Real estate has always intrigued me. As a kid, my parents had us live in rental homes until I was 13 years old. We would move every few years, and I loved being in new surroundings. When I got older, my dad was retired, so we decided to do a fix and flip close to where my parents lived. We had a friend who was a real estate agent who told us it was the right time to get into real estate. Our venture did not go very well at all. Here is my story about my failed fix and flip.
The Initial Process
We searched for three months to find a good fixer upper to flip. My parents are very picky so they often dragged their feet. It seemed to aggravate our realtor. We finally purchased a house and thought we would get a return of about $50,000. We decided to spend six weeks renovating the house and then we would have our open house in July.
The Problems Started Early On
We had a major issue with staying on budget. Our general contractor told us that we could update the bathrooms and kitchen, install landscaping, changes some finishes and stay within our $10,000 budget. The first day, he told us that a few of the pipes in the kitchen needed to be replaced. He also told us that we might want to also consider taking down an interior wall near the entrance to the kitchen to make the room more spacious.
Time Becomes Money
The demolition and new drywall cost us almost $1,000 and was an overage. Then, we encountered a problem with our bathroom. We decided to install a glass shower door. The man installed it and a few hours later, we heard it shatter all over the floor. This cost us almost another $1,000 in damage. The general contractor kept leaving and not doing enough of the tasks that we needed completed.
Our Time Frame Is Surpassed
It took three months for us to get the work done. This meant that we had to carry the mortgage for two additional months. This put a huge burden on our finances. The real estate agent said that our updates were nice. She liked the new tile in the bathrooms and kitchen. She told us that removing the wall would make the place more appealing to buyers.
We had several showings of the home. Brokers said it was cute and quaint. Unfortunately for us, the house sat on the market for six months. We had to take a loss on the house to move it. We ended up losing $25,000 on our investment. It was a tough pill to swallow as we had gone through so much to fix and flip the house.
My Advice to Others
I would advise people to fix homes that are not in rural areas. We thought paying less for a home in a small town would be a great investment but it was not. I would also suggest getting referrals when looking for general contractors. The one that we chose was not efficient with his time management skills which cost us a lot of money. My final tip is to have additional funds for overages and to consider renting a home if it does not move quickly enough.