Blending art and business
I want to stretch my creative muscles and combine them with business.
I love to create things that stand out in the world and I find that using my creative muscle improves as I use it more, just like any other hobby I get better at it with practice. For many people house flipping is just a regular inventory sales style business: buy a house, make it appeal to a wide audience, and sell it. I wanted to do something that made more of a statement and something I could brand. This house was the first one that I really stretched my creativity in a myriad of different ways and made something I'm proud of.
However, I realized that this is not great for a flipping business, this house would have been better as an Airbnb, and that has convinced me to do two things: First, treat flipping more like a business and less like an art project. Second, I'm going to convert some or all of my current long term rentals into short term rentals because I know I can design them in a way that's highly visually appealing. In fact, this flip really taught me that while I do want to put my creative stamp on my flips I'm more excited to unleash the the absolute limits of my audacity on the short term rentals. The buying pool for outlandish houses is too low to take the risk on selling them with this type of design, but I believe the pool of people who would love to stay in a house like this for a few nights or more and even pay a premium for it is very high! So I am working to make that transition immediately.
I made another YouTube video for the flip
When I started buying rental real estate I learned early on that it's a boring business. Tenants pay once a month, I had a property manager, and it wasn't going to take a lot of my time. I needed a hobby to keep me busy with all my free time and that's when I found photography, I'm a life long car guy so I figured I could shoot cars and houses and combine my hobbies. 5 years later I had no idea how right I was.
In early 2020 when I flipped the first house I recorded the whole thing on a GoPro in a vlog style video, but to be honest I kind of hated it. This time I wanted to try something very different so I made a cinematic style video using my Canon EOS R and the new Ronin RS2 gimbal.
Hope you enjoy!
I made so many mistakes it's embarassing
I went WAY over budget
This deal caused me quite a lot of stress. I went way over costs, way way over costs in fact. This is a super common rookie mistake so I don't feel too bad about it but it caused me a lot of undo stress. There isn't too much that I did to the house that I could have refrained from upgrading, so I'm not sure that I over improved the house as much as budgeted too little for the rehab. My initial rehab estimate ws 40k but I total 55k when all was said and done, and this was incredibly frustrating, that's a 37% mistake in my numbers. Part of this was increased lumber costs and the HUGE deck that went on this house, and some of it was the way I improved the house. I'm very lucky that the housing market is up, demand was low, and this house is particularly nice, all these things saved my poor budgeting.
The amateur art student
The original paint scheme was far uglier than what I ended up with. I had to repaint the front of the house because I absolutely hated what I had done the first time. This the struggle with taking creative risks, sometimes it doesn't' work out. It cost me nearly a thousand bucks in paint and labor to fix this problem, however, I knew when I tried it that if it was horrible it was only a thousand dollar fix, and if it worked out I had the chance to create something highly unique. I'm glad I took the chance and was able to fix the first version but it caused me quite the lack of sleep for a night or two while deliberating it.
Here is the original:
I hated the all black front and the all white back, it looked like two houses smushed together.
No more winging it
This is only my third flip, the first one I was just seeing if I could do it. The second one went a little better and this one went ok, but now I'm starting to gain some confidence and seeing where I can improve: the most notably is with systems and organization. I am not a highly organized guy by nature, but towards the end of this flip I started to write out my entire process and checklists for things to do with the hope that I can find someone to help me implement it. This will be a work in progress but I think I can afford to have someone on the ground help me with operations and organization, give them a cut of the flip, and become a partner of some sorts that I can grow with.
Flipping is a hobby if I treat it like a hobby and it can be a business if I treat it like a business. Since I don't have a steady w2 job these days I need to treat this more like a business because relying on this income and then not paying enough attention to how it's made causes me undue stress and it's just less profitable.
Interest expense: $2500
Total all in cost: 124,100
Accepted offer value: $171,000
Consessions at close: $3,000
Net profit (before taxes): 43,900
Is real estate still easy?
If you haven't caught on now I'll explain a bit about why I say constantly that "real estate is easy":
to encourage people to try it for themselves
to be a bit obnoxious because I think it's funny
This deal kicked my ass for sure. I went over budget, I went way over timeline, it caused me stress and self doubt, I made ALL the rookie mistakes people are constantly warned about. By all reasonable measurements this would be considered difficult ...and yet, I still made some money. What does that say about how possible this is?
I don't know any other business where a person can screw up so badly, learn a ton about how to do it better, and still make a positive net profit.
So yeah, real estate is definitely easy. It's kind of TOO easy. It might even be the easiest thing I've ever done in my whole life ;)