Tag: Flipping


Build with your brand in mind
25 Jun 2014

Build with your brand in mind

Ryan Brignac is a licensed commercial/residential real estate developer for Skyy Bridge Developers focused on the New Orleans area. After Hurricane Katrina, he started flipping properties to help revitalize the comeback of New Orleans and has not stopped since.

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The property: Single family home in Harvey, LA
Purchase price: $28K
Valued after rehab: $159.8K
Start and end date of rehab: I started this rehab on December 23, 2011 and finished on February 4, 2012 (2 months)

Why did you choose this property?
The major factor you need to take into consideration when you are buying investment properties is the location of the property and the resale value.

This property had a decent size lot, foundation, driveway and about ¾ good framing, all for $30K. Other lots in this area alone were selling for $45K and I couldn’t understand how no one saw the opportunity that I did.

I chose this specific property because of the vision I had when I first saw it. Your mind has to have a great imagination to see the finished product immediately following your first walk through. Although it was on the tear-down list, I saw the potential it had and envisioned turning it into a beautiful, completely remodeled, 4 bedroom, 2 ½ bath. It also had a very open floor plan with plenty of space for decorating which I knew would be attractive to buyers.

Were there any problems with the property when you purchased it?
Absolutely, it was full of problems. I knew about 90% of them going in and just had to take them one by one as new ones arose.

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The main problem was with its framing. There was fire damage on the middle floor so we had to do a lot of restructuring. We also kept running into issues with building codes in the past that had changed. Because this was a complete remodel, we had to upgrade to today’s standards

As a contractor, you will always run into problems. You just have to find the correct solution to fix them as fast as possible and move on. It also helps to be able to do an estimated cost analysis in your head during your first walk through. Luckily, most of the problems were small and could easily be fixed so it only increased my budget a little.

Before After front of house

What was your initial budget? Did you stay within that budget?
My initial budget was around $80K, however, we exceeded that by $10K because of some of the fire damage that needed repairs.

The biggest upgrades were that the stairs had to be reframed with 3 stringers, the windows all needed another header, the plumbing needed to be rerouted, the whole house needed to be rewired and we had to make sure all the electrical outlets and breakers were up to code.

What did you spend that majority of your budget on?
The majority of the budget was spent on upgrades. The buyer basically received a brand new home from the inside as we did a complete renovation from all new electrical wiring to stainless steel appliances and fixtures. The only thing that was solid was the brick front exterior and about 80% of the interior framing studs, everything else was replaced and renovated.

One of the most expensive upgrades we completed was the kitchen. We went with solid oak cabinets and picked from a higher class granitite. We also put better doors in the house that were more solid than your normal hollow core door.

What are some tips you have for other rehabbers to cut-costs during a renovation?
The best way to save money is to make sure you purchase the property at the best price possible. If you buy right, you can always discount your property for a good sale and come out with a nice profit. You can also cut costs by being your own salesperson and contractor.

On other hand, do not go cheap on your master bath and kitchen. I would not advise using all cheap materials and cheap labor. The old saying, “you get what you pay for,” is true. If you don’t care about your product and resale brand, in the long run, you will end up giving yourself a bad name as people will recognize you as a cheap developer.

Another tip is to not over build for the neighborhood. I always refer to the comps recently sold, what’s under contract and what is currently listed. Deals that are sold or under contract will always provide you with a detail of what other buyers liked. If your neighborhood is calling for a more high class client, you will not get away with putting in cheaper products.

The flip side to that is if you are in a small middle class neighborhood and you start putting in the most expensive kitchen cabinets, fixtures etc., then your costs will far outweigh the sales prices of recent comps and you will find yourself in trouble.

The best advice I can give is do your homework. Know who your retailers are (big and small), who sells what and at what cost, what they specialize in and where you can get the best deals. Then, you can determine what you are willing to put into your project. Even if you have to buy from 5 or 6 different retailers, so what? It’s a numbers game and you need to watch your numbers like a hawk.

