A Couple Mistakes I Made as A First-Time Flipper

[jahelmie]

When I first started flipping houses I actually went in on one with my uncle Bob and his friend Phill. They had purchased a home from a lady in a million dollar neighborhood for 110k. The house was kind of out of place in this neighborhood as it was a lot smaller than the surrounding houses, overgrown grass, and looked like the builders decided to quit half way through. You would think the city would have condemned it, to be honest. But I was young and eager to get some capital and I decided to buy in. The house had a lot of potential and there wasn't anything structurally wrong with it. And the surrounding houses really made me think this was my big ticket. It was clean inside, under construction, the walls had mostly new drywall. No floors were installed yet. Kitchen was all new. Most of the materials were already purchased. So they agreed if I gave them $11,000 when the house sold it would be split 3 ways. I didn't even hesitate. Gave them the money and I would go over there and help them work on it every day. Part of the agreement is I wouldn't have to make the loan payment. Bob didn't have any money coming in and the only money Phill had coming in was his 2,500 a month retirement check which paid his actual house payment and bills and the rest went into the flip house.

They were needing a way to continue to make the house payment while the work on the house was being completed. So Phill rented his actual home and decided he was going to live at the house while he worked on it. He found a renter for his home quick and while I thought this would be good for production by having someone live in the flip house, little did I know, he couldn't afford a storage unit for all of his belongings from his 2 story house. So where did they go? Into the flip house. I had to leave for an oddball job the week his new renter was moving in. When I returned I went to see the progress on the flip house. I opened the door and my stomach dropped out the bottom of my behind. He moved all of his belongings into the house we were flipping. Everything! Dressers, beds, a PIANO! So much stuff that there were only paths through out the entire house to get anywhere. No more work could be performed on the areas that still needed work. I chalked it off as a learning experience and regretfully lost that 11,000 dollars. Just for fun, before I stopped my side of the partnership I took Phill and Bob to the bank and had them sign a notarized, meaningless promissory note that the money would be paid back to me in full.

What I learned from this is when I decided to flip houses on my own is to always keep the inside clean. I am actually quite anal about it. When I flipped a house, I moved into it until it was complete. I have a 30 dollar air mattress, a mini fridge, a microwave, and barley enough clothes for a week. I think I was so traumatized from the disaster I walked into that day Phill moved into our flip house that I always make sure everything is picked up and in its place. When I became overwhelmed with the work left to be done, I would pick up a broom and just clean. A lot of time, starting with a "clean slate" was just the motivation I needed to keep going. When it starts to get messy, a project you are working on that was once somewhat overwhelming becomes extremely overwhelming.

When I first started out by myself I had no experience repairing houses, and not a whole lot of money to hire work out, although some stuff was hired out such as: windows, counter tops, carpet, tree removal. Everything else I did. Electrical work, plumbing, flooring, counters, drywall. I actually enjoyed it even though it was a self-employed job. A lot of people would ask me how I just jump right in and knew how to do all the work that I did. My response, "YouTube." That is how I learned everything. And not that it matters, but I am pretty good at repairing almost anything because of the houses I flipped and the mistakes I made and the things I learned from seeing how people on YouTube did things.

It's very overwhelming when you first get into a house by yourself to flip. Especially when you have a very limited budget. I read a couple books on how first time flippers often fail on their first couple flips. But the way I did it was kind of how MJ DeMarco talks about reverse engineering your main goal into little steps, I guess?

The big picture - Complete the house under budget.
Steps broken down - Fixed one room at a time. Wouldn't touch the next room until the one was 100% complete.

As I completed each room I saw progress and I was proud of the new look in the completed rooms which drove me to the next. And because I did one room at a time the rest of the house was still in one piece. I didn't do what they do on those house flipping shows and take a sledge hammer to anything and everything in the house I planned on changing. I did one room at a time because my budget was small and if something were to happen to me or the little money I had it would have been game over. And I realize it wasn't the best practice because like Millionaire Fastlane says a self-employed job depends on me to be there for the money to be made. But I needed the capital I did not yet have. So, by doing one room at a time, it made the process a lot less overwhelming and if something would have happened, I could at least sell the house with a couple of newly remodeled rooms. But I was determined and I have never not completed one. And the several houses I flipped have bought me the time that I have now, as I don't work.

Feel free to share your thoughts on other areas where I might have failed or perhaps areas that I can improve on if I ever flip another.

To be honest, I thought this was going to be my avenue but I just have not figured out how to get a house for a decent price, and be able to make money from it by hiring a contractor to do the work / hire out. I haven't been able to get another house in about a year now. Every offer I have put in ends up selling for practically 30k over sometimes. Realtors take their 5%. There just isn't a lot of money in flipping houses the current way I know how to flip them. If you have some tips, feel free to share.

That's about all I can tell you in this short book. I'll continue to post things in areas that I self-employed myself to make quick capital to fund the business I have yet to create. I'm here to learn and while my methods were back breaking and exhausting, I am now sitting here resting working on my main goals because I have time to do so and the money to keep me afloat while I work towards my main goals in life.

I am posting a couple pics of the kitchens of my first house and my favorite kitchen on another house I flipped. I didn't have the skills to do this work. I had no idea what I was doing. But anyone can paint. And if you read and watch enough informative videos, anyone can do what I did if you're looking for some quick capital to fund your idea. Every house I did took me about 3 months to do by myself. Longer to sell though. One thing to make sure to factor in when you're budgeting bills.

My first flip Before (Kitchen only):

After:


My favorite kitchen Before:


My favorite kitchen After:

 

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