[Music] Hello everyone and Welcome once again to another episode of the Selling Greenville podcast probably the greatest podcast ever at least that's what I think and certainly the greatest real estate podcast in Greenville South Carolina because we're one of the only if for no other reason reason but but yes I think it's pretty great hopefully you think it's pretty great which Segways right into if you love the podcast please give us a rating or a review and make sure you subscribe don't forget to download episodes as necessary and as needed and if you need to reach me for any reason if you're looking to buy or sell a house or you know someone looking to buy or sell a house or you want to discuss a podcast all my contact information is always in the show notes by the way if you've never listened to this before and you just clicked on a Apple link you can listen to this on pretty much any other platform that's out there we're on audio boom Google play several others I don't remember all of them that I that I send this out to but just look up selling Greenville we're on a bunch of different platforms today we are talking about fix in flips fix and flips people thanks to HGTV a lot of people are interested in flipping houses it has become a trendy thing over the past 10 15 years but it's taken people a while to figure out the the standardization for it right because HGTV is very unrealistic and it it's taken a while for kind of the General market for all these people that you know learned about flipping house es from watching shows to figure out how to actually make money doing it today we're going to be talking about a very specific part of flipping a house which is being able to quickly identify what type of flip you're dealing with and what that means because at the end of the day it's rare that you can fully analyze a property in this market in the sellers Market prior to going under contract in other words you typically prior to going under contract you have to do a quick analysis and be very decisive because there's going to be a lot of other competition a lot of other offers offers that are Asis with non-refundable earnest money deposits all sorts of things and you need to be able to be decisive and confident going in in your offer in your purchase in your numbers and you might not have all of your numbers down to a te but you need to at least have be able to form form a general idea of what you're dealing with and what that's going to mean so we're just going to talk today about a handful of stereotypical types of fixer uppers and what that means for you if you're looking to purchase them how how that impacts the way you evaluate the properties so here we go we're going to start with a term that I I did not coin this is a common term in the industry but what we call lipstick flips now imagine that you're you're going out to a party and you're already fully dressed you have everything ready to go you're ready to go to the party all that you need is to put on your lipstick and then you're good to go you are out the door on your way to the party that is the analogy of a lipstick flip this is a house that is good to go in just about all ways possible you just have to put some lipstick on the pig so to speak it just needs cosmetic stuff and and the two big cosmetic things maybe you can say three but but at least the two big ones are painting and flooring if you want to add a third one in there you could say cabinets and countertops maybe that's three and four but those are those are are the big ones painting and flooring every single house needs that right every single house I should say that is a flip possibility is going to need those two things those are going to be two major expenses that you'll always have to do and a lipstick flip is one that doesn't need a whole lot beyond that maybe just a handful of small things a few little tweaks maybe an appliance here or there but by and large it just needs a little bit of lipstick and it's good to go now what type of properties are typically going to be a lipstick flip type of property well typically you've got the ones that are going to be predominantly less than 20 years old such as in Five Forks or Greer some of these areas where there's been a lot more development in the past 20 years I've seen these types of flips or or these types of properties come on the market in tailor you know with some of those brick ranches and the tailor area where maybe it's an older person that's lived there for a really long time and they've kept really good care of of the house but it's just all the Cosmetic stuff needs to be improved it's got wallpaper that needs to be taken down and replaced with paint old you know loliflooring or whatever the case may be but those are generally the areas that you're going to find these and so a lipstick flip is is an interesting option from the standpoint of it's typically going to be be kind of low risk but also kind of low reward cuz typically there's going to be tons of competition for these types of properties because not only are investors potentially interested in it but also people that are owner occupants they might even be able to get normal conventional financing if all it needs is some cosmetic stuff but the house is in good shape you've got owner occupants that for sure could get financing on that and so they're going to be in the potential buyer pool for that property and so you've got a lot of competition so that's going to increase the price the purchase price on the property which means that your margins aren't going to be that great but in theory you can turn the property around pretty quickly do the work really quickly get it sold really quickly and often times these properties tend to be in neighborhoods where the comps are really reliable you're not taking a major risk and so you know pretty much at the end of the day what you're going to end up with in terms of of your profit and these types of flips are personally my favorite mainly because in terms of of what I prefer I really prefer the front end of the flipping process I like finding properties I like analyzing the numbers and doing all of that I don't like the process of rehabbing them that part is stressful for me I don't enjoy that it's not my favorite so these properties that don't need a whole lot of rehab are really ideal for me and I've fli multiple properties over the years that fit this description I'm flipping one right now in my neighborhood that that fits this description and and I'm really excited about it I think I'm going to do quite well on that and and yeah and and I'm happy about it really the first thing that we did in that house is we started yanking out the flooring now we're painting we're going to put new flooring back in there we're probably going to paint some cabinets there's still a few things that we need to assess a lot of minor repair and so forth and so on but it's it's at the end of the day