Flip or Flop

NEW -> Contingent Buyer Assistance Program
My .02c:

I see a large difference between the skill sets needed for one vs. the other.

For someone assisting others in buying, selling, renting and/or property mgmt (a full-time real estate professional) it is serving others primarily. The service is providing your best info to help them maximize what they want. On the listing side, this can range from selling for the best net, to selling in the shortest time possible, to maximizing privacy, and more. On the buying side, it can also range from neighborhood knowledge, to getting a rebate, to contract knowledge, to relationship parlays (access to pocket listings), and more. Finding out what each client wants and needs is essential and the brokers who do it well are able to navigate away from most of the pitfalls.

For someone flipping properties (in my admittedly limited understanding) it is primarily a self-service. The key skill sets are finding/creating opportunities, negotiating with vendors/contractors, generating accurate estimates, and knowing "when to say when." Sometimes the best deals are the ones you walk away from. The setup of the successful flippers I know is very different, as well. It takes a team of dedicated individuals (auction-buyer, realtor/marketer, designer, dedicated handyman/contractor, title/P.I researcher, closing agent/escrow officer, and..??). I know several well-qualified agents that have failed in their speculative runs, and a couple of flippers that have run for the hills when trying their hand with buyers and sellers.

-IrvineRealtor
 
I agree with IR that flippers may not make good realtors... but I still think realtors may make good flippers.

I think that realtors have a larger set of skills and the skills required to become a flipper are easier to acquire/learn (how to bid at auction) then for a flipper to acquire the customer service (ie social skills) needed by a realtor.

I would consider becoming a flipper... but not a realtor because dealing with auctions and contractors is more business... relationships with homeowners and buyers is more personal (and I'm a cold-hearted monkey).

I don't think the difference is as large... but I'm neither one so it's just based on my limited observation.
 
after every episode where Tarek and his wife clear 60K my wife looks at me and asks me why we dont try to flip a house.  i keep on having to remind her that its not as easy as it looks on the show. 

with all due respect to Tarek, Christina is a knockout.
 
qwerty said:
after every episode where Tarek and his wife clear 60K my wife looks at me and asks me why we dont try to flip a house.
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Hehe... that's funny... that's what I say to my wife.
i keep on having to remind her that its not as easy as it looks on the show. 
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Seems like if you do the comps properly, get the property at a good discount (the hardest part), and just add pergraniteel... you're good.

But again... armchair flipping is easier than real flipping.
 
irvinehomeowner said:
get the property at a good discount (the hardest part)
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that is when you make your money.  i wonder if flippers at auction have purchased a second lien vs the first. does anyone know about a situation like that?  sometimes with the online services its not always accurate and im guessing these guys dont go the county office to check the title string.
 
qwerty said:
irvinehomeowner said:
get the property at a good discount (the hardest part)
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that is when you make your money.  i wonder if flippers at auction have purchased a second lien vs the first. does anyone know about a situation like that?  sometimes with the online services its not always accurate and im guessing these guys dont go the county office to check the title string.
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Most of the flippers will have a title company contact who they'll provide all the business to in exchange for running title searches on their target properties. 
 
Saw the Garden Grove episode... $280 purchase, almost $100k rehab but they sold for around $512k so I think they made $100k on it... it was the episode with the investor guy.

I like what they did with the place, I think for the backyard, since they tore up the concrete anyways, they could have put in more softscape. This episode really showed how much rehab can cost on some of these homes so you really have to be smart with your purchase compared to comps.

So far, on every episode I've seen except the Anaheim Hills one, they gotten multiple offers over list price. Seems like if you're selling your home, putting some upgrades in really helps with the final price.
 
qwerty said:
irvinehomeowner said:
qwerty said:
you gotta have straight cash homey to buy the house at auction, which im guessing a lot of realtors dont have.
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Obviously you need to hook up with some backer (or sell a home in Shady and use the commission as your first flip money and steamroll from there).

Isn't this what Larry's Superfund was doing? Buying properties for flip and rental income?

I should convince some FCB to let me use his suitcase to start up "Irvine Flips Inc.".
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yeah but your statement made it seem like any realtor can just find the backer, that is the barrier to entry.
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Without a rich family member, it's common to start with a hard money lender until you get your bankroll up.  The advantage to that is the hard money lender provides a second set of eyes and will tell you if your deal stinks.  The disadvantage is that hard money lenders charge a lot.

Another strategy is to find somebody with a lot of money parked in an IRA and promise them a better return than stocks.  They can partner with you and their profits will be tax-deferred in a standard IRA or tax-free in a Roth.
 
irvinehomeowner said:
Saw the Garden Grove episode... $280 purchase, almost $100k rehab but they sold for around $512k so I think they made $100k on it... it was the episode with the investor guy.

I like what they did with the place, I think for the backyard, since they tore up the concrete anyways, they could have put in more softscape. This episode really showed how much rehab can cost on some of these homes so you really have to be smart with your purchase compared to comps.