Did you sell the property? If so, how did you market it?
Yes, we sold it 4 months after purchasing it—including the time it took to rehab it. Our company’s reputation attracted people to the property. Along with the layout and price, it was an easy sell.

We list all of our homes on the MLS for our local realtors and put them on sites like realtor.com, Zillow and Trulia for extra exposure. We also send emails to agents directing them to our website where they can see what projects we are working on and the rehabs we have completed.

I’m a normal figure at our local investor meetings where I pitch what deals we have currently on the market, what we’re working on and what we’re looking for in the future.

I am also a big believer in using social networking for real estate. I’m always boasting fliers of my projects through social media. This provides me with a much larger platform to work with as we know exposure is the best key to your business growth.

Bridnac Before After v1 4Jun2014 EC

What, in your opinion, added the most value?
The master bath and kitchen. We tend to spend extra time on kitchen renovations as it is where a lot of people spend most of their time so we want them to feel comfortable. If the kitchen doesn’t have a good feel or flow, it won’t make a buyer feel good.

The bathrooms are also important because you want to provide a place where buyers can wind down and relax. For this property, we upgraded the bathrooms by adding all the new fixtures, cabinets and counter tops.

Was there anything you would have done differently?
The only thing I would have done differently would have been to put hardwood floors and crown molding in all the bedrooms, but because our budget, we decided not to.

Putting in hardwood floors adds a tremendous value to any project. Depending on the size of a property and its resale value, it could increase the value of a property by 10-15%. But again, you have to look at what the comps are in the subdivision you are flipping.

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What tips can you provide to investor rehabbers?
You must always know your limits, the max dollar amount you want to invest and keep your emotions out of the deal. If you’re feeling bad that day, are in a bidding war and just want to flaunt your ego to outbi
d the other bidder, do not bid.

If you get caught up in the excitement of the bidding, or if the seller does not want to accept your low offer and now you are considering paying asking price as you think you can find ways to cut costs once you’re in the house, do not bid.

Trust me when I say, you will lose and regret the deal if any one of the above happens. Once you sign on the dotted line, you are committed to the deal. Wouldn’t you rather spend your time enjoying your deal and the product you are building than constantly worrying about how to get your numbers down?

You must also know your craft and investment strategy. People that really add value to a property don’t take shortcuts and their properties will be the ones that stand out. Novice flippers that cut corners and aren’t worried about the quality of their finished product won’t last.

Overall, develop a brand to model yourself after and stick with it. In the long run, having a quality product and a good brand will hold stronger in rough markets than using cheap developers, materials and labor. Eventually it will catch up to you either in a good way or bad. So stick with a value investment plan.


Failure is the path to success
19 Jun 2014

Failure is the path to success

Nate Armstrong worked as an executive at Target before deciding to pursue real estate full time in 2007. By 2008, he founded Calhoun Ventures. Today his company is active in 6 states and has produced nearly 500 turnkey rental houses for investors.

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The property: Single family home in Minneapolis, MN
Purchase price: $105K
Valued after rehab: $180K
Start and end date of rehab: We started this rehab on November 15, 2013 and finished it on December 30 (6 weeks)

Why did you choose this property?
We chose this property because it was a 1 ½ story house, with a very popular and resellable style. The master bedroom and bathroom sat on their own story, permitting additional privacy. That, combined with the pleasantly low price we were able to purchase it for, made for an easy decision to renovate it.

What was your initial rehab budget? Did you stay within that budget?
Our initial budget was approximately $35K and we were able to stay within that number because of the inspector we hired. He was thorough, experienced, trustworthy and had scrutinized hundreds of houses for us in the past. We owe our accurate budget estimates to his detailed report and what each repair he recommends should cost.

What did you spend that majority of your budget on?
We spent a majority of the budget on the kitchen and bathrooms. These are usually the most important rooms to people because it’s where they spend a majority of their time and they want them to look nice. A poor shower or stove burnercan be all it takes to send a great renter right out the door.

