The Anatomy of a Flip - Personal Experience

Here are numbers from a recent personal house fixing up experience...

** To protect the new owners, I won't be giving out the details of the location of the property.

Purchase Price - $206,000
Amount of fees I had to pay when I bought it - $6,436.52
Amount of commission I got when I bought it - $6,180.00

The cost of new siding (hardiplank), paint, Pergo flooring, carpet, door hardware, front door repair, 4 mortgage payments, 2 new garage doors and garage door openers and utility bills came out to $25,754.91.

Now this was an actual "house", not a townhouse nor a condo. This one involved a moderate amount of work. I outsourced ALL of the work except for the garage doors (Dan and I hooked those up).

That means in order to break even, I had to sell it for $232,011.43.

The actual selling price... $294,500.
Here are the fees I had to pay at closing... $8,835 to the selling real estate agent, $605 in taxes (that I owed for that 4 month period), $5,242.10 (1.78% excise tax), approx $1400 for title and escrow.

After fees, the total I got to keep was over $46,000 in just over 4 months. Pretty decent return especially since I didn't do any of the work except for spending one weekend putting up garage doors.

The Anatomy of a Flip - Don't believe what TV tells you

I've had it with these "Home Flip" TV shows. The ones that tell you,

"John spent $850,000 on his home. After spending $65,000 on fixing it up, he plans on selling it for $990,000. That means he will make $75,000!!!"

Eh, WRONG. At least in Washington State, we have this little 1.78% fee called an "excise tax", to be paid whenever a home is sold. That's over $17K right there!

Not to mention spending about $3,500 on Title and Escrow and between $40K to $60K on real estate commissions (between 4% to 6%). If you're lucky, you're left with $10K after paying capital gains tax.

** All these amounts are based on the home actually selling for $990,000 **

I actually saw one the other day called "Property Ladder"... it's just like all the other Home Flip shows, except this one tells you how much the people made AFTER all the fees.

One group of 4 made $37K TOTAL after 4 months. Hardly worth the effort.

I miss my popcorn ceilings

Okay, so every homebuyer these days seems to cringe at the sight of popcorn ceilings. Now, if you don't know what popcorn ceilings look like, they're the textured things that builders used to put on ceilings inside homes (none of the newer homes I've seen have them). They're also referred to as "cottage cheese ceilings". The main reason for these was that they apparently hid defects in the walls, although I don't buy that reason (I've had to remove popcorn ceilings twice and neither time there were defects underneath). I think the main reason they were used is because it was applied using a massive spray technique, so it was fast, quick and cheap. Maybe they have soundproofing abilities as well.

I lived in a home for 20+ years that had popcorn ceilings, and now I kinda miss them. I remember a couple of times I would swing a baseball bat, or golf club, inside the home and accidentally scrape the ceiling, only to have little flakes come off the ceiling and into my hair or into my eyes.

Being in the real estate industry, you see trends come and go. And when some trends "go", you get nostalgic about never seeing them again. Maybe one day these trends will make a comeback (like aluminum windows and berber carpets are doing these days). But I have a feeling popcorn ceilings will go the way of lead-paint, never to make a comeback.

Although I do have to admit, popcorn ceilings can be pretty ugly.