items!

We have red birch floors throughout the entire house.  They get refinished starting Monday - so we've focused on getting the rooms ready for John Abrams and his flooring crew.  We've been caulking and painting, and then painting and caulking, with a little spackle thrown in!  It's making a huge difference now that the old, dated wallpaper is gone and the walls are light and bright.  We're also making progress on the upstairs bathroom.  The marble floor and border are in and grouted.

Check out our progress and some sneak peeks!

Remember the front bedroom with its dark blue wallpaper and damaged walls?  And the acoustic ceiling tiles and broken windows?  All gone, now we just need the floors refinished and it will be done!

Front Bedroom - In Progress

Front Bedroom - Before

And the back bedroom with it's grimy, granny wallpaper and acoustic tile ceiling - all gone!  But when we pulled up the vinyl tiles, we discovered nasty black adhesive underneath.  That will get sanded off, exposing the birch flooring underneath.

A big improvement - but we need to get the smelly adhesive off the hardwood floor!

We also made lots of progress in the Living Room - the brick corner is gone and the floor should be beautiful once it's refinished!

Living Room - In Progress.  Note the big opening to the sunny kitchen, a big change from before.

Living Room - Before

And once last quick peek - here's the newly tiled upstairs bath.  We love the carerra marble basket weave floor and border.  Still lots to do, but it's coming along.

Stay tuned for more updates this week.   In addition to the flooring team, we have the landscapers coming to tackle the front and back yard.  And, weather permitting, we should get the exterior painting completed.  

Hopefully we'll be scheduling our Open House soon!

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