Flippers Beware

Real Estate Agent with Rector Hayden, Lexington, Ky

I have been in the proceess of getting a home ready to sell the past three weeks.  When I bought it  I was hoping to have it on the market next week.  Things just take longer than I usually plan and of course it costs more to make the necessary upgrades than I had planned. I do some of the demolition work and help out a bit.  However, I am not a finish carpenter and don't pretend or try to be.  I contract out the work that I know I cannot do professionally.  .

I recently had a friend say to me, "I have been reading about flipping a house and have been reading and learning everything possible."  I asked him if he was working with a realtor and he said no.  I advised him to give me a call and he said he would.  I see him every week and yet he has yet to call me.  

It is so easy to walk into a vacant house and spot a home that someone has bought and is trying to flip.  Especially if it is someone who is not a professional remodeler.  Typically these homes are in need of repair to the repair.  Recently I showed a home to a client where the attempted updates to the kitchen included a two piece granite top that was at least half an inch off at the seam.  They had also attempted to update the kitchen without installing a dishwasher.

Often these "get rich quick flippers" also will not bother getting a home inspection.  So when they try to sell the home things such as electrical problems or even worse mold problems raise their ugly head and the "flipper" ends up losing money.

Once again applying the Golden Rule is the only way to "flip" a home.  If you fix it up so that you want to live in it, you are happy to pay the price you are asking and you are willing to buy a home warranty for the home then it will sell quickly.  If you made a little money during the project consider yourself fortunate.  Odds are the first home you  flip will  make little or no money however.  So ask yourself,  "Am I  patient enough to learn from the process and willing to do some real soul searching before I do it again.  

Just one last word about flipping.  If you are trying to buy a bank owned home be ready to wait and wait and wait.  Be aware also that the bank may be looking at more than one potential buyer and that if your bid is not high enough you may lose out on a home after waiting for weeks and even possibly months.

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Paul Campbell

The Jubilee Team of Rector Hayden Realtors

Lexington's Green Thumb Realtor

The Jubilee Team,  Paul Campbell and Dorothy LaBar

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Walter Jetter
Heavenly Homes Realty, Inc - Fayetteville, NC


Thanks for the Great tips!!

Sep 14, 2009 12:47 PM
Linda Landry
HomeSmart Realty - Tucson, AZ

Flipping is not a get rich scheme!  It takes an investment and a wise investor and a cooperating market to make it profitable!

Sep 14, 2009 12:50 PM
Marvin Von Renchler Security Trust Mortgage, Inc. Oregon

Didnt read every post so Im sorry if this is redundant but one must also watch out for existing and new state laws regarding 'flipping' of properties. How its aquired may be important. You may be sued by the old owner. Having a r.e. license may be a big handicap.

Sep 14, 2009 01:57 PM
Marvin Von Renchler Security Trust Mortgage, Inc. Oregon

Didnt read every post so Im sorry if this is redundant but one must also watch out for existing and new state laws regarding 'flipping' of properties. How its aquired may be important. You may be sued by the old owner. Having a r.e. license may be a big handicap.

Sep 14, 2009 01:57 PM
Mona Lisa Harrison

I work with smart investors who see "flipping" as a business and are not afraid to call in the experts BEFORE making expensive misstakes. A good team will include a knowledgeble and hands on, creative agent, good craftspeople, inspector, and someone like me, a stager who understands the market and has project management experiece. 

Nothing can overcome a bad buy. You have to understand what you are REALLY getting into and it takes more than just YOU to see that. If done intelligently, buying and reselling a house quickly can be done here in the Upstate of SC and for a profit. But just like football or soccer or basketball, it takes a good team effort.

You don't have to be Lucky or HOPE you come out ok, with proper guidance in the beginning, you should be able to predict your outcome. And of course, you have to LISTEN to your teamates. Even when they say, "walk away".

Sep 14, 2009 02:53 PM
Linda George,Re/max Connection,Vero Beach FL


First let me say that I will keep your grandbaby and your entire family in my thoughts! I hope she will recover quickly and return home ,where she belongs.

