Daily photo by John Godbey|
Marshall and Heather Bloomfield on the deck they added to the backyard of their newly flipped house on Cypress Street Southeast.
On The Flip Side
House flipping is not as easy as it looks on TV, but local people are profiting from the process
By Danielle Komis Palmer
Heather Harrison Bloomfield recently finished adding a new deck, beadboard and granite countertops to a small house on Cypress Street Southeast that had become dilapidated over the years. The pride is noticeable in her voice when she talks about how she improved the home.
Despite her passion for the house, she will never live in it.
Rather, she’s hoping to sell it as soon as possible, and begin the renovation process all over again.
The backyard before local house flippers renovated it.
Bloomfield is one of many local people who have jumped on the house-flipping trend — a practice in which investors quickly buy, renovate and sell a home. The practice has been thrown into the mainstream by reality TV shows like A&E’s “Flip This House,” and TLC’s “Flip That House.”
While these so-called reality TV shows makes flipping houses look as easy as flipping pancakes and making $50,000 off it, in real life the practice is not quite as easy or worry-free.
Most local flippers flip houses on the side whenever they can squeeze in the time — and only when they have the money to invest. Investors’ profits are often not as high as $50,000 per house like viewers see on TV, but are usually one-fifth to one-half of that sizable return.
Richie Sparkman, a local house flipper, started his property-investment firm 31/2 years ago after researching real estate investing for two years.
The Decatur attorney estimates that he spends four to five hours each day on his “second job,” talking on the phone with his business partner or researching properties online or in the field. While he’s flipped 40 houses in three years, he estimates he has researched and passed up 10 times that many.
“We’ve got to study a lot of properties before we find one we like,” he said. “You don’t just go buy that one, you’ve got to look around. You have to know your markets.”
Sparkman flips four to eight houses at a time and said the part-time work has become increasingly stressful as he and his partner have taken on more houses.
No risk-free trial
While house flipping entices many people looking to earn extra money, those looking to get into the business should be aware of the risk they are undertaking, Sparkman said.
Daily photo by John Godbey|
Marshall Bloomfield shows the remodeled kitchen in a house he and his wife flipped. They added countertops, appliances, hardwood floors, cabinets and more.
“A lot of people look at this as a way to save money for their kids’ college or to generate a second income, but they’ve got to be able to afford a bad day,” he said.
Bloomfield, who splits her time between New York City and Decatur to run her and her husband’s new property investment firm, agreed. The Decatur native chose to flip her first house in Decatur because the investment here is less than it would be in New York, she said.
A before photo of the kitchen.
Penny Fagan, a Decatur mortgage broker, said she and her husband jumped at the chance to flip a house a year ago when they learned that even investors in California were flipping houses in this area.
“We both got to talking and said, ‘We should be doing that,’ ” she said.
So far, they’ve flipped one house, which sold in two weeks. The couple decided to take on the extra projects so they could more quickly afford to build their dream home on a scenic high point in Hartselle.
How quickly you can sell the house you renovated will be a big factor in your profit, flippers said. A house sitting on the market that you are paying for (many flippers use interest-only loans) will quickly eat away at your profit by raising your expenses.
“We really try not to get greedy,” Sparkman said. “I’ve seen a lot of people hold out for more money and they carry the debt a lot longer and make less money in the end.”
Because speed is a factor in house flipping, many investors hire contractors to do the work on the houses, though they usually choose their own materials such as paint and cabinets and oversee the labor.
Often, flippers install cabinets, countertops, carpet or hardwood, windows and more. Many flippers focus on cosmetic renovations and try to avoid anything more serious, and therefore more risky.
“Typically we look for homes that are structurally sound but are cosmetically deficient,” Sparkman said. “They’re ugly houses but there’s nothing wrong with them. The majority of the time the exterior curb appeal is one of our main focal points on the property.”
Outside, flippers will often invest in landscaping, front doors, exterior painting, new vinyl siding, new roofs or adding a porch.
What flippers gain
There is a steep learning curve when it comes to flipping houses, said Bloomfield, who took on many responsibilities herself such as buying materials. The do-it-yourself approach initially cost her money because she lacked expertise, but the knowledge she gained while doing it will be invaluable in the long run, she said.
Along with gaining knowledge (and of course, money) flippers said transforming a neighborhood blight into a home a new family is excited to live in is rewarding in itself.
For Bloomfield especially, transforming a house near where one of her favorite childhood places once stood — her grandfather’s grocery store — was satisfying.
“Decatur’s really had a special place in my heart,” she said. “I took the worst house on the block and turned it into the best place on the block. I think I really gave something back to the community.”
What does it mean to ‘flip’ a house?
Flipping a house refers to buying a house, fixing it up and then re-selling it for a profit. While entire businesses are dedicated to this investment strategy, individuals also flip houses for a second income on a smaller scale. Contractors often do the work, though some people do most of the renovations themselves. Flipping a house became better-known with the advent of reality TV shows that revolve around people who do it for a living.
Beginner flipping tips
Some advice from local house flippers:
Research, research, research! Know what you’re getting into before you invest.
For your first flip, buy a property that you can rent if you can’t sell it.
Don’t take on more risk than you can afford to lose.
Count on a project costing more than you expected and be aware that if something can go wrong, it often will.
How to get ‘cottage style’
We can all add a bit of charming cottage-style detail to our homes, whether we live in a house that’s California craftsman, Southern shotgun or mid-century ranch.
That’s the encouraging message in “Creating Cottage Style,” a special edition of Cottage Living magazine. Along with ideas for building and remodeling come suggestions for small changes that can have a big impact on the look of your living space, such as:
Age new floors with historically inspired finishes such as whitewashing or staining.
Lay reclaimed bricks for an established look.
Greet guests with an old front door.
Install vintage-inspired plumbing such as a claw-foot tub or faucets with a period feel.
Use period hardware on drawers and cabinets.
Add character with the use of architectural salvage pieces.
Try antique or vintage lighting.
Evoke a handcrafted feel with millwork.
It’s not as complicated as it may sound.
For example, “millwork” includes woodwork crafted at a lumber mill, said Cottage Living’s assistant homes editor Steele Thomas Marcoux, and that could include moldings, window casings, doors or even shelves.
“It can be purchased ready-made and still create a custom and even hand-crafted feel, as well as add texture to simple, sheet-rocked walls, giving it that warm, cottage look,” Marcoux said.
The 128-page special edition, $4.99, is on newsstands through Sept. 25.
The Associated Press
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