Home > Real Estate > We Flipped a House!-Part 1, Buying the House

We Flipped a House!-Part 1, Buying the House

flipping a houseI have a secret to confess. I have not been completely open and honest about all of my financial endeavors. Sure I’ve talked about selling my business, transitioning into part time work, and buying a rental property, but there is something I haven’t told you. Even before starting this blog, my husband and I were in the process of flipping a house. Why on earth, you ask? Good question. I’ll share some background on how this investment property project came to fruition.

The House No One Wanted

We started our rental property search in early 2012. Our realtor, who also does property management, brought a house to our attention. This deal was so good that she wanted a part of it herself, but needed an investor. Her idea was to flip the house, which means to remodel it and sell  for a profit.

This house was in terrible, terrible disrepair. The roof was crap. The family room had mold. The flooring was covered in grime and cigarette burns.The decor was all from the mid-70’s, and the place was covered in nicotine stains. It also had a detached garage that was falling down. In fact, the only things that were in good shape were the foundation and the doorbell. However, the house was a good sized 3 bedroom/ 2 bath home. It had a wonderful yard with a sprinkler system that actually worked, and it was on the second most desirable street in our town.

The owner had been an older lady in poor health that had moved into assisted living and then passed away. My realtor had been involved in moving the lady’s things from the house after she passed. The house was inherited by a daughter who lived out of town. The daughter apparently did not have a good relationship with the mother and wanted to demolish the house and sell the lot. She had no desire to fix up the house, but it was going to cost $20,000 to bulldoze the place, so she agreed to sell.

Did We Want to Become Flippers?

 At the time, we really had no interest in a flip. We were hoping for a long term investment, and I’ve seen those house flipping shows on TV. Something always goes wrong! If we agreed to this deal, we would put up the money for purchase and renovation, and our realtor’s company would be in charge of fixing up the house.

Ultimately, we decided to go for it. There were a number of reasons why.

  • We wouldn’t have to do any work ourselves. We are good at finish work, but this house was way beyond our capabilities.

  • We had known our realtor for a long time and knew she had done this sort of project several times.

  • The price was too good to pass up. We were able to purchase this house for $47,500.

  • For experience. Honestly, the project excited us, and we felt it ultimately wouldn’t lose money. Even if we didn’t get rich, what a great learning experience.

How Did We Pay for It?

 This might send some of you debt averse readers into a tailspin, but we took out a Home Equity Line of Credit. We have about $200,000 worth of equity in our house. Our bank was offering a fixed 2.99% rate on a HELOC for 24 months. By doing this, we put our house on the line, but our out of pocket costs would only be about $200 per month to cover interest. There were no closing costs and barely any paperwork. We agreed to invest a maximum of $100,000 on this project, meaning we had $52,500 remaining to put in after the purchase price. We were assured that it could be done for that amount. Our time line was 6 months. At that point, we hoped to list the house in the $160,000-$180,000 range.

As the investor in this scenario, all we have to do is sit back and wait to collect our money, right? With those numbers, there’s no way to lose. Maybe we’ll become professional house flippers! You’ll have to check back on Wednesday for the next installment to see if the project happened as planned or not.

If you have five minutes, you might find it fun to watch the before video. Keep in mind, we are not professional filmers. If I had any idea anyone might see this, I would have fixed up a bit more, and don’t laugh at my accent!

What do you think? Are we seriously smart or really crazy?

Image courtesy of ddpavumba / FreeDigitalPhotos.net

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.

57 comments

  1. I hope that you’ll cover how you orchestrated all of the repairs needed in the next post. That’s one of the things that keeps me far away from even looking into flipping houses. I have no desire to act as a general contractor.

    • It’s not completely done, but I will cover more of that next time. There will likely be several posts before it’s all said and done.

  2. Video doesn’t work! It’s telling me it’s private! But I definitely want to see =)

  3. Looking forward to part 2. I’ve always wanted to flip a house but never have taken the plunge. Love hearing “real world” stories and not drama filled tv shows.

  4. Wow, this is pretty sweet, Kim! I can’t believe you found a house for $47,500…absolutely makes sense why you’d want to try to flip it. I certainly do not have the financial backing right now to take on a house flipping project, but I would consider doing it someday. Another option would be to fix up a house and rent it out, but I believe you’ve already done this? 😉

    Also – your video is currently set to private.