Secondly, thank you for stirring the pot with this subject. I am currently looking for a couple "flips" in my area, and will use the comments and advice to make the right buying decisions. My husband and I have done several in the past..all with a small profit. I know we have done a good job when I am sad to see it sell, and have contemplated moving into it myself!

Sep 14, 2009 02:58 PM
Paul Tomlinson
Fox Valley Property Solutions - Montgomery, IL

I am a flipper and have been in the business the past 3 1/2 years or so. If you put out a superior product, you will do well. If you follow the formula, have a set timeline, know the cost to fix up the property, holding costs, and your exit strategy (strategies), its a fantastic business.

Yes, there are those that get into flipping that not only have no business sense but they try to do all the work themselves and put out an inferior product. I've learned along the way what I'm good at, what my partner is good at, and we have contractors/electricians/plumbers/carpet guys/drywall guys, etc... for the rest. As a flipper, you learn to play by the percentages. I don't put in one offer and expect to get that property. I'm often putting in a dozen offers within a week. Some may call it low-balling but I have a formula, pick out properties based on several criteria, and so far it has worked out very well. Yes, there is the FHA 90 day rule but there is a workaround to that by incorporating a quick lease option for the potential buyer. Collect a good amount of option consideration and on the 91st day a contract is written. No brainer.

When it comes to appraisals we can back up our work by making sure the appraiser gets a list of work that has been completed as well as copies of receipts or a spreadsheet detailing the cost breakdown. Not a big deal and never had a problem with it. Usually the one's that say it can't be done are the one's who haven't attempted to do it themselves. I've corrected many an attorney and realtor along the way because they say that certain things can't be done. Just because you haven't flipped a property in one day, don't say it can't be done (I bought with cash for $50K and sold it for $62K cash on the same day).

Sep 14, 2009 03:03 PM
France and Mark Clausen
Realty Austin - Dripping Springs, TX

Brace yourself, I am about to reveal the closely guarded, absolutely fail safe way to make a "small fortune" flipping houses. START WITH A LARGE FORTUNE.

Sep 14, 2009 03:24 PM
Robert Huntsinger
Empire Realty - Upland, CA
Empire Realty Upland, CA - Full Service at a Discount

Been a flipper in my previous life, it is not for the faint of heart.

Rule one, before you buy cost everything out if you were to hire an experienced journeyman for every task. Make sure that your project plan is complete and stick to the plan, you will always have unknown unknowns you will need to deal with so add 20% to what ever your estimate for time and costs are.

Add in your expected profit, I don't take on a project unless I can net $25k and make sure you have boths sides of your transactional costs.

Everything you choose to tackle yourself you will make money on because you are not earning journyman wages, but remember time is money if a journeyman would have taken two days for a job that took you a week to complete you lost money.

With your hedges for cost and with the sweat equity you put into the place you will make more than projected 75% of the time.

With this model you might have to work up 20 houses to get one tat works for your model but I would rather spend my time working up houses than bitting my nails and busting my back to scrape out a $5k profit.

I like investing much more than flipping! It is all about that cash flow!

Good luck!



Sep 14, 2009 03:49 PM
Mark Velasco
West Shores Realty - Whittier, CA
Top Producing Broker Associate

Very true Paul. Flippers need to do their homework...or else they may pay dearly.

Sep 14, 2009 05:02 PM
Anna Stout
F.C.Tucker Co.-Carmel/Westfield IN Homes for Sale - Westfield, IN

Thanks for your insight. I appreciate your thoughts on applying the Golden Rule. I'm currently working with an investor who loves buying Bank Owned properties. He will rehab them and then rent for 3 yrs before selling. After several conversations about doing the right thing from inception to completion, I think renters and future purchasers will have a good quality home.

Sep 15, 2009 01:50 AM

i do have a few comments:

1 flipping does not have to include rehabbing;

2 REO are OWNED by the bank;

3 shortsale is NOT a bank sale. it is when the owner is asking a favor from the bank to let go of the lien the bank holds on the property for less than what the owner owes, so that the owner can sell that property.

