Posted on January 12, 2017 @ 07:01:00 AM by Paul Meagher
I enjoyed reading Johnny Sanphillippo's two recent articles on house flipping done wrong, and house flipping done right.
Johnny was able to purchase a distressed and dilapidated house for $10,000 with the idea that he would fix it up and rent the upstairs and downstairs levels to respectable clientele.
Below is the house Johnny purchased and the changes he wanted to make to it (i.e., add a floor).
Where the proverbial shit hit the fan was trying to get these plans approved which he found near impossible (read the article for the full details). In the end, to proceed he could not add a second level and would have had invest in fixing up a 700 square foot house for rental income. Given his bad experiences, and his failure to see the upside to proceeding at this square footage, he flipped out of the house for a bit less than his cost of purchase and the service fees for an architect who helped him try to get his plans approved.
For the guy he flipped the house to, the house was part of a larger plan to fix up 8 similarly failing houses in the neighborhood and sell them. The guy had a bigger plan involving private investors, a local building contractor, and a quick turnaround on the resale of each property. His remodels were not flashy or big new upgrades so didn't have issues with getting approval from the city but were appealing to the people he would ultimately sell them to (e.g., modern kitchen and appliances, new windows and doors, nice facade, etc..). He was able to develop a good perception for the project as a whole given his local developer status and the general improvement in the appearance of the neighborhood that he helped foster.
These two articles on house flipping, Lessons Learned, and Doing What Actually Works are worth a read for prospective house flipping entrepreneurs and investors.
StrongTowns.org is the online journal these articles were published in. I like the strong towns theme of the journal and the quality of the articles collected there. Looks like a site I might be visiting more frequently in the future.