As a buyer’s agent who worked with a lot of low-cost, entry-level buyers, I saw some absolute horror shows that were trying to be passed off as houses. Sometimes, it was subtle, like the house where the floor was pulling away from the wall and there was a two inch gap on the living room’s south side.
Sometimes it was much, much worse, like the house I showed that I literally took two steps into, and declared to the buyer, "We’re leaving." I would not have been upholding my fiduciaries to that nice lady (or able to sleep at night) on a transaction with that property. Old houses settle, it’s true, but when they’ve literally settled in all the directions, potentially warping space and time, it’s a real bad sign.
So, when I started flipping houses, I decided I was going to be a different kind of flipper. Rather than just doing the ol’ paint and resell number, I was going to deliver houses that my own buyers would not only be proud to live in, but that I would be proud to sell them.
Every first step was a doozy
No one in the housing industry could spend money on an old house like I could. I could double my cost on a low-value acquisition in five minutes with the right phone calls. And that was by design. Because every first step for me was about the same thing: providing first-time homebuyers with safe, comfortable, and reliable housing.
So, the first thing I did in absolutely every property I had a hand in was to update and modernize the big-ticket items. I didn’t care if that 30-year-old gas furnace "still worked," if it was going to be expensive to repair or run, out it came. Same story with three-tab shingle roofs that may have had the bare minimum of five years left in them but were over a bunch of old shingle layers -- out they came. That was going to be a prohibitive cost for a first-time homeowner in their first few years of ownership.
Almost every one of my purchases was in need of electrical upgrades or never had central heating installed or had dodgy plumbing or had almost no insulation; whatever it was, we fixed it. Rather than cut corners on the critical items for existence and make the house look like the ones on HGTV, we did the opposite. We spent money on the stuff that would be with the house when it was sold again.
People I knew in the real estate world thought I’d lost my mind, but I’d watched too many first- time homebuyers suffer their first foreclosure because a faulty furnace had cost them their entire savings, and then they needed to fix the car, too, leaving slowly building arrears in their mortgage payments.
I knew this was a place where I could help.
Making money for everyone
The way I saw it, there was enough money in these properties that everybody could take a little something away. I walked away with plenty of cash -- it was there to have if you could buy the properties right (and I was an agent, remember, so I saw things the moment they hit multilist and heard the whispers of properties that were about to be listed).
So, I might have spent an extra few grand that I didn’t absolutely have to spend to sell the property, but I didn’t have to watch another buyer go into foreclosure over something relatively small. I could sleep at night, and that was certainly worth a lot. And, of course, I never acquired a property without a solid home inspection, so I knew how to budget my cash.
I walked away from deals after an inspection because they were simply too costly to do right, by my own standards. If I wouldn’t feel comfortable putting my own grandmother in a particular house, for whatever reason, I wasn’t going to sell it to anyone else.
My houses didn’t always have the latest cabinetry, but they did have the newest HVAC and built-in fire alarms. They were clean, with fresh paint, and new counters. They were refurbished, even if they weren’t HGTV sterile.
Make no mistake -- I took every nickel I could out of the property. But I also made sure that when those buyers went to sell again in five or seven years, they could take something, too, even if they just took care of the place and didn’t make any changes. As a Realtor, it was important to me that I didn’t create new homebuyers who struggled with housing affordability because of unplanned expenses.
For those owners, their one and only home was the foundation of their financial future. Where they entered on the property ladder mattered. And not in the way you might think. If I sell you a house with future appreciation that beats the general market, well, I feel like I’ve done something. Down the line, those owners will have gained years in their equity climb without doing anything but maintaining a home.
The Millionacres bottom line
I loved rehabbing residential housing because it gave me a way to help people and preserve the personality of homes that would have otherwise been completely sterilized from tip to stern. What can I say? I’m a bit of a purist. My current home is a mix of projects that are slowly turning the clock back to its post-World War 2 origins.
But for profit or pleasure, long before you salvage those pink bathroom tiles, you have to pay attention to the big-ticket items. If a house were a business, the HVAC, the electrical, and the plumbing are the fundamentals. Everything springs from there. Everything starts with the structure, the systems, the roof, the chimney. If those things are in place, the rest is a cakewalk and something you can absolutely be proud of for a lifetime.
I don’t want to look back at my life and see a cold pile of unyielding cash. I want to drive by homes in my area that I was involved with in different capacities and say, "Hey, I was part of that. I helped create safe housing for my community, I helped reduce crime in my neighborhood. I helped build my city."