it's probably going to end up being less than $115,000 worth of work which is great that's and when you're flipping a house $115,000 is hardly anything and to be able to do that and still make good money I'm pretty happy with that and it's not a major headache at the end of the day that to me is really important so that's a lipstick flip the next one down from that would be what and this isn't as catchy of a name but a major systems flip so a major systems flip would have the Cosmetic stuff it's still going to need the flooring and the paint and all of that but it's going to need some major systems to be overhauled for instance the roof the roof might need to be replaced the AC furnace water heater major things like that maybe stuff stuff in the crawl space thing you know Vapor Barrier and moisture remediation things like that it's going to need some type of major work in a major area of the house that's not structural or anything like that but it it's just going to need some type of an update like that now these are probably out of all of them the most common that you find these are you know these pop up several per month both on and off Market but again there's a lot of competition for these because you still have some owner occupants interested and they're they might not be able to get you know normal conventional financing but they might be able to get 203k financing a renovation loan or something like that and so these are are tricky to find like like the previous the lipstick flip they can be tricky to find ones that you can actually make money on when flipping but there's enough of them that come through that if you know what you're looking for you can find them you can flip them and you can make money these are kind of again pretty low risk there you know there's not a whole lot that can go wrong when you're replacing an AC unit as long as you know what to expect in terms of the costs and and the reward on them is probably going to generally be fairly low as well it's very similar to the lipstick flip in that regard I I flipped a house that fits this description a few years ago well actually I I did what we call a whet tailing of this house where I bought it from someone that was just trying to offload it and I then took it and sold it to a flipper and I made good money doing that and then that flipper then went and did a bunch of things to it and then they listed on the market for in my opinion way too much but who knows I haven't checked to see recently if that sold because I saw it hit the market several months ago and it was just sitting on the market but if I had flipped it instead of just passing it on and and making a a quick Buck passing it onto a flipper I would have done quite well with that I probably would have made you know I think probably like $80,000 worth of of of profit just based on what I was looking at in terms of of what needed to be done maybe not quite that much maybe closer to like 60 70 but that was one where you know it needed a new AC needed a new furnace needed new flooring and etc etc and one of the things that's really important with these types of houses as well as the lipstick flip type of houses is the size of the house and honestly this is an important consideration for all of these because in real estate we always think from the standpoint that bigger is better right because the bigger the house the the more it's worth but when when you're flipping a house a big house means more work more liability more potential for something to go wrong and really the ideal flips are once you start getting into these ones that need more and more work particularly are ones that are smaller and maybe in some of these areas where you know smaller homes sell really well like Parkins Mill or Gower or you know a Guster Road area or North Main or or you know all all of kind of those those general areas that we have in and around Greenville and so that's just something to keep in mind just because the house is if you walk into a house and it's massive and it needs a ton of work you have to understand that you have to budget for that yeah it might be it might be able to resell for a good price but how long are you going to be working on that flip if it's a really large property that's definitely a factor because time is money when you're when you're talking about flipping houses the next one on the list is the structural flips and this is pretty self-explanatory it has major structural issues in addition to the other things and and sometimes structural issues I say major but sometimes people can think structural issues are major when they're really not like if it just needs some peers replaced or short up and in the foundation honestly that's really just minor but some people might consider that to be a major thing you know if the floors are all wonky in the house it will feel like the house is about to fall down but really it might just need a few a few peers to be replaced or maybe a few Jacks to be put down there now if you need to completely take out major beams and joist and all of that whether that's in the Attic or in the crawl space or whatnot now that can start becoming a lot more pricey and so that's where it's really important with structural flips that you actually know what you're getting into how big of a structural deal are we talking about because not all structural things are equal a lot of structural things are really simple to fix and you need to make sure that you understand the difference between a simple and a non-simple one I I had you know a situation not too long ago where some clients they they had a contractor that in my opinion was just flat out lying to them that there were some cracks in the brick facade of the house and that contractor was making a big deal that that house had a foundation problem and I I got another contractor to look at it and one that I trust because my client they were using their contractor and I didn't like what they were I just the vibe that they gave off I just didn't trust them and so I brought in someone that I trusted just to get a second opinion and he thought that that was absolutely bogus you know we were talking about a house that was 50 years old and had very minor settling that was causing some cracks in the bricks in the brick facade and that brick facade any good contractor will explain to you that that that is not what is holding the house up the framing of the house is what's holding the house up that brick facade goes over the framing and so these are all things that you have to keep in mind when you're assessing a a structural a structural issue with the house you also have to keep in mind that depending on what type of structural issue that it is that you're dealing with you may actually have to account for things being damaged on the inside of the house you know if for instance if the floors are all wony and I've been in houses where one wall was higher than the other because