This past week a real estate agent that I work with, Robin Spiers with Robin Spiers and Associates, and I had a walkthrough of a potential flip property. I thought this would make a really good post as I know some of my readers are looking to flip their first property while others are in the ‘let’s think about it’ stages.
Before I begin, I’m going to use the property we saw in my examples. Please note: the previous owner looked like they were either going to flip it themselves OR they were doing their own renovations.
Flipping A House
When I enter a potential flip property there are certain areas that I pay particular attention to. I often will say to Robin,
Here is what is going on through my brain right now.
So what are the 4 major areas that I pay particular attention to? What’s going on in my head when I walk through a property?
As we all know and have most likely heard a thousand times over: the kitchen is the heart of the home. The kitchen can also be a place where the budget can easily be thrown out the window. Here are the certain key elements I look at immediately:
- Layout of the kitchen
- Condition of the cabinets and counters
- Condition of the appliances.
Layout of the Kitchen
As soon as I walk into a potential flip property, I look at the kitchen and what the layout is like. With this particular potential flip property, I was not in love with the layout for many reasons. Do you see the open area where the stove should be?
The dishwasher is right beside the sink (which is good for the plumbing budget) however the stove is situated right beside the dishwasher. That is a horrible design. While looking at the layout, I’m also taking into consideration any plumbing that may need to happen.
Condition of Cabinets
This was a pleasant surprise. Not only were the exterior of the cabinets in pretty good shape, but the interiors were in fantastic shape. That’s a huge plus! What that means is that the cabinets could potentially be painted and kept. This would certainly help with the renovation budget.
Condition of Appliances
In this particular property, there is only a dishwasher and although it may look fairly new, it’s not.
When I look at the pros vs the cons, I figure this kitchen needs a brand-new layout – which means all new cabinets and counters (and as you can see, there aren’t any counters anyway)! While there may be arguments that this kitchen could work, this is one of the first spaces a potential buyer will see. You know how the saying goes:
First impressions make a lasting impression.
What I told Robin is that the investors could try and sell the cabinets (as they really were in good shape).
I do want to point out one thing here: Robin sent me some comparables in this townhouse unit and after looking at what has been going on in other units, this kitchen definitely needs a new look, new layout and a new WOW factor!
After kitchens, bathrooms are the next thing I look at. This particular potential flip property has a powder room situated right off the kitchen.
This glass door that looks like it should be a pantry door is the powder room. Yes – this little beauty sits right beside the kitchen!
While this is a bit odd, wait until you see what was happening upstairs. The entire upstairs had been started to be reconfigured. What used to be a 3-bedroom 1.5 bath unit is currently sitting at 1 bedroom + den and 1.5 bathrooms. Here is what was going on in the main bath located upstairs:
What was once a smaller 3 piece bathroom was in the midst of being turned into quite the master ensuite. So, what exactly was going on in my head when I saw this?
- Since there used to be 3 bedrooms and now it appears to be 1 + den (to make room for this monster of a bathtub), the entire second story would have to be reconfigured. After talking with Robin, we said that this unit would for sure need to have at least 2 bedrooms.
- There was some concern with the plumbing that I saw. The stack for the powder room below was cut when a wall was taken out upstairs. This causes me to pause as I am almost sure the work that was already done was maybe not done by someone who knows what they are doing.
- The state that the bathroom sat as we saw it, was a hot mess. It starts right at the design (or lack of), then flows to the tile that was chosen, then it flows to the install of all the tile. The work on all of the new drywall was, how shall I say this? Shit! Look at the number of screws, the crooked cuts and the horrible mudding. My good friend, Darren Ward with Sterling Interiors, must be cringing at this!
The main bathroom upstairs would have to be totally ripped out (as well as the entire second story and start from scratch). A good thing is that the ginormous bathtub could be sold as well as the faucets that go with the tub.
The size of this bathroom should be made smaller and everything needs to be new (and by new I don’t mean expensive). It’s easy to over renovate a bathroom and with this potential property flip I can’t afford to over renovate!
As for the powder room, my first gut was to tear it out. Who would ever use that bathroom? Open up that space between the kitchen and the family room. There are however 2 posts that would have to play into the new kitchen design (which is totally do-able). If this powder room was deleted on the main floor, I would suggest a powder room be installed in the basement. There definitely needs to be 2 toilets in this property (IMHO).
Of course, with all of this, I’m looking at potential plumbing issues and costs. The plumbing is very fixable and I honestly don’t think will break the bank.
The worst thing that could ever happen it to have a surprise electrical expense – which is why I pay particular attention to it. The main floor of this property is fine and very workable. The upstairs, where all of the renovations had started is actually very workable. Because the work was so shitty, it would be removed, and we would virtually start from scratch. The electrical panel, that is another story.
When we went downstairs, I did sigh looking at the electrical panel. What another hot mess. This had me pause for concern as I know this could really add to a budget! Can you just see if this was a TV show:
Oh my god! What is going on here? [insert look of horror on the face]
And then break to a commercial!
When I look at the entire home and weigh the pros and cons of all of the electrical I saw, the electrical really isn’t bad (even though it does look that way).
Potential Flip Property: Results
When I see a potential flip property with Robin, he really wants to know what I would need for a budget to get the property ready to sell. After looking at the comps in this particular townhouse unit, taking into consideration what I believe is absolutley necessary for this property, I go to work in creating a rough budget. This process is relatively easy for me as I have created my own system to come up with a number. I have spent a lot of time creating this system to allow me to quickly turn around a number for investors. I went straight to my office, pounded out the numbers and let Robin know what I could work with to get this ready to go.
Now – I wait and see what the investors could get this property for and if I’ll be working on this flip property! I do have to admit, even though the upstairs really is a mess, the beauty is that there is a ton of potential! The unit is in a really good location, it has a beautiful view from the kitchen window, and the potential is there to make this little mess a wonderful home for someone. And that my friends – is the BEST part of my job!