Phill Grove Provides Some Flipping Houses Tips

This property is located in a small town in Central Texas. We bought the home with cash for about $13,000. Comparably sized houses in better condition typically go for about $90,000. Instead of doing a full renovation for upwards of $40k and competing head to head with properties in that range, we opted to do a prehab (making a minimal amount of improvements to be FHA loanable ) for $4,000. This allowed us to sell the house at a fraction of the price and ensured a quick sale while still making a profit of over $35k. It also broadened our range of potential buyers. Not only could did it offer an attractive opportunity for investors, a homesteader could buy a house for about as much as they would a mobile home.  The prehab is one of the best flipping houses tips.

Flipping Houses Tips The Deal

Phill Grove: Hi, I’m Phill Grove, and I’m here to check on one of my renovation projects. This is a little house I bought for $13,300.  It’s not a bad looking house.  We actually cleaned the house up quite a bit.  We actually did what we call a ‘prehab.’  A prehab is when you basically just clean the house up and make it, what we call, FHA loanable.  Make it eligible for a loan, but really pretty minimal renovations. Hey Barry how are you?

Barry Adelman: Hey, good how are you doing?

Phill Grove: Barry you helped sell us this house, do you want to tell us a little about what we did to fix this house up and how got this thing sold?  How much do you remember spending, that we spent to fix this house up?

Barry Adelman: I think we spent a grand total of right around $4,000.

Phill Grove: Around $4,000. So for $4,000 what did we get? We got some new carpeting and we actually decided not to paint the house. It’s got some funky fabric walls in here and a lot of the walls were actually this wood paneling.  So rather than spending money trying to paint or sheet rock or do anything like that, we actually just went ahead and cleaned the walls.  The walls aren’t perfect, but they’re good enough.  The kitchen is pretty rough and admittedly the kitchen was probably the roughest part of the house.  And we really did not have any budget to redo the kitchen.  We didn’t even paint the cabinets, but we did glue them together and get them back working as best we could.  We’ve got this antique known as a stove here and we got this really well cleaned and it does function. What we ended up with is not the nicest kitchen in the world but it is functional.

Flipping Houses Tips | The Flip

Here’s the bathroom.  One really nice feature in this little house is that somebody had already put in some pretty blue tile around the tub.  We did go for two major upgrades in the bathroom.  We bought a new toilet and we bought a new fixture on the sink.  So obviously for a $4,000 renovation budget, you don’t get a lot of renovation.

I have to admit myself, you know, normally when I do a renovation project, normally I like to fully renovate the house . I like to put in new cabinets, new flooring, and new paint, and do all the things to make a house look pretty.  But that strategy is not always the best strategy, it’s not always the most profitable strategy.

Barry Adelman: What we did, we were very upfront with people when they came to look at the house.  We said, ‘obviously, you know,  it’s got some rough issues, obviously the kitchen if we were going to move in we might replace some things.’

Phill Grove: But rather than spending $35,000 on this little house and then selling it for $90,000 where we would have competed with, you know, 50 other $90,000 houses in this little town, we decided to spend $4,000 and sell it for $60,000. We actually made more money on the project and we’re able to sell it in a heartbeat of time, because for $60,000 we had no competition at all.

Barry Adelman: Spending as little as was spent to fix the house up it gave the buyers more options too.  For instance, we had somebody stop by and say, ‘did you know that you can get $750 a month for this place in rent?’  So, your investors can come in and buy. Your people who want to have a homestead can come in and have a home. It just leaves a lot more options when you don’t try to completely deck a place out.  Think about your options before you go in and do a strategy.

Phill Grove: Again I’m Phill Grove and this is what it looks like to buy a house for $13,300 and sell it for $60,000. Thanks.

Flipping Houses Tips | The Closing

Hi, I’m Phill Grove and I’m at Independence Title about to walk in and get my closing materials and close on a house.

Everything looks in order for me.  On this particular deal we did something a little different, we put a roof on the house, so we charged an additional $2,500 for a roof that got thrown in. So, that’s the deal.  We’ll show you the check when we get it.

Flipping Houses Tips | The Check

Hi, I’m Phill Grove and I just wanted to wrap up this little deal.  I just got the check couriered over to us from the title company.  We closed yesterday and it just funded, so they just sent us over the check.  Here’s our check for the amount of, if you can make that out, $52,526.  We also got a promissory note when we sold this property, we also threw in a roof that was required by the buyer’s lender at the last minute and we agreed to pay for that roof if they would sign a promissory note to pay us back.

So, we in total made, let’s see add it up.  We sold it for $60,000, after we deducted all of the closing costs and commissions, netting $52,526.  Minus the 13,300 that we paid for the house and the $4,000 that we spent to remodel the house. All in all, a very, very good little flip.  Little money out of pocket and a very good return. I’m Phill Grove, that’s it, thanks!

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