because of structure issues you may have a situation where after you remedy those things there might be all kinds of you know flooring that gets messed up or drywall that gets messed up or the ceilings might get messed up you need to account for all of that make sure that if there are you know if you're going to be really jacking things up that down below that you don't pun intended Jack things up on the inside as well all right I didn't intend to say that that just kind of of rolled off my tongue where where can you find these types of properties well there's a lot of these are you know the older Mill houses in particular but in you get out into West of Greenville or anywhere there are older houses and you can find a lot of these and a lot of these come on the market a good number of them are off Market as well that have structural issues probably more off Market than on Market but you'll see some that come on the market often times listed for way more than they should be but at some point usually those sellers come down in their price and I've seen situations as well you know there was a home earlier this year that came on the market in tailor that had a tree fall on it and we have a lot of neighborhoods with Big Trees and you know those houses you know a big old limb or a tree will fall on on those houses and and cause structural issues to those houses and so there's a decent number there's a handful of those per year that that we see that seem to have enough margin in them that you could flip as I said oftentimes they are off Market there there are a few that come on the market per year but oftentimes you know there's a big market for these as well and so that's just something to to keep in mind I've had multiple clients put in bids on properties that fit this description and put in very good bids and not get them so it's a hot market right now and and that's just something that you have to to keep in mind now I bought a house like this last year in downtown Greer and I ended up I didn't do as well on this one as I wanted to but I ended up similar to the house that I referenced before I just passed it off to a flipper and that flipper I think did very very well on it that house came on the market recently for like dramatically more than honestly than I would have thought but that's just you know at the time that I sold it to him last year we didn't see the market getting as crazy as it has and you know downtown Greer has really done a lot of good things and so I'm really happy for him he's he's really done well with that house I passed it off to him and you know in hindsight that's one that if I had done that house came with a lot next door I sold both of them off to to two separate people had I actually de dealt with the headache which I didn't want to of completely rehabbing the house that had structural issues and we're talking about major major structural issues like the house felt unsafe to be in had I done that and then built on the lot next door I mean I easily would have made over 100,000 on that but that would have been very time intensive it would have been a big headache I didn't want to deal with that at the time so I just passed it Off made a little bit of money and just kept moving there is some value in doing that but for people that are that really enjoy the process of flipping and that have good good teams that can come in and out quickly and and that can kind of manage themselves those types of projects that have the structural issues can be great projects that have a lot of money in them and it just kind of depends it depends on everyone's situation and I think it's important part of this part of the reason why I'm having this podcast this specific episode is that not everyone is good at flipping the same types of houses some of us you know like myself I've carved out a niche in for myself personally in some of those lower risk lower reward properties and I love that I'm I'm happy to do that I'm not flipping 10 houses 20 houses a year and then the other structural ones and whatnot that come on the market I have clients that like those and and I can pass those to my clients and try to get them under contract for those and so there are this is how it all works and then you know every now and then there will be multiple lipstick type of lips that come on the market at the same time and maybe I get under contract for one and then you know I have a client that goes under contract for another one there's all kinds of things that can happen normally I try to give my clients first dibs on on all of these properties to at least give them the opportunity and then if they pass up on it or if they're not as bullish about it as I am then I'll put my foot forward it all just kind of depends but that's the balancing act that I do as both a realter and an investor is I feel like it makes the most sense for me to try to Avail my clients as much as possible and the opportunities that are out there and then if my clients aren't interested then I kind of jump in but for the most part when it comes to fix and flips I'm focused more on the ones that aren't going to involve as much work because those are just the ones that I prefer now after structural flips we've got the complete overhaul flips and these need the full package new electrical new Plumbing new HVAC new roof Etc they need a little bit or a lot of everything and these obviously tend to be in the areas that have the the oldest houses really any of these major structural ones tend to be in areas that have old houses by which I mean 50 60 70 years old particularly in the mil areas around Greenville and tayor that's where you're going to generally find these these types of houses and Denine and Judson and Mills Mill and Brandon Mills Taylor's Mill all these different areas in and and around them usually a decent number of these come on the market per month and every now and then there will be one that that comes on the market and it's overpriced and it just kind of sits there for a period of time and sometimes are opportunities to low ball those it just kind of depends obviously these are higher risk but often times they come with a higher reward you might have a possibility to break in on a street in an area that's transitioning very quickly those Mill areas that I'm talking about some of those cover are in Opportunity zones some of those are you know being revitalized getting getting city and county money pumped into them well most mostly city and and there's so there's all kinds of things that happening right now that can impact the upside of a flip but generally these are these have more upside than oftentimes in some of the others just by virtue of the fact that they're going to be in these areas that are being revitalized and I've got a client right now that's under contract for one of these and it you know it's going to need a little bit of everything but I mean it's on a street that is completely