Flipping homes was the rage when my husband and I purchased our first home together in 2005. We intended to fix-up the home and then flip it for a profit, but failed so miserably that we ended up just living in the house. We also didn’t realize our timing was off since few people knew it was a housing bubble until after the housing market collapsed. We didn’t expect to face real estate failure since I had success flipping a new construction townhome just a year before we bought our single-family home. With my townhome, I walked away with a $30,000 profit. With our single-family home, we have yet to walk away after sinking about $40,000 into it in 9 years.
Spending too much on upgrades
When I flipped my townhome, I did spend money on upgrades. However, since my townhome was smaller, my costs were also small. When we put engineered hardwood floors in our single family home, it cost about $10,000. Our $180,000 investment quickly became a $190,000. We also purchased stainless steel appliances for our fix and flip. We also spent money on landscaping the yard, which was completely barren due to recent droughts in our Florida community.
Getting stuck in a flip
I think the biggest reason our fix and flip was a failure is because we never actually succeeded at selling our home as we originally intended. After fixing up the property, we got ready to list our home. Home values had plummeted so quickly that the home we purchased for about $183,000 was now worth $150,000. We decided to continue working on fixing up the home as we waited for the market to bounce back. As we worked, the value continued to decline, hitting bottom around 2012 at $95,000.
Even though our fix and flip failed, we had a few neighbors who successfully flipped their homes. One of the main differences was the speed at which they flipped their properties. We planned to spend 2 years fixing up the property before selling it, while a few of our neighbors flipped their homes in less than 4 months. I’ll never forget how one of our neighbors purchased their $3,000-square-foot home for $190,000, but sold it for $300,000 at the height of the housing bubble. Although I admired their “success,” I felt bad for the new homeowners, who eventually let the home fall into foreclosure. After our fix and flip flop, I realized I better stay out of the home flipping game. For us, a home is just to live in.
More from this contributor:
Why We Aren’t Buying an Investment Property
As a Homeowner, I’m Wealthier but not Happier
Even After the Crash, I Love Real Estate