We did it! WE DID IT! We successfully completed the renovation and closed our very first flip in the Parkrose neighborhood of Portland, Oregon. It took SO much longer (and cost SO much more) than we originally planned, but we also got exactly what we wanted: a fast-track education in renovation/resale of properties. We pretty much did ALL. THE. THINGS: new roof, windows, siding, water service, furnace, water heater, garage, kitchen, cabinets, appliances, floors and bathrooms. We also decommissioned the oil tank (with soil remediation), refinished the horrible-condition hardwoods, updated the electrical (including relocating the box) and lots of other things that I’m probably not remembering at the moment. I will tell you all about the lessons we learned in the process, but first, let me refresh your memory on how this house looked last September (2016) when we purchased it:
We knew we had our work cut out for us, and we had a lot of unknowns. But over the course of almost 8 months, we learned pretty much everything we needed to know to make a future project even more successful. (Spoiler alert: yes, the end result was a success!) So what exactly did we learn?
The hardest part of flipping houses is finding the right property.
Some think that financing flips is the hard part, and it’s not easy. People do it in various ways – cash savings, hard money loans, family loans, etc. etc. I won’t get into that portion of our project in this post. But I do know that regardless of the financing method, finding the right property is still the hardest part. It has to be the right condition (crappy, but not TOO crappy), the right area, the right price (LOW) and the right time. You have to know which mailing lists to join, which numbers to call and how quickly to act. The best prospective flips rarely make it to the public MLS – they are sold directly to wholesalers, flippers and developers. And when they DO go public, they generally get many, many competitive offers from investors with loads of cash. To be honest, I’m not really sure how we scored this property. I mean, I know where we got it (a wholesaler), but I’m a bit dumbfounded we won out over other bids. Perhaps it was beginners’ luck?
Your first flip will take longer than you think it will.
At least, in our case it did. We were hoping for a 6 or 8-week project completion time, and it actually took more like 8 months. This was all part of the learning curve – whether or not to do demolition ourselves (we did, mostly), getting contractor bids, meeting with lots of subcontractors, finally deciding to use a general contractor, picking finishes and other cosmetic things, permitting, inspections, more permitting, etc. etc. It seemed like every time something came up, it added another 6 weeks to the project.
It will also cost more.
Even with very careful estimating and planning, we ended up spending significantly more than we initially thought we would. There were a few things that really upped the budget – full replacement of the garage that we thought we could save, lots of re-wiring/electrical work and new water service/plumbing (for starters). And then there are all the little things that really add up…but you don’t think about so much at the onset of the project ($300 here, $1250 there, et. al.).
I know you want to know, so fine: Our renovation total came to around $90K.
After finding the right property, the most important part is finding the right general contractor.
Unless you are highly knowledgeable in construction, have lots of time on your hands and don’t mind spending many, many hours doing hard labor and inhaling toxic fumes and dust, I HIGHLY recommend hiring a general contractor to manage the work of your flip. Most people I know who start out flipping houses still have full-time jobs and families, so doing all the work oneself is not usually feasible. Finding a dependable, affordable (but not cheap), knowledgeable and communicative general contractor is key. Did I mention dependable? Yeah. One more time: DEPENDABLE. (And no, I will not give you the name of mine…unless you are my client!) 🙂
And finally, staging is everything.
Throughout the renovation process, my contractor kept joking with me and asking why I was planning to “waste” $3K on staging. I kept telling him it would be worth it, but with our super tight budget, I was a little bit concerned myself. After going through the process though, I am SOLD on staging. The photos looked fantastic, and we had a TON of interest. People really fell in love with this property, and I think the emotional connection made through staging did the trick. It’s one things to beautifully renovate a house, but it’s another to show someone exactly how living there could look and feel.
If you don’t believe me, see for yourself (finished photos below)! The home was under-contract in three days with two above-list-price, cash offers. Will we do another one? Maybe. But first, I’m going to enjoy NOT driving from SW to NE during rush hour (always, inevitably) multiple times a week to make contractor deliveries and check on progress.
Side note: See those nice, black shutters? We got done with the house, and I thought it was missing something. In a spur-of-the-moment decision, I told the contractor I wanted black shutters. He would have to special order them and wait…that’s right…about 6 weeks for them to arrive. That was a no-go. So I went to the Habitat for Humanity in a fit of desperation and found two sets in the exact size I needed for…wait for it…$6. I cleaned them up with a baby wipe and had the contractor slap those suckers on. Don’t they look fab?!
I don’t think we’ll be doing any more flips in the near future, but ask us again in a couple years. Overall, we learned a ton and had some fun, but we are TIRED! 😉