changing in an area that's completely changing in Greenville and I think he's going to end up doing quite well on it I think that there's probably you know 60 $70,000 of of margin there when it's all said and done but it's a little bit tricky on the front end to estimate what it will all cost because you know you can't get accurate quotes on every single item we're talking about tearing down drywall all throughout the house taking the whole house down to studs rewiring re-plumbing re you know doing new duct work doing literally everything except for reframing the house and you know I I don't know if maybe the siding might be kept we'll have to see but it's going to be a lot of work and so there's a lot of projecting and and a lot of going off of your gut of like you know okay I think I can keep this to this project to under this amount and so it's a it's a higher upside but it's a higher risk as well because you don't know what you can run into in that situation the final example the final type of Fix and Flip is a tear down what we call a tear down and usually the main difference between a tear down and the last category the complete overhaul is with a complete overhaul the structure framing of the building is in is in good shape structurally for the most part you know it might need some foundation work it might need some some roof work or whatever but generally speaking the framing is in good shape whereas a tear down the house is kind of like collapsing on itself and I just saw one of these recently and I didn't even I was not even willing to step into the house it was just like you know what I I don't know if if the floor is going to cave in I don't know if the walls are going to cave in I'm just not even going to take the risk these are almost exclusively on the west side of Greenville City View Sansui you know you you get over there into Denine and Judson and and welcome and park you even some parts of north north of downtown Greenville like Park Place brutin Town you'll see these types of properties over there as well and again basically you just have to boldos down the house and just kind of start over and really for these there there can be opportunity for these because you're starting over so you literally are going to be building brand new construction which really can have appeal to people now the key is will it be the first new construction on the street I I prefer not to you know I prefer if you're doing new construction for there to have already been some done on the street and so last year I bought a house in an area like this right near right now right near Greenville Memorial Hospital that it was it was a tear down for sure but it was right next to two homes that were new construction and again this is one because just my profile for the homes that I that I like and that I want I didn't want to have to to take on that whole project and so I just flipped that on to someone and just made you know like a little bit of money like 15,000 something like that flipped it on to to another investor and I don't even know if he started on the project yet but at some point that house just needs to be torn down and just new construction put up and there's already new construction on that street so he's he's in real good shape the the model has already been proven to be true that you can build new construction and and make good money on that street and so whenever he decides to do that he's going to be a good shape and and so that's can be a really good option as well the key is you have to realize that you're not saving that much and and you could end up spending more on a property like that versus just buying a lot and just building on a lot and so you have to keep all of that into consideration it might make more sense to just buy a lot and just build on that versus buying a lot that has a house that needs to be bulldozed down bulldozing the house down and then building a new house on top of the foundation it just kind of it depends on a lot of things and ultimately it just it just comes down to numbers but this is the thing is that each of us we have a different profile each of us that are into flipping houses we have a different profile for a house that we prefer and at the end of the day it's not like HGTV HGTV almost exclusively deals with the first two categories those lipstick flips and those major systems flips and then they'll try to make it look like oh it's a major structural thing you know oh you know I saw one recently where was like termite damage in a really small section of the house come on I I've seen termites go up into the walls into the framing of the house and destroy the entire house from the inside little bit of termite damage in one corner of a house that's not a structural problem give me a break but this is the way it is on television you just have to understand that but in real life there's a lot more that can go wrong and really it comes down to your RIS risk tolerance your confidence in your contractors your confidence in your yourself and your ability to assess a property and then me as a realtor I always try to provide really good feedback and really honest feedback to my clients as well I'll run comps for them I'll tell them I'll give them a range and I'm usually very accurate on my range on on what a property is after repair value what we call the arv I take great pride in that I put a lot of research into that before I you know send an arv to a client and so I consider myself or or I try to try to make myself an essential part of a team for the flippers that that are working with me and that are using me as their realter and I've got experience in this so I know what I'm looking at and I know basically I can basically assess the property on my own and then my client needs to assess it and and we can compare notes and then go from there but I try to understand the types of of properties that profile for my client and then I send them those types of properties and that's kind of that's kind of how it works and that's the beauty of doing this is that there's a subjectivity to it and as I get to know my clients better the ones that are investors I can send them better and better houses that are more closely fit their criteria and hopefully if you're listening to this and you could use a realtor that understands investment that understands flipping houses you're going to go to my show notes and you're going to look at my contact information you're going to shoot me a text or give me a call or send me an email I'd love to talk to you and and I love talking to all you guys regardless of whether you're investors or not so keep my information handy I'm always available I hope you guys have a great rest of the week and stay safe we got past all that range this past weekend that blew up from the hurricane I think we're going to have some nice weather here for the next little bit let's enjoy it and let's have a good rest of October [Music]