MY EXPERIENCE AS A DIY HOUSE-FLIPPER
The purpose of this space is to share my experience as a DIY house-flipper and even more importantly, how I managed to do it as a single girl on a modest budget starting out. In order for this section to be truly beneficial to you the reader, I am going to share specific amounts and financial details because I want you to see how making extra money, paying off debt, etc. through house-flipping is very acheivable! (I'm looking at you, single ladies!) I'm being totally transparent here, so please put aside any conservative notions that sharing your annual income or sale profit amounts is tacky, braggadocios or negative in any way and read on!
HOUSE FLIP # 1
My house-flipping journey started in 2010 when my current rental lease was ending and I had to figure out where to head to next. I was 27, single, living in Atlanta on a gross annual income of $37,000 with student loan debt amounting to $27,000, credit card debt around $3,000 and a car payment. (Regretfully, I went to a small, private liberal arts school and got a music degree, so these numbers may not surprise many of you, but that's an entirely different blog article for a different day)
I was looking around Atlanta for another rental situation because home ownership was the furthest thing from my mind and honestly something I didn't think someone my age could achieve. As you read on here, you might pinpoint timing and the economy as the reason for my flipping success... and you would be correct, partly anyway. During the 2007-2009 recession, the Atlanta real estate bubble burst and there were foreclosures and short sales all over the place because of people who could no longer afford their mortgage payments. (If you've never seen the movie "The Big Short," you should definitely watch it, it portrays exactly what went down prior to and during that time) A friend of mine at that time who happened to be a real estate agent asked if I had considered home ownership. Skeptically, I looked at some numbers on paper and realized that there were perfectly adequate homes out there in a price range that I could afford! We're talking super low range here too folks, to the tune of a max budget of $65,000. (When I say adequate, I'm not talking about new construction in super nice suburban areas, I'm talking older homes in fringe neighborhoods that are still safe for a single woman to live in)
So with a 30 year fixed mortgage and a 3.5ish interest rate, I bought my first home, a 2 bedroom/2.5 bath attached townhouse built in 1980, with a monthly mortgage payment around $550 a month. The home was a foreclosure/fixer upper and needed a lot of work, but what it didn't need was any big ticket upgrades (i.e. new roof, HVAC system, furnace, etc.) So one project at a time, one month at a time, I slowly renovated the house. I didn't have the money to hire professionals to make the upgrades, so I did them myself. I watched YouTube videos, Googled how to do everything and occasionally got advice from folks at my local Home Depot and Lowe's.
Fast forward 3 years later and I found myself needing to move to another suburb of Atlanta for a new job. (I am not a good commuter, so I have to move near where I work to keep my sanity) So in 2013, I was going to consider renting out my home to move somewhere else in North Atlanta. At that time, I had no concept of what the Atlanta housing market was doing and was completely unaware that it was making a slow, steady climb out of the gutter and that I had some equity in my home. (What?!!) That was until an agent friend of mine (new friend, new agent) said you can totally sell your house and I think you can sell it for $95,000. None of the other 2 bedrooms in my neighborhood were worth even $85,000 at the time. But my house was upgraded! That house went under contract the same day it was listed and I walked away with a check for $27,936.90. I was able to pay off my car, 3 credit cards I had balances on, put some money toward my student loans and set cash aside for savings.
HOUSE FLIP # 2
I didn't want to have to instantly find another house so I rented a sweet apartment in North Atlanta. Six months later I was bored and ready for another flip, so my agent and I started looking. We landed a great foreclosure (this house hunt took much longer than the last because foreclosures and short sales are no longer easy to come by. They're still out there, just not as abundantly as they were) but this one was a little more expensive than my last. Fortunately, my income grew over those few years by about 37% and I was able to afford more than a $65,000 home. With a max budget of $100,000, I bought my second home in 2013 for $95,000, another 2 bedroom/2.5 bath town home, this one built in 2000. This time, I went in with the full intention of flipping the home, so I knew what needed to be done and knew what design choices to make from the start. By now, I had done quite a bit of research about flipping in general and learned that what I was doing was called long-term flipping, which means renovating the home over time and waiting for the home value to increase with the market before choosing to sell.
Another extremely important piece I learned was that in order to avoid paying capital gains taxes (around 15% at the time), I had to live in the property as my primary residence for a minimum of 2 years. (Another factor in avoiding capital gains tax is making a profit of less than $250,000 as a single individual, but that was not a factor for me in my low-budget endeavors)
Passing the 2 year mark, I targeted the Spring of 2016 as the prime opportunity to sell. (Spring market in real estate = most people looking, most people selling, best time to sell) Within 72 hours of listing, this house had 18 showings and 7 offers! We listed this house at $168,000 and sold it for $174,000. On closing day in June of 2016 I got a check from the bank for $70,920.42. I was able to pay off the rest of my student loan debt, pay off my car loan and pay off credit cards used for home renovations (I spent less than $7,000 to upgrade this home). I became completely debt-free for the first time in my adult life.
HOUSE FLIP # 3
Recently engaged to my now husband Bill, we set out to find our next home together. Both of us pretty weary from constant renovation projects in our previous homes, we didn't start out looking for another flip home, but all of that changed when we saw House Flip # 3 for the first time. It was a 1980s gem that hadn't seen a single upgrade, BUT... it had a pool, a golf course and lake view and a floor plan with giant rooms that I couldn't wait to get my hands on, and most importantly it was within our budget! We made an offer and were instantly sucked into the pure hell that is waiting on bank-owned property agencies to do anything quickly, but we persevered, had to outbid a couple of other offers and ended up buying the house for $278,000 in 2016.
And that brings us to the present... I am now a full-time flipping housewife renovating the heck out of this house that needs oh so much love. We're over a year in and there are so many fun transformations to share that I had to start a blog about it! Hopefully, this blog will inspire you to explore how you can do your own renovations on a small budget, build equity in your home and pay off debt in a matter of a few short years!
Have questions? Feel free to ask me via email or social media!
Disclaimer: The experiences shared above are exactly that, my experiences, and are not to be considered a roadmap or prescription for flipping houses. I am not responsible for losses incurred by any reader who attempts to buy and sell property for profit as a result of reading this blog.