Our Real Life Experience Flipping A House . . .
As I discussed in another article about the risks of flipping a house, we actually purchased and flipped a house, but our business plan was much more conservative. For years, we thought that we possibly wanted to build this type of business. And for years, we searched and searched for just the right home, in just the right location, for just the right price. We were very careful to study and learn about buying and selling houses, and we had been doing all of our own work around our house for years, trying to develop our remodeling skills. Our game plan was to find a house in a good location, with a low price that was considered a “fixer-upper”. We wanted a neglected house, but not a structurally damaged house. Our game plan was also that we would do most, or all of the remodeling work, because we love that type of work, and we knew we could make more profit in the overall project because we could keep our costs low and not need to deal with contractor over runs. Well, our problem was that for years we could never find just the right house for our first project. It always seemed that the “fixer-upper” low cost housing were in some of the worst locations, and the better locations always wanted more money for the house, even if it truly was a “fixer-upper”. And we really believed in the old saying about real estate (location, location, location). Finally we found the perfect deal, and it just happened to be directly across the street from our house.
As it turns out, this house across the street was used for years as an adult care business for mentally handicapped people. The business owners had finally decided to close up shop, and sell the house. Now we had been looking at this house for years, and it had been in a state of disrepair for a very long time. Since we had to look at this house everyday, we were excited about the chance to improve our neighborhood. This was the worst house in our area, and we already lived in a very nice custom home area, and we knew exactly what the house could be worth if it was remodeled and sold in newer condition. The only problem was that since we were in a good location, the price of the home was more that we were looking to spend for our first project. We did not have enough capital or credit limit to be able to afford this remodel house, while at the same time be able to make payments on our house. So we decided to enter into a partnership arrangement with another family member in order to be able to purchase and make the necessary down payment on the house. We knew that our partner would not be able to offer too much assistance with completing the remodeling work, but we also knew we could not do the project without the capital investment from that partner. So the partner was very important to us, and we agreed to split all profits evenly.