Flip That Fixer! Pros Offers 10 Top Flip Tips
“You do know you are living many people’s dream, don’t you?” I say to Matt Lavinder over the phone. Lavinder is the founder and president of New Again Houses, a company turned franchiser, that buys old houses and fixes them up for today’s buyers.
“I’m not sure I see it that way,” he says, laughing.
So maybe his job isn’t always a trip to the ice cream parlor, but who hasn’t fantasized about buying a decrepit old house for a song, fixing it up with a patch here, new fixtures there, and a fresh coat of paint, and selling it for a tidy sum?
In my many imagined house renovations, I tear out walls, raise ceilings, replace fixtures, change flooring, put up moldings, and Poof! take the place from dump to dreamhouse. Never in my daydreams do I run into dry rot, black mold, ruptured pipes, or snake dens, nor does my taste for improvements ever outrun my budget.
But the risk of those real possibilities is why I, and probably you, remain armchair flippers, and live vicariously through folks like Lavinder.
Since starting his company in 2008 in Bristol, Tenn., he has flipped over 300 houses locally. Two years ago, he harnessed that experience into a franchise for others who want to use his fix-and-flip formula. New Again Houses now has 21 franchises in 11 states.
“We provide capital, technology, training and an ecosystem to allow franchise owners to flip one house a month in their area,” he said. About half the franchises completing their first full year are on track to hit that number. Because money is often a limiting factor for flippers, working with a franchise helps them achieve scale they otherwise couldn’t.
Lavinder’s numbers-driven model starts with buying houses in probate, often taking them off the hands of heirs who have a house they don’t know what to do with. “We don’t buy anything on the market,” he said.
He also has a type: “We like bread-and-butter houses, not big custom projects that are high risk, but workforce housing,” he said. The typical fixer is a ranch style, built in the 70s, and around 1300 square feet, with no owner updates and lots of deferred maintenance. Not to be confused with “affordable housing” (code for government subsidized), workforce houses are for blue-collar, working-class families. “That to me is big.”
The average sales price for one of his remodeled homes is $170,000. From that, he aims to make at least $25,000 on a flip.
The process starts by assessing the scope of work, then using company software to “turn the flip into a math problem,” Lavinder said. “The process is very data driven. We take the emotion out of the analysis.”
That emotion part is why I would be terrible at this.
Though every flip is different, the method to turning a humble house into something today’s buyer wants is the same. Here are 10 steps Lavinder and his project manager, Annie Elliott, say every flipper should follow:
1. Pick the right house. Lavinder will walk away from properties that are poorly built, or “under engineered.” For example, a house where the joists are 24 inches apart rather than 18 inches tells you the builder took shortcuts. Underground water issues and wet foundations are another red flag. “We spend a lot of time in crawlspaces looking for unfixable problems.” They also avoid homes in bad neighborhoods, another problem they can’t overcome.
2. Start with the unseen. Assess the systems: electrical, plumbing, heating and roofing. Determine what needs to be repaired or replaced, and what those big-ticket items will cost. Then work backwards to nail down your budget starting with a realistic end sales price, which can’t be more than the neighborhood will support.
3. Plan it 100 percent. “Too often, people make 80 percent of the decisions for what they will and won’t do, and figure they will decide the rest on the fly,” said Lavinder. Instead, spend more time at the beginning to get it planned to 100 percent. Then don’t change your mind.
4. Get good estimates. Having a specific plan will help you get accurate prices from workers. Do the legwork to secure and validate costs.
5. Salvage what you can. Part of this is instinct, Elliot said. “Often, you just know what must stay and what must go. If it’s gross, doesn’t work, or is water damaged, it goes.” The decision gets harder when something is in good shape, but you just don’t like it.
6. Set your contractor up for success. To do that, be sure to have a complete project design, and don’t change it during construction.
7. Do for sure: While some decisions are line calls, some aren’t. For sure refinish wood floors, and remove old carpet and bathroom tile. “It just feels cleaner to not move in on that,” Elliot said. Always paint and landscape.
8. Biggest bang for the buck: Beyond painting in light neutrals throughout and landscaping, other moves that yield big results include moving or widening doorways to improve flow, and bringing in light by swapping out old light fixtures and adding new ones, and adding decks, porches and patios to expand usable living space. Outdoor shutters are also an easy, low-cost way to add character and curb appeal.
9. Beware of social media. “HGTV and Pinterest have in some ways made our job harder,” Elliot said. “Buyers come in with these expectations and wonder why they can’t have a navy-blue island with a quartz countertop. I’d love to make every house Pinterest worthy, but that’s not practical.”
10. Know how the pandemic has impacted the market. Today’s buyers value square footage more than they did a year ago, Lavinder said. Where in the past we would have hesitated to finish a basement, now that’s an easier decision. “We are not risk takers. For us, it is all about the math.”
Photo caption: A Flippin’ Kitchen —To update the kitchen of this historic Bristol, Tenn., home (shown above before and after), the New Again Houses team repainted upper glass-door cabinets and shelving, and installed new base cabinets, laminate countertops, a tile backsplash and new hardware. They replaced laminate flooring with ceramic tiles, put in a new sink, faucet and light fixture, replaced appliances, added a dishwasher, and painted walls Sherwin Williams Silvermist. Photos courtesy of New Again Houses.