erealestatemonterey.com

I love it when the buyer/flipper tells you their budget.  It looks like they pick the amount they want to spend.  Take for instance the one with the “Not So Silent Partner”.  They decided they should/would spend $25,000.  First huge mistake they did not get a pest control & Structural report.  They bought a foreclosed property owned by bank and bought it “as is”.  Well buying it “as is” doesn’t mean you close your eyes and just hope everything is ok! Hey if there are more problems you can use that to help you get a better price.

They ran into a mold problem among other things. This would have been noted on an inspection.  Just walk thru yourself and look carefully and they should have seen the mold.  Next if you see a significant amount of mold, wear a mask or other breathing apparatus.  Open the windows, bring in an air purifier.  This buyer/flipper got sick and lost a number of days work.

There are better things to use than a solution of bleach.  Go to a hardware store and get something specifically for mildew removal.  The mildew came back, the future buyers didn’t!

Get estimates of all major repairs and renovations.  Then it is not a big surprise to find out your new flooring is going to cost you $13,000!!  That’s a big clue you won’t be able to stay within a $25,000 budget.  Get estimates for appliances.  Get estimates for all major building materials.  Total it all up - including labor and that’s the start of your budget. I would then immediately add on at least another 10% for unexpected expenses.  Do the same with your estimate of time. If you think it’s going to take 60 days, add another 10% or 6 more days to your time line.

The guy had it half right when he said he was going to “turn & burn”.  I’m sure the investor is still feeling that burn.  I feel alot of sympathy for that investor!  Mr. Flipper turned down a less than full price offer.  He has time invested but the investor has money and is probably the one making the payments each month it isn’t sold.

At the close of this show, the home had been on the market several months with no other offers.  Mr. Flipper started another house flip.   Sure feel sorry for that investor - the previous one and the new one! 

I have to confess to a dark, secret, guilty pleasure - I have started watching several of the TV “reality shows” where people flip that house!  But sometimes I feel like I am watching comedy central instead! I owned a Property Management Company on the Monterey Peninsula so we handled alot of remodels, house maintenance, repairs, etc.  It was not an easy process. But since we paid very quickly and were a source of continuing business we got the best of the contractors! 

I have been in the Real Estate Industry for over 25 yrs. now. I shake my head in frustration when I see one of the TV flippers buying a house without bothering to get a structural pest control report.  I also groan or sometimes laugh aloud at some of the budgets they just pluck out of the air.  A guesstimate is not an estimate.  Most older homes are going to need new plumbing, new electrical and a new heater.

One of my pet peeves in regards to these shows is that until recently they did not even mention selling costs!  In the current challenging market in most areas, you are going to need to figure in a Real Estate commission.  There are other costs such as Title Insurance which the seller pays in the Monterey area.  A rough estimate for Selling costs aside from any Real Estate Commissions is 2% of the selling price. 

My other pet peeve is that all the houses are beautifully staged and there is no charge!  Well, I guess if you are on tv, there are stagers who will do it for free. But for those sellers not lucky enough to be featured the cost to stage a vacant home is staggering.  I just finished taking the ASP (Accreditated Staging Professional) course from Barb Schwarz.  Renting furniture starts at about $1,000 per month - and that’s only a small amount of furniture.  Then there is the cost for the staging professional.

Buying a home - to live in, at the right price - if you are going to live in it at least 3 yrs and 5 yrs is better, can still be a good investment!  I think “flipping” is now a flop and a thing of the past, and I’m glad.