    • Video is fixed. I would love to keep this house, but it wasn’t up to us as it came as a package deal with partners who wanted to flip.

  5. Well it sounds like a great plan on paper. If even if you could flip it, would you? Or would you just keep it as an income property?

    • This would be the perfect rental property, but the deal that was brought to us was as a flip only, so that’s what we’re doing. The house never actually went on the market. We got inside information to even know it was available.

  6. It sounds like a decent plan on paper, but paper is paper. 🙂 I am interested to see how it turned out. I don’t know that I’d do it, but that’s more due to the fact that I would have no idea where to start with flipping a house and less to do with the HELOC.

  7. There are so many shows on TV about house flipping, as you say – something always seems to go wrong. I have never really thought about doing it myself, but I do find the shows interesting enough.

  8. I had no idea you were doing this! You are good at keeping secrets haha.

    I am very interested in this. House flipping is always interesting to me.

  9. I hope this works out for you. I was just listening to a commercial on the radio this morning about flipping houses and they were referring to an area close by where I live. I wish I did not have the debt because doing something like this would be very interesting to me. I am capable of doing a lot of things around the house to add value so I could save money from not having to bring in too many professionals to work on the house. Good luck.

    • It’s not for the faint of heart, but being good at construction puts you ahead of the game. I hope you get the opportunity when your debt is paid off.

  10. I have gotten the itch to flip a house, but the one I want has all of the things you mentioned AND a crack in the foundation. It’s nearly 100 years old. My heart and my wallet are in conflict, and I’d also have to do all the work! But, it could be a great profit.

    • Find a good inspector and ask lots of questions. Bad foundation is a deal breaker for us. Everything else is just lots of work.

  11. Congratulations, and incredible work!

  12. I think you have to be a little crazy to do flips, but it works for a lot of people.

  13. I don’t think its in your blogging contract that you have to disclose every single thing about your finances to us 🙂 I can’t wait to find out how much you flipped it for. You are becoming a real estate tycoon!

  14. I probably would have flipped that house as well, even-though I have no desire to get into flipping real estate. That kind of price and the good overall foundation seems like an OK idea. I am excited to see the next posts.

  15. I really hope things go well for you. This is my wife and I’s dream for retirement!

    • I do think real estate is a great way to get to retirement early. Not sure we’ll get there with this project, but one step closer.

  16. The house looks bad but if you have a great team then it will turn around quickly. There is more upside because the price being so low, good luck.

  17. Kim, sounds like a great project you got into. I’m definitely curious for the next part to see how it all worked out. In the video, was that an old TV?

    • Yes! A classic old Zenith. It was as big as a dining room table. Sadly no market for such a beast and it has died a lonely death at the salvage yard.

  18. We’ve never flipped a house, but then again we’ve never had the option to purchase a home for $48K on the second most desirable street in our town. Anxious to learn how it went for you and hope it has a happy ending. 🙂

    • I’ll give more detail on Wednesday, but it isn’t over and done by a long shot, so I certainly still hope for a happy ending as well.

  19. We have never flipped a house to sell but we have remodeled a few. One of our rentals had extensive remodeling and the house we live in got completely redone. It was a lot of work…but I’m happy with the outcome!

  20. That is really interesting. I can’t wait to hear the next part! I have thought about flipping houses before, but I’m worried about the amount of work that it would take.

  21. Sounds like you need to replace the battery in the smoke detector. 🙂

    My ex-roommate used to flip houses in college before the housing market collapsed,. So did one of my co-workers, so it really isn’t rocket science. Remember, the reason there are so many expensive problems on house-flipping shows is because they make for good tv! The average flip is a lot more boring.

  22. Wow big project! Congratulations! I can’t wait to see how it turns out!

  23. Wow! You’re a bit crazy, but crazy sometimes has great dividends. Loved the video BTW. Reminded me of when we were looking at houses.

  24. Good for you. I think like anything we invest our money in if we are able to confidently say that we are ok with loss of money and still live life, paying the bills etc than sure go for it. That’s your call, you know your situation. I can’t wait to hear about the renos and how it all unfolded… now you’ve got me waiting on edge for post 2! Cheers Kim

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