4 for those who despise shortsale investors under the premises that those investors are praying upon owners losses, consider that the owner has already lost everything and is NOT entitle to receive from the sale ANY money. this would be bank fraud. the bank loses even more money by going through foreclosure. the bank is NOT entitle to look for a buyer until it takes legal title to the property. this happens at the auction. so if the bank can't sell the house it doesn't have yet, the owner can't get any money from the sale, the property has lost its value, then why so much fuss over some investor who attempt to save the credit of the homeowner from having a foreclosure on their record, save the bank from the hassle of going through that foreclosure, create an opportunity for a new buyer to get a house for a decent price, prevent that house from being a worse statistics and decaying till the bank puts itself together to figure out what to do with that property, and still get pay a crazy salary for their action? why be jealous of their income if the bank is satisfied with what they get, the owner with saving their deteriorating credit and being involved in an excruciatingly long process of insecurity and fear, and that the new buyer has some cushion if the market goes further down? sell the house and be happy a problem was solved!

5 those wannabe handymen suck!

6 if you flip with of without rehabbing, never forget to include the rehab costs with everything you can imagine that may go wrong, then your closings, your upkeep and maintenance until you sell, your profit, then as well a good discount to the end buyer so as to give them that cushion i mentioned.

7 don't use zillow for nor should you consider MLS alone.

8 be a problem solver but not a slave. if you are the agent don't be a gofor, take charge, understand the deal, make it work. use tactics and techniques of true salesmanship as needed, play the field make everyone conscious of the state of affairs, don't be afraid of slamming doors on the face of those who are unreasonable, they waste your energy and are after self pity. be frank and open. study investing and understand the infinite flexiblity of creative buying so as to bring to the table incredible solutions no one had thought about. don't be stuck with one closing agent/title company/lawyer. don't be stuck with the wrong mortgage broker. don't complain and point fingers

9 boycott the government, fannymay, and the banks!

Sep 15, 2009 05:20 AM
Glen Fisher
National Property Inspections of Southern New Jersey, LLC - Oaklyn, NJ

A few years ago, 9 out of 10 flipper homes were reported to be fully renovated by simply repainting and replacing the floor coverings.  Concealed areas such as attic and crawl spaces were a mess.

Fortunately, I see very few flippers today.   

Sep 15, 2009 11:45 AM
Paul Tomlinson
Fox Valley Property Solutions - Montgomery, IL

in the flipping business we call that a haircut and a shave.

Sep 15, 2009 11:56 AM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

Paul, great advice learned the hard way.  HGTV makes it seem soooo easy.  It can be financially ruining if you don't know what you are doing.

Sep 16, 2009 03:26 AM
Erby Crofutt
B4 U Close Home Inspections&Radon Testing ( - Lexington, KY
The Central Kentucky Home Inspector, Lexington KY

A hot topic, Paul.  I hope your deal works out for you.  Now that things are slowing down a little bit, maybe we'll have time for that cup of coffee we talked about so long ago!



Sep 17, 2009 01:30 AM
Tatyana Sturm
Exit Realty DTC - Aurora, CO
Denver Realtor, GRI, Denver/ Aurora CO Relocation

I like 126's comments, so true, flipping is hard to make the numbers work, usually the investor needs some sort of inside source to make the numbers work and be worth thier time

Sep 19, 2009 09:54 AM
Hank Jons

The agent has to have a good  back ground  in property values to tell his buyer when to run.   I encourage  buyers to get second opinions from their contractor.  Thanks for the article.

Sep 30, 2009 07:58 AM
Sasha Miletic - Windsor Real Estate
RE/MAX Preferred Realty Ltd. - Windsor, ON

Hi Paul,

Excellent post... Thanks for sharing with us. Keep posting... merry christhmas.


Best - Sash

Dec 17, 2009 12:34 PM

how do we ensure lower risk and higher profit with conventionel financing flips? I try to flip my first one.

Mar 22, 2011 02:06 PM