How To Get Started Flipping Houses
Here's an old inner-city house that might be a flipping candidate. It might also be better put into a landfill. ©2017 Tim Carter
How To Flip Houses TIPS
- Cable TV shows are NOT realistic - don't believe them
- Hard, dangerous and risky work filled with surprises
- Plan for cost overruns - at least 50 percent
- Landslides a real danger in certain areas
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DEAR TIM: I’ve decided it’s time to take a chance and flip a house that was built in the 1890’s. I’ve watched plenty of shows on cable TV and feel it can’t be that hard.
Have you ever done this type of construction work? What did you experience and would you do it again? Are there unknown dangers and how risky do you feel it is?
It seems like it’s an easy way to make a sizable profit. Paul T., Erlanger, KY
DEAR PAUL: The first few years of my construction career were spent cutting my teeth, fingers, arms and legs rehabbing houses. Back years ago, that was the word used to describe what you’re thinking about doing. I could talk to you for hours about the challenges that lie ahead of you on this quest.
Cable TV Un-Reality Shows
Let’s talk about the cable TV shows since I’ve been doing professional home improvement video work for over twenty years. Most of the shows I’ve seen about flipping homes are produced as entertainment and not a tutorial or investment guide.
The shows are taped and edited so you feel happy after you watch them. The show producer wants you to watch a following episode.
Pandering & Sizzle
There’s an old saying that I feel comes into play here. “A half-truth is a whole lie.” If a cable TV show about flipping houses told you the entire truth and revealed all that really happened from the start until the end of the project, you might end up with a sour taste in your mouth.
But if a show woos you with lots of glamour shots and the exciting aspects of the construction, you might turn off the TV, stretch your arms and get up from the couch feeling empowered and confident. It's my personal opinion after working in the video news business for years that cable TV show producers pander to their audiences.
Hard, Dangerous & Risky
Flipping houses is hard, dirty, dangerous and risky work. It’s not unicorns, rainbows, juice boxes and fruit rollups. You might have better odds making a profit if you roam through the Bellagio casino placing bets every ten minutes at different $100 blackjack tables.
This is especially true if you’ve got no real construction experience and you’ve never put together a detailed cost estimate for a project of this magnitude.
My Experiences
Let’s saunter down memory lane and add in a few things I saw just a few days ago while on a trip to Cincinnati, OH. Doing this will give you a small taste of what may lie ahead in your future.
Toxic Lead Paint
Old houses, especially those build prior to 1967, contain vast amounts of lead paint in them. This is a given for ancient houses built in the late 1800’s and early 1900’s. Any painted surface you disturb can create lead dust that can poison you or anyone working with the material. I had no idea about lead poisoning decades ago while I tore out plaster, sanded old paint and created clouds of dust wearing cheap fabric breathing masks that were next to useless.
Foundation Issues
I’ll never forget the house I built for Habitat for Humanity. Fortunately my money was not at risk, just eight hours of my time every Saturday for several months. It was the first house built on an old inner city lot in Cincinnati.
When we dug for the new foundation, we discovered a massive sub basement where the original house stood and it took 200 cubic yards of flash fill to provide enough solid support for the new house footers. The budget was blown for this job before we drove the first nail.
Active Termites
I’ll never forget the shock I felt at another old house when I opened up a wall to install a new window. I saw all these tiny white insects about the size of a grain of rice scurrying around. Lo and behold I was interrupting an extended family feast hosted by a giant nest of termites.
Clogged Full-Size Vent Pipe
Oh, and then there was the first old house I flipped for myself. I decided to replace the rotten cast-iron plumbing drain lines with new PVC plastic ones. Once I had the entire system put back together, I couldn’t understand why the toilet didn’t flush right. It turns out eighty years of scale and rust buildup at the bottom of the full-sized cast-iron vent stack was blocking air from getting into the plumbing system.
Landslide Danger!
As I write this column now, I’m less than ten miles from where you live. A few days ago I was touring a very vibrant community called the East End. It’s filled with old houses and small businesses that were built at the same time, or slightly before, the house you’re looking at.
Many of these structures are currently being pushed off their foundations by a massive landslide. The landslides you see on the news in California grab all the attention because they’re violent and come down the mountainsides like an avalanche of snow.
These Cincinnati landslides are not new. I was a geology student at the University of Cincinnati and had the good fortune to study the characteristics of the bedrock geology of the greater Cincinnati area. The hillsides around Cincinnati and the bottom of the hillsides in the river valleys are prone to landslides.
In Cincinnati, the unstable soil created when the weak shale in the Kope formation weathers moves like a sniper in a ghillie suit crawling through the weeds. Because of the slow movement, many in the community are blinded by the fog of complacency. This past week I saw tilted foundation walls, patio stones bulging up as the soil oozes upwards, and entire structures pushed off their foundation walls.
This is a copy of a United States Geologic Survey (USGS) geologic topographic map of the East End of Cincinnati, OH. The downtown area would be just to the left of what you see. The Kope and Lower Fairview formations are the light pink rock just above the magenta alluvium that's north of the Ohio River. (C) Copyright 2017 USGS and every US taxpayer that owns the maps. CLICK THE IMAGE TO BUY GEOLOGIC MAPS FOR YOUR AREA.
Foreclosure Looms?
Can you imagine what it might cost to stop or repair damage like this? If a lender discovers this is happening during construction or afterwards will he call the note requesting you pay in full your 30-year loan amount immediately? Will you be able to get new financing? Will you have to declare bankruptcy through a foreclosure?
Vandalism, thievery of building materials and tools, and tough code restrictions will great you as you jump into this project. Out-of-level floors, ancient sewer and water lines that may have reached the end of their useful lives and other money-sucking surprises await you. Just be sure you can handle delays, cost overruns and lots of stress.
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