So far, on every episode I've seen except the Anaheim Hills one, they gotten multiple offers over list price. Seems like if you're selling your home, putting some upgrades in really helps with the final price.
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Part of it is market timing.  The last year has been accelerating although it may be starting to slow.  So far, their holds seem overly long.  The Garden grove one was six months over Q1 and Q2, 2012.

The Santa Ana, spanish salvage one where they made $100K+ again, was a nine month hold. Plus, they didn't make $100K.  Granted, $208K invested plus another $57K expenses (rehab) if I recall correctly, plus they didn't list any  closing costs.  The sale record shows a different agent for the buyer so they didn't double end the deal.  I think their real profit came out closer to $75K. Granted, that's still a 40% annual return. 

However, at a nine month hold, they had another $2200 in property taxes, 9 months utilities and assorted kibble.  Power, water,etc, how much?  Another $500?  maybe a $1000.  And nine months of trips to the property. 

For the people knowing successful flippers, isn't the general model, buy it, rehab it in 30-60 days, and get in escrow within a week and 30 days at the outside?  Looking a for close and money return in roughly 90 days and 120 at the outside? 

Part of the reason their profits are so high is they're riding the surge of the market and over pricing and letting the market come to them.  The Santa Ana property was listed late June and sold late August.  I was looking for rentals in that time period and homes were listing and selling same week, if not same day.

They used the same guy as the Anaheim hills property.  I wonder why they switched off him to the other guy.  I wonder if it was crew size and ability to turn the property quickly.
 
@nsr:

The show makes it seem like they are listing 30-60 days after they purchase and then selling after a month on the market... where are you getting information that they are holding for longer than that? Kind of hard for me to find on Redfin since I don't remember the exact sales price or square footage of the Santa Ana one.
 
irvinehomeowner said:
@nsr:

The show makes it seem like they are listing 30-60 days after they purchase and then selling after a month on the market... where are you getting information that they are holding for longer than that? Kind of hard for me to find on Redfin since I don't remember the exact sales price or square footage of the Santa Ana one.
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I can't remember either, basically city and rough price, then I narrow with SFR and then quickly flip through looking just for the Prudential sold properties.  Basically end up checking a half dozen or so before you find it.  Anaheim Hills was a 4 month hold.  Here's the La Mirada house http://tinyurl.com/c8qaj6e  Bought first week of June, sold last day of Nov.

The Anaheim Hills house was quicker, like 3.5-4 months, as was Cypress, 4 months.  It could just be scheduling or some title issue.  The Anaheim Hills house used the same contractor and same start month as the Santa Ana house.

BTW, is there a way to do anchor html?  <a href=http://tinyurl.com/c8qaj6e>house</a>?
 
I watched the Santa Ana episode this weekend.  I suspect they started their day count from the time they either got all their permits from the city or their plans.  In the show, they were on Day 5 and were looking at redrawn architecturally rendered plans for the house after modification of the bathrooms.  Maybe the construction guy did them, but they looked to be fairly complete plans for the entire house, I really doubt that is something that's done in 5 days.  There could also have been some other hang-up with the sale/legality issue delaying everything at the beginning.

Also, they made a comment later in the show about the inspector and missing something so it would be 7 days before the inspector came back.  MLS sales records show auction sale in Dec 2011, and resale close end of August 2012.

 
Just saw the Fullerton and the Whittier episodes, expensive homes and expensive rehabs.

Both ended with no sale so I don't know how much they made. On the Fullerton home, I don't think they should have copied the neighbor as much... esp the master bath with losing that one closet.

The Whittier episode was interesting because they used all of their savings, maxed out their credit cards and borrowed from Tarek's mom's equity line. I wonder where this was in their order of flips because the investor didn't seem to be involved and since they are using Israel, I'm thinking later than sooner.

Tried looking through Redfin but with no timeframe, not sure when to search.
 
I haven't seen the episode.  I did run into an issue in the prior Whittier property where it was up for sale again.  So if it was done early enough, it's possible they have already been resold.
 
Seems like the flip formula is:

1. Knock down walls to open up any kitchen area.

2. WoodGraniteel (or TravGraniteel)

3. Pimp the bathrooms.

4. Profit.

That was lame they got the pool pump/filter stolen at the Whittier house. I thought that leveling remediation was going to cost more... I hope they did okay on that one since Tarek borrowed money from his moms for it.

Where has Tarek gone? He doesn't answer questions here anymore. :(
 
Found the Whittier house. They sold it in February for $749K.  Redfin is missing the info, but found it by lot size.

Not sure how they did on that one, I don't remember the numbers.  Overall, I think they're doing pretty well.

To be honest, I'm not the sure the strong market is helping them, it might actually be hurting them more by pushing the buy prices too high.

The Whittier house looked nice, and that would have been a tricky flip. Huge yard, but not really usable, view property, but with a neighbor up a steep bank above your house.  Plus, it's Whittier which while it does have multi-million dollar properties, puts a pretty steep price gradient as you drop out of heights.



 
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