On HGTV’s “Fix My Flip,” real estate pro Page Turner helps novice flippers turn a profit on their projects. But sometimes, Turner must walk away from certain renovations that seem doomed.
In the episode “Big Plans, Big Pivot,” Turner heads to Eagle Rock, CA, an L.A. neighborhood just 10 miles from Hollywood that, she says, is “growing fast with young, artsy buyers demanding smaller homes.”
So she’s a little surprised when she sees what first-time flippers David and Tira plan to do with the 977-square-foot, two-bedroom, one-bath home they’ve purchased. They bought it seven months ago for $710,000, already put $150,000 into it, and are at a standstill because they can’t get a 1,000-square-foot addition permitted.
All they’ve really done is gutted the place, and they’re paying $4,000 in carrying costs each month.
Turner is surprised they have such ambitious plans for the property, because the listing photos reveal it could have been a cosmetic flip—a little paint, a little reconfiguring, and presto, a quick profit! She comes up with an excellent plan that will save these flippers valuable time and perhaps hundreds of thousands in renovation costs. They agree to her plan, albeit reluctantly, as well as her $50,000 fee.
As we watch this project unfold, there’s some excellent advice for us all.
Don’t remove original wood and fixtures
The original listing photos show that the house had built-in paneling, shelving, and wood floors. But David and Tira had ripped it all out, leaving nothing but studs. Turner is shocked and thinks this is a mistake.
“Looking around at this 100-year-old precious little house, I’m shocked at how and why they gutted original 1920s wood and fixtures,” says Turner. “Eagle Rock buyers would have killed for that. Seeing the basement, you get a sense of the historic wood that they cluelessly tossed aside upstairs. What a shame.”
Don’t over-renovate for your neighborhood
While adding square footage might seem like a good idea for such a tiny house, Turner thinks otherwise after consulting comps and doing the math.
“If the flippers add the extra 1,000 square feet with their planned addition, they’ll sell for roughly $1.4 million,” she explains. “But at their current square footage—under 1,000 square feet—finished homes are selling for $1.3 million. So why spend an additional $375,000 on plans that make you only $100,000 more?”
The results of this number crunching make sense when you consider buyers today.
“Eagle Rock’s young, artistic buyers only have so much money, and they prefer smaller homes with character, not big, fancy modern ones,” Turner explains. So she comes up with a plan to scrap the addition, and remodel what’s already there.
Consider putting a bedroom in the basement
Although David and Tira hope to have three bedrooms in this home, Turner isn’t convinced that’s a good idea.
“In the 990 square feet that we’re working with, three bedrooms seems a little cramped,” says Turner. But she notices 600 square feet of basement space that they could use. She comes up with a plan to put a bedroom and a bathroom in the basement, which the flippers seem fine with.
“I’d be OK with two bedrooms and an amazing bathroom upstairs, as long as the downstairs is connected. Then it feels like it’s one space,” says Tira.
Flip based on facts rather than emotion
Inset a loud record scratch here. After all this planning, David and Tira meet with Turner for coffee and inform her that they want to swing for the rafters and proceed with their original plan. Turner doesn’t see any way for them to make a profit and graciously bows out.
“It’s just a flip—it’s not a home you’re going to live in, it’s not a legacy home, you’re not passing it down to your children. You’re really only doing this out of emotion,” she tells them.
Yet these flippers stand firm, so Turner walks away.
“I don’t agree at all,” she says of their plan. “It really gives me a knot in my stomach, because I’ve seen flippers lead with emotions and I have not seen it work out well. I sincerely wish the best for them, but this is not a plan I can participate in.”
Should you sell or rent a flip? Crunch the numbers to find out
“When one door closes, another door opens,” Turner observes. Several weeks later, she is called back to Eagle Rock by Anthony and Anton, the same flippers she helped in Tujunga.
They had bought a two-bedroom, one-bath house for $650,000, remodeled it for $100,000, and are thinking about renting it out rather than selling it.
Again, Turner does the math.
“I’ll be the first person to encourage people to buy and hold income property, but after researching David and Tira’s flip, it’s clear that these smaller homes are in such high demand, I don’t think this is the property to rent,” Turner explains.
She believes the rent would probably be around $3,500 a month. At that rate, it would take them years of renting to earn the same amount of money they’d get from a quick sale.
“In Eagle Rock, rents aren’t explosive, but home sales are,” Turner explains. “If you sold it at a high price point of $1.2 million, that’s $450,000 in cash that you have sitting here. So what I’m seeing is this property is worth more cashing out, grabbing the $450,000, and going to get a rental property that will turn over more money per month, like a duplex or triplex.”
Anthony and Anton see the logic in this and agree to prepare the home they’ve already remodeled for a quick sale. They make a deal with Turner to help them with this, for 10% of the profit.
White walls work for renters, but buyers want more character
Anton and Anthony have remodeled with renters in mind by painting everything, even the fireplace, a clean white, but it looks a little dull.
“Plain white walls are fine for renters to mark up and hang their big screens, but buyers are looking for something a little more unique,” Turner says.
So she persuades the flippers to paint the fireplace black and add a cedar mantel and shelving. She also makes the big, white living room wall look more interesting by adding wood laid out in a square grid pattern, then painting it the same color as the wall. They’re little fixes, but they carry a big impact.
Does Page Turner manage to fix these flips?
In just a few days, Anton and Anthony get an all-cash offer for $1.1 million. After subtracting Turner’s 10% cut ($35,000), the flippers pocket $315,000, and are elated.
And as for Tira and David’s Eagle Rock project? Six months later, Turner revisits the property. It appears to be in the exact same condition as when she left it. It’s a good lesson that when flipping a house, it’s always best to tailor your plans to the end goal in mind: making a profit.
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