Zoom Call 8.30.22 Pat Starnes Flip That House
ActiveRain member, Pat Starnes from Brandon, MS and Front Gate Realty was the presenter this week and offered her story as to how she became a flipper and what has worked to make her successful.
She offered up a brief synopsis of her entry into the business of flipping as a second step to her entry into the market as an investor looking to create a portfolio of rental properties that would eventually be her retirement portfolio. This was altered when hurricane Katrina tore through the gulf states and holding real taste long-term didn't seem like the best investment in that ar.
She also became frustrated with the constant maintenance of the properties whenever a tenant moved out and she had to clean up their mess.
She decided to venture into the side of buying, fixing and selling for a profit, although each property presented a different scenario.
She believes that not all investors/flippers are seeking the same result, and the market they work will decide what is best for them. Be it a condo or a residential property in a highly urban area and whether the choice is to buy and hold long term.
If a decision has been made as to type of property, then the next step is to confirm source of funds and have sufficient value to not only cover the cost of the seen issues but also for unknown repairs that may not be openly obvious.
Another part of the process is to make sure the last art of the process such as closing costs and tax ramifications have also been properly researched.
Pat believes that the best profit would come from doing research into the community where the property is located. Profit potential needs to be achievable, but also not over fixing is important so that it is not the best house on the street, but another comparable property.
Buying a property that needs very little and has just sat on the market is not a wise investment. The more work that needs to be done, the higher the potential for greater return.
Taking a personal approach to the refurbishment and being creative can also help. If you cannot do the work yourself, find contractors and workers that meet your criteria, and you can trust to do their jobs properly and within the budget you have created. Cost overruns will suck all the profit out of the project.
Pat discussed a particular flip she had done on a modest neighborhood and how she was approached by several of the neighbors to compliment her on the job but also point out a distressed home at the end of the street that could have potential.
The owner was an elderly person and also somewhat of a hoarder. She couldn't maintain the house but was very reluctant to allow people onto the property due to the issues and her embarrassment. Pat suggested she evaluate the property and offer a fair market price allowing for the clutter to be removed and the fixing that needed to be done.
This was an acceptable solution and Pat began the task of refurbishing this fixer-upper.
This home offered a great upside potential as it was a rare home with a 3-car garage. Once inside, it was a large challenge as there were major mechanical issues that had been ignored for years as well as cosmetic issues that were just ghastly.
The contour of the home also presented issues as it had a large rear sloping lot that presented challenges both for cleaning up the exterior of the house as well as accessing the yard itself.
The foyer of the house was high, and the walls were covered with a wallpaper which was actually brown paper bags glued to the walls to create an "only a blind person could appreciate" look.
Using her creativity and the desire to spend a reasonable amount of money and time to remediate. After giving it reasonable time, she decided the best action to clean it u was to jus cover it all up with board and batten materials and give it a fresh clean look with reasonable expense and labor. She also had the railings and spindles replaced and cleaned and refinished the stairs herself. The look was very appealing when she was done.
The outside entryway to the property was a challenge for the deterioration to the doors and neglect. She cleaned up and re-stained the doors.
To get this completed, new columns were installed, and Pat was the painter that stained and refinished the entryway.
There was also the unforeseen expense of a rotted tree on the property
This required a tree trimming company to come in and take down and remove as well as a few other trees and trimming back some of the overgrown ones as well. This was an unforeseen expense of $3,000 that came out of the budget
Due to the sever slope of the lot, a lift was brought in to paint the exterior.
The interior of the house had the kitchen redone, as well as cleaning the fireplace and installing a new mantle, The bathrooms were redone, and a large room was made into a possible additional bedroom by the addition of a large walk-in closet which could either be a closet for the bedroom or storage for whatever the purpose of the room as well. All the interior rooms were repainted to make the house as well.
The rear of the yard had a sever slope so to make it easier to access there were stairs and decking repaired and installed.
The work was done right, and the house was sold to allow for her to make a better than reasonable profit.
Zoom Call 8.30.22 Pat Starnes Flip That House
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