Playing Bob the Builder

This past summer I got the "flip" itch again and decided to tackle another "flip." It didn't turn out quite the way we hoped. But, we did learn some valuable lessons in the process. In our previous deals we have lived in the home while we were renovating and then we sold the shortly there after. This was the first true "flip" we've done. We purchased a converted duplex in American Fork Utah. Our purchase price was 169K. For a duplex that's not bad right? We'll see. We lost 2-weeks right away on the project because the upstairs tenants, who we had to kick out because they weren't willing to work with us, refused to move out in a timely manner. We had to find them a place to live so we could get them out of the house.



First lesson in flipping--make sure the home is vacant when you buy it.

Because we were having difficulty with the renters we started in on the roof. I contracted this out to a contractor we've used for other projects. He did a wonderful job. I assisted in removing the 2 layers of asphalt shingles and the layer of wooden shakes. Then I let the contractors handle the rest while I worked on finding a place for the renters. Once the roof was done we started on the siding.

Lesson #2 Don't use a contractor until you check references and make sure he's dedicated to getting your job done in a timely manner.

We had all sorts of problems with this contractor. He started putting up the wrong color of siding, took 2 weeks longer to finish the job than he had projected. I could have done the project by myself in less than a week with no help. They finally got it done and it looked ok. But we lost another 2-3 weeks of time (that means lots of money in the flip business, this delay ended up costing us more than we thought it would in the end.)

Next we gutted the house. The first part of the house was built in the early 1920's so it had plaster walls. Previous owners thought they would take the cheap way out and covered it all in "wood" paneling. Not a good option, and it looked terrible. All the wall board came out! As did the carpet through out the house. Then I tackled the kitchen. The previous owners had placed one layer of vinyl over the hard wood planks, then covered that with cement board and more vinyl and then covered that layer with more cement board and ceramic tile. I took me one whole 12-hour-day to tear all of that out. Once those layers were removed the entry doors fell off. So I had to replace both entry doors with new steel entry doors. The cabinets were in bad shape so they came out too.

In bathroom I removed the old rock shower surround, it looked extremely out dated, and removed all the fixtures and cabinets, as they were in pretty bad shape as well. Then I removed all the acoustic popcorn from the ceilings and hauled over 2 tons of trash to the dump.
Now I could start on putting it all back together. The "Demo" took me a little under a week from start to finish--I would go work on the house in the morning and go to work at the prison from 2-10pm.

The next step was to hang drywall over the lathe and plaster. I hung 1/2 in sheet rock over all the old lathe and plaster, taped, mudded, and textured the walls with a "skip trowel" texture--it's the rage in new homes apparently. I re-textured the plaster walls in the kitchen area and used knock-down texture on the ceilings throughout the house. Next, I installed a 4" base molding around the original part of the house. Then we pained everything with a Navajo white paint.

I should note here that Brooke spent some late nights with me painting, and even spent one evening on it all by herself while I was at work. That helped more than she'll every know, as I was getting really tired and burned out at this point. That gave me a much needed boost of energy to finish the remaining projects so we could get this little project wrapped up.

Next, I laid a tile surround in the bathroom using 4" white bathroom tiles, tiled and grouted the kitchen floor after attaching cement board over the entire floor. I had a co-worker from the prison, who lays carpet on the side, put in a Berber carpet throughout the house, upstairs and downstairs. By now, Chris (Brooke's ex-husband), had finished the custom knotty alder cabinets he made for us and I helped get those hung, then went to work getting the new laminate counter tops cut and installed. Then I installed all the kitchen fixtures and appliances, poured cement to repair a back-step, and finished installing the molding around the entry doors that we had to replace, and replaced all the the electrical sockets and light switches.

Then we moved to the down-stairs. We decided to let the down stairs tenants stay because the didn't care if we were in and out doing projects. So down stairs I ripped out all of the carpet, jack hammered out a ridge in the foundation under the carpet and poured new cement, repainted the entire basement, and had new carpet installed and called it good.

We were planning on being able to sell the home for 235-245K which, after expenses would have netted us a nice 20-30K in profit for 2 and a half months work. However, the market dropped out the week that we listed our property. Stories started pouring in from all over the country about the "mortgage crisis" and banks reacted by changing their loan qualification guidelines, which in turn really slowed down the Utah market. Homes were selling in 1-2 weeks, were now sitting for months on end. Brooke and I had just found out we were having twins and didn't want to be stuck with a rental property and all of our money tied up in this project so we ended up selling it for 218K. After paying 5% commission to the Realtors our net profit was. . . well not a profit at all. We actually lost about 4000 on the deal.

Lesson #3. Sell the home on your own if you can, save lots of money.
Lesson #4. Use reputable contractors instead of doing all of the work yourself. They can get it done faster and the expense is probably worth the time it will save.
Lesson #5. Luckily we followed this lesson when we started. Know your market. Buy the right property at the right price and be ready to sell, even if it means a small loss, if everything goes wrong. If you pay to much for the property, this is no longer an option and could result in a catastrophic financial loss.
Lesson #6. Always over estimate on your repair budget by at least 10% to cover any unforeseen problems or expenses. If you don't have to spend it great, but it's wonderful to have if you need it.

Although this project didn't turn out the way we had hoped, we did learn a lot from it. I enjoyed doing the work and learning a few more "tricks of the trade." We will probably do another "flip" when we can find the right deal and the market has corrected it self. I hope you enjoy the video.
I know there are some misspellings...I don't feel like going back and fixing it.