I was flipping around the TV the other day when I came across an episode of Flip or Flop on HGTV. It follows two real estate agents in California who buy houses at auctions, fix them up, and sell them retail. They showed a few of their previous projects. On one condo they made $20k in 20 days! They wake up in the morning and find that there are over 80 auctions in their county.
While it sounds easy, there are a few catches. First, they don’t get to see inside the properties before they bid. Second, they have to buy the houses fast for cash. At the auction they get the property for $275k but had to pay a little more than they wanted. When they get into the property they won it turned out to be in good condition. What surprised me was how much the husband wife differed on their estimated renovation costs. It felt as though they were just winging with project.
Soon the contractor arrived. Going through the property the husband and contractor were quite adversarial. The contractor would throw out a price for specific work and the husband would immediate cut it in half. The contractor wanted to bid out the project as a whole but the husband wanted to sub-contract out everything piecemeal. I don’t feel like this is the correct way to build a relationship with a contractor, but who am I to say, I’m not a professional.
The bid from the contractor came in at $42k. This was more than the husband estimated but less than the wife. They need to sell the house around $330k just to break even. The husband decided to save money by filling in the pool himself. The contractor saved the day by stopping the husband since the pool would have to be removed, not filled in, per code. This pool removal added an additional $5k to the budget.
The wife is the designer of the operation. She picked out some great tile that cost a little more than the husband wanted.They decided to paint the fireplace to blend in with the color scheme. The biggest risk they took was not having a door in the master bathroom. It passed the inspection but the inspector found a window that needed to be replaced with something larger for egress access. Not only that but the contractor found asbestos that had to be remediated. This added $5k to the budget! They were going way over but at least it was being done right.
Once the house came together it was beautiful. They held an open house and had a ton of interest. They got multiple offers and sold the house for $405k with a profit of $55k!
Looking around Arbutus I could see myself flipping one of these houses. Yes, I know, I had sworn off real estate investing in my previous posts, put this show has got me thinking. Why wouldn’t I be able to pull something like this off?
Hooray! I finally did it! I sold that ugly house of mine! You know, that one my father left me five years ago. The one I’ve been complaining about for the past 5 years. The one with the leaky roof, the nightmare tenants, the angry neighbor, and the kitchen fire. I was done dealing with the house and I decided that I needed to sell fast and I needed to sell for cash. I sold to a We Buy Houses company and it felt great.
It all started with a yellow postcard I received in the mail. It was a Tuesday evening and it was between a BGE bill and a local newsletter. It read in big letters, “We Buy Houses Fast in as little as 7 days!” At first I was hesitant. How can a company buy my Baltimore house in 7 days? I jumped onto their website and started my research. They had articles on how they make fair offers and how they can help with foreclosure. They were expert local Baltimore professionals who really understood the neighborhoods and were exactly what I was looking for in a We Buy Houses company. The We Buy Houses Baltimore company was called Dependable Homebuyers and they did a great job.
After speaking with Evan I was impressed by his knowledge of Baltimore real estate. He genuinely wanted to help me with my problem house. He was able to provide me a fair offer over the phone on my terms so I could sell my house fast. We set up a time for him to see the house and the process was started!
When Evan arrived at my house in Baltimore we went right to walking through the property. He was upbeat, highly encouraging, and transparent. We started laying out his version for the property. How he was going to open up the main floor, upgrade the heating system, and replace the roof. These were all the things I had always wanted to do but never had the time. While I was relieved that I was going to be selling my Baltimore house fast, I was excited by Evan’s plan to turn the property around.
We signed the paperwork and Evan had his title company contact me that same day. They were very helpful and answered all of my home selling questions. They understood the benefits of selling off-market and gave a lot of praise for the We Buy Houses process.
Closing was a breeze. While I was happy with the amount of money I walked away with, the biggest relief was having the property off my hands. I distrusted We Buy Houses companies in the beginning, Dependable Homebuyers really impressed me and made it an easy transaction. I highly recommend you contact them if you’re looking to sell before fall.
Dependable Homebuyers even helped me move out my father’s war memorabilia collection from the attic once it was sold. They told me that they always make fair offers and can buy on the seller’s terms. They have to buy at a discount in order to make a profit but I found their offer fair. To be honest I walked away with more money than I would have it I had listed with a real estate agent.
You can read about Part 1 of my Arbutus MD tenants from hell here.
The next morning I woke up early and headed over to the Baltimore County Rent Court. When I got to the front of the line they handed me a Failure to Pay Rent form. I filled it out and handed it back to the clerk. Next was the long wait until our scheduled court date. During that long wait I kept dreaming about getting rid of the property. Honestly, at this point I don’t even want anything out of it, I just no longer want to deal with the hassle of owning real estate in Arbutus.
Finally the letter came in the mail. I would be reporting to the courtroom the next Friday. I arrived that Friday in a suit with all my documentation on the property. I was embarrassed to be in this situation and felt as the the other people in the room were judging me. Luckily when my time can my renters hadn’t shown up. The judge awarded the case in my favor and gave me a document that would allow me to schedule a sheriff eviction. I had to wait 10 days but I didn’t care. This nightmare of being a landlord was finally coming to an end.
I showed up at the day of the eviction with the sheriff. I was surprised to see that the tenants weren’t prepared at all. The sheriff gave them 10 minutes to gather their things and he escorted them off the property. I changed the locks and turned around to see all the junk they had left behind. It was going to be a long day. My two nephews pulled onto the street a few moments later and we began dumping everything into the dumpster I had ordered the day before. After the house was cleared I noticed all the damage done to the property. There were holes in the walls, scratched up cabinets, and a warped vanity from wet towels that had be left on it overnight. I was not in the mindset to deal with those problems so I left them for another day.
It’s tough to admit when you’re wrong. In this case I was overly confident. You always see the people on HGTV having a great time and experiencing tons of success. I can tell you firsthand that it’s not that easy. If there’s one thing I learned, it’s to leave this real estate stuff to the professionals.
A few years ago I inherited a property from my father in the neighborhood of Arbutus, MD. Arbutus is located in southern Baltimore. The first 6 months the property sat vacant. I was busy with the funeral arrangements and then just could find the energy to do anything further with the property. After a little while I got past the grieving process and decided it was time for action, I was going to turn it into an investment property.
I called a few property management companies but wasn’t impressed with their customer service. With the lack of quality managers I decided to go at the management alone. How hard could it be? I made a listing on Craigslist and had a handful of interested renters in a matter of hours. “This is going to be easy,” I thought to myself. Boy was I wrong.
Meeting the renters at the property, they seemed like good people. The wife was a local nurse at Johns Hopkins and the husband was a for-hire carpenter. They grew up in the area and were looking for a larger house with more space for their kids. Although my gut instinct was to go through a formal background and credit check, I decided that they seemed honest and had them sign a lease then and there. They gave me the first month’s rent, a security deposit, and I was on my way to being a landlord.
The next month I waited for a check in the mail but it never came. My heart sank but I comforted myself with the idea that if must have been lost in the mail. I tried calling them a few times but no answer. Getting impatient I went over to the house. The wife answered the door. She apologized for being behind on the rent, that her husband had been out of work. Where was this information a month ago? This was the beginning of my nightmare experience being an Arbutus real estate investor.
I was overcome with anger and regret. How could I have been so stupid. I decided to suck up my pride and call a local Maryland lawyer I know and he gave me the rent court address. “It’s going to be a long process,” he said to me as we hung up. Drained and slightly defeated and laid on my couch. I no longer had the visions of being the next Baltimore millionaire and was quickly learning that owning rental properties was not for me.