One question that I get asked over and over again is, “How on earth do you find your flips?”
Well, wonder no more – I’m here to give you the nitty gritty on where we find those elusive, ripe-for-renovation-and-resale gems. The answers might surprise you!
After we renovated our own home, Jason and I were itching for another remodeling project. I don’t know what made us think we could flip a house (were we naive? crazy? both?) but once we got the idea in our heads we just couldn’t let it go. So we set out, trolling our surrounding neighborhoods for candidates (we knew we wanted to stick with areas we were already familiar with). For two people new to the flipping game, our our local MLS (Multiple Listing Service) where every house in the Dallas-area is displayed (if it’s listed with a licensed broker) was a natural place to start. We had direct access to the MLS at this point because Jason was (and now we both are) a real estate broker. We found this in-need-of-love home after it had already been on the market for two months and, just a month later in June of 2009, it was ours. When we turned a profit on the sale we were hooked on flipping houses.
After we bought our first flip, we didn’t buy another one for over a year. Finally, in September of 2010, we bought our 2nd flip – also off the MLS! This property had already been foreclosed on by the bank and then, because it didn’t sell at the foreclosure auction, it was marketed to the general public. This type of property is called an REO (which stands for “real estate owned” and just means that it’s a bank-owned property). Sometimes it can take awhile to negotiate with a bank, because . . . they’re a bank - but I don’t recall us having any real problems. But figuring out how to de-crazy the living/kitchen/sun room? That’s another story.
Ah, I remember buying good ol’ Flip #3 – it’s one of my prouder moments. We saw this house pop up on the MLS (are you sensing a theme here?) and immediately put in a lowball offer. We hadn’t even seen inside the house, but we knew that if we could get it for our offered price it would be a great deal. The house was being sold as an estate, and the heirs countered our offer – I told them we would consider their counter-offer but that we would then have to make the sale contingent on a home inspection. Surprise, surprise, the house was suddenly ours! We officially bought it in June of 2011.
While I wouldn’t normally recommend buying a house sight unseen, without a home inspection, we felt comfortable enough with the price and our knowledge of the area to believe that our budget could absorb any unexpected “surprises,” such as needing foundation repair (and it did), a new roof (and it did), or plumbing problems (and it had them). And even though our purchase of the house wasn’t contingent on the home inspection (i.e., we couldn’t back out or demand a lower price if we came across something scary), we did make sure to have the house inspected before we started construction just so we knew exactly what we were dealing with.
You guessed it – we bought this one off the MLS. It was originally listed with a very ambitious asking price, and it sat on the market for 6 months. The price was reduced drastically and the house was relisted, and then we came along and got it for way under list price – a great deal. I think the completely weird sun room and lone full bath scared people off. We bought it in February of 2012 and it’s still one of my favorite projects.
So this is where we throw you a curve ball – we didn’t buy this house off the MLS. By this point we’d been flipping houses for a few years and we had the confidence to search for homes through avenues other than the traditional MLS method – foreclosure auctions, word of mouth, mailings, etc. The owner of this home built it back in the 70’s and was ready for the house to have a new life, so when he received our mailer he gave us a call and we worked out a deal that suited all of us. We were kind of shocked that something as simple as sending out a letter gave us an opportunity that we wouldn’t have otherwise had! We bought it right around the time Peanut was born, in May of 2012.
This is another house that we pounced on the instant it was listed on the MLS, before anyone else could take a look at it. I remember that Jason and I went to scope it out in shifts because it was after Peanut’s bedtime so one of us had to stay home with her. It was pitch black and even with a flashlight we could tell that the kitchen and addition were not cute. Because of the low ceiling in the addition I was convinced that it had a flat roof – since it was so dark that I couldn’t see the roof line from the backyard we resorted to stalking an aerial view of the house through Google Maps to confirm that yes, the addition had a flat roof that we would have to deal with. Boo. But, we were able to take that yucky fact into consideration when we put in our offer that night. We closed on the house just a few days before Christmas in 2012.
Here’s another curve ball for you – we found this flip through word of mouth! Our neighbors knew that the owners were wanting to sell so we were able to negotiate a deal before the house was listed for sale. We actually bought it back in the summer of 2012 and Jason’s sister lived in it for about a year before we began the remodel. As an added bonus, the house was literally right across the street from our own home so we could keep an eye on things just by looking through our windows. :)
Our 8th flip, that we’re currently working on, was also found through the MLS. We tried to buy it the first day it came on the market but we were beat out by another offer. Luckily, that contract fell through and we were able to snatch up the house. It was a little awkward trying to poke around the house before we bought it because the (very sweet) owner was always there. We bought it just before Thanksgiving in 2013 and took possession the next month. It feels like this flip is dragging on forever since we’ve had random delays like a tree falling on the house and flaky cabinet guys (just to name a few), but barring any disasters this baby should be on the market before our real baby arrives in May!
I know people often feel like it’s impossible to find great deals on homes if they’re listed for sale to the public but that’s just not true! Clearly the MLS has been our best friend when it comes to finding flips since 6 out of our 8 flips have been found that way. You just have to be ready to pounce on a deal when you find it (sometimes within hours), have your finances in order so that you can make a genuine offer, and not fall so in love with a house that you’re willing to compromise your budget.
As for other methods of finding flips, word of mouth and mailings have worked for us – although not with the same rate of return. We’re currently negotiating on another home that we found through a mailing that we sent out so if that deal works out it might up our percentages in the mailing arena. :)
We have bid on several homes (and lots) at the Dallas County foreclosure auction but those haven’t worked out for us yet (I’ve been meaning to write a post about auctions, maybe I’ll get on that) – and several times we’ve dropped out in the middle of the bidding process because the price has gone above what we’re willing to spend. Foreclosure auctions don’t always guarantee great deals!
That’s it! So far we’ve found our flips through the MLS, word of mouth, and mailings. Are our methods what you guys expected?