It
always amazes me when I talk to beginning investors about the homes that
they are looking at and calling fixer uppers.?They frequently tell me
stories?of homes that they feel need to be torn down, and when I see
them I think they are in good shape, at least as far as a rehab is concerned.
But then I think back
to when I first started in this business.?I consider the homes that I
had been looking at and the difficulty I had in overcoming my first investor
purchase.
In
my early days as an investor I pursued homes that today I wouldn’t waste
a minute of my time looking at.?I was one of those people who believed
that this couldn’t work where I lived, and if I would have kept on the
same path that I started on, another casualty would have been listed in
the book of failed real estate newbies. I used to think that homes that
had dirty carpeting, needed some painting, and perhaps they had a water
stain on the ceiling were fixer uppers.?Today I consider those homes
to be in move in condition, people are probably living in them now.
The first home that
I ever did buy as an investor was one that my initial instinct was to
bring in the bulldozer.?I bought the home for $38k, and I totally fixed
it up for $7k and sold it for $64,900.?$7k can go a long way.?The home
looked pretty good from the outside, thank God.?If the outside would
have looked like the inside I probably would have walked away from my
first deal.?When I got inside of the home I was totally bummed out.?
My heart sunk, I felt nauseated and sick from the site and smell, and
the heebie-jeebies that I felt brought on this overwhelming need to take
a shower- and I don’t mean in the home that I was buying.
The second we opened
the door, the smell of cat urine about knocked me over.?I have asthma
and this house kicked it in.?The carpet was torn up from the floors,
the walls were painted all different colors.?I put my shirt over my mouth
and nose and began to venture inside with caution.?I gingerly walked
across the floor expecting it to cave in.?As I got near the kitchen the
first thing that I noticed was the bright orange and green paint on the
walls.?I was disgusted by the remains of dead roaches, the cabinet doors
missing, broke, and hanging off.?I couldn’t tell you what color the floor
was supposed to be, and I never did find out.?
By this time I felt
a little more comfortable that the floors weren’t going to cave in beneath
me so I ventured toward the stairs.?As I climbed the stairs, I decided
to test them first by pushing down a little before allowing my entire
weight to be supported by the step itself.?I walked up to the second
floor and into one of the bedrooms.?It was painted electric blue, had
holes punched and kicked in, graffiti on all surfaces, the closet doors
were on the floor, and the door was hanging from one hinge.?I was no
longer surprised by what I was seeing.?I then walked across the hall
to the bathroom.
The bathroom was no
prize either.?The floor in here was dangerous.?Next to the tub it was
really soft and rotted through.?I had to be careful.?This room was absolutely
filthy, the sink was stopped up with something that appeared to have been
gooey, but dried out.?The toilet was no better.?I wouldn’t even pick
up the toilet seat to see what was inside.?The tub was rusted, had stick
on flowers, and the tiles were falling off the wall.?I figured that a
stick of dynamite and $10k would do the trick to bring this bathroom back
to life.
Then we entered the
other bedroom.?This didn’t have any damaged walls, but there was writing
on the walls and on the door.?They tried to cover the writing up with
a red and white paint mixture, they didn’t do a good job of mixing it
so it looked really bad.?
I only had one more
place to check out, and it was the basement.?I immediately began to feel
like I was walking into a dungeon, and was glad that there was a realtor
with me, otherwise I doubt that I would have went down there by myself.?
When we got to the bottom and turned a light on, surprisingly this was
the best thing the home had to offer.?It was by far the cleanest room.?
It just needed some cobwebs cleaned up.?But there was a new furnace in
the basement, so I finally saw a positive about this house.
I walked out of the
home feeling like I wasted my time. I couldn’t believe that someone would
even try to sell such a home.?I almost felt as though it should be illegal.?
I wasn’t going to pursue the home until a friend of mine told me that
he was going to buy it if I didn’t.?So just to keep him from buying it,
I did.?I was scared, I couldn’t believe what I had just done.?
I talked to one investor
about the home and he was willing to give me $40,000 for it.?I was shocked.?
I had a $2,000 profit before my eyes just from one conversation.?But
my friend made me keep this one to renovate.?In the end, I put in a new
kitchen, carpeting, paint, fixed the rotted floor in the bathroom, put
down new vinyl tiles in the bathroom and kitchen, had the tub refinished,
put a new vanity and light in the bathroom and completed the renovation
for just under $7k.?The place looked and smelled new, and my initial
take was to tear it down.
These days I walk
into houses that are much worse than that one, and I see beauty in?them.?
I’m about immune to the smell, if nothing else I think I’m enjoying the
smell because it means CHEAP!?When you see a home that totally disgusts
you, that is a good thing, because it means that most other people are
disgusted by it as well and just aren’t interested in it.
Happy
Investing
Steve Cook is a real estate investor from Baltimore, Maryland. He is the owner of flippinghomes.com. For more information on Steve or his materials, click here