Fortunately, not too many features in the kitchen and bathrooms needed major replacements. The kitchen we cleaned up, retiled and installed new appliances in, which is a pretty standard procedure in all our flips. The bathrooms however came pretty immaculate as is. Besides a little cleaning, they only required new mirrors and vanities.

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Don’t fix it if it isn’t broken!

What are some tips you have for other rehabbers to keep within budget?
Establish a great rapport with your contractors, but bear in mind that they are your employees. Before your contractors start work, always agree with them in writing what their work must produce.

That way, if they fail to fix something that you hired them to do, you can expect them to return to the job site before they should receive their final payment. This saves you the heartache of having to hire a second contractor to remedy the first one’s omission, or worse, having to give yourself an impromptu lesson on tiling or drywall so you can make the last-minute fix yourself!

Another piece of advice is that cheaper isn’t necessarily better.

For example, when you buy a toilet, know that the cheapest toilet has ultra-narrow pipes which will clog quickly or that when you buy a sink, the cheapest ones are made of steel so thin that a dropped butcher’s knife could easily pierce it. The plumber is the highest paid type of contractor, the less time he spends in your house, the better.

It’s also very tempting to stylize and personalize each house you renovate on a case-by-case basis. However, pouring over catalogues and making certain your contractors have received the precise backsplashes, carpeting and door handles you’ve ordered for each house eats up a lot of time. Pick one standard set of appliances and accents that all of your houses will receive. Standardization translates to time and money saved.

Did you sell the property? If so, how did you market it?
In this instance, we first sold the project idea to an investor who partnered with us on the fix and flip. We love working with investors personally so we can understand precisely what they expect from their investments and meet their expectations.

After we renovated this property, we listed it on the market with our realtor. We put up yard signs and held an open house and after just 18 days, sold it to a family that had been shopping in the area.

What in your opinion added the most value?

Quality materials and attention to detail are key to differentiating a good property from a great one.

Durable and attractive appliances are a must in every house, as are their complementary accents.

Neutral colors throughout the house will also appeal to the greatest number of people—beiges and whites aren’t bland, they’re soothing and go with anything. Making certain that everything matches and is the simplest way to ensure a property’s lasting value.

What tips can you provide to investor rehabbers?
Too many would-be great investor rehabbers only scratch the surface of the investment scene and stick to educating themselves on mistakes rather than taking the all important first step into a real investment. Experience is the finest tutor, so know that even a misstep can provide a great lesson.

I admire the spirits of men like Alexander Fleming. When Fleming accidentally let some of his bacterial specimens get infected by mold, he didn’t complain about the waste of his resources to contamination—he studied them. As the result of his error, Fleming discovered penicillin and consequently made one of mankind’s greatest contributions to modern medicine. Failure is not the end of success, it is the pathway to it!


Coming in under budget
13 Jun 2014

Coming in under budget

Eric Workman is the Vice President of Sales and Marketing at MACK Estates where they specialize in rehabbing properties and is one of the largest owners and managers of single-family rentals in the Chicagoland area. Learn why doing a thorough investigation of a property has kept this team under budget.

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The property: Single family home in Homewood, IL
Purchase price: $120K
Valued after rehab: $239.5K
Start and end date of rehab: We bought this rehab on September 5, 2013 and finished on January 10, 2014 (4 months).

Why did you choose this property?
We chose this property because we had already completed other projects in Homewood so we were comfortable with the municipality, neighborhoods and buyers. Market trends for rehabs in this area have also shown property values to be on the rise and it’s close to some of the best school districts in the southern suburbs.

What was your initial budget? Did you stay within that budget?
We actually came in under budget. We had anticipated a longer construction schedule than what had actually occurred so we were able to save on labor and holding costs. Our initial budget was $75K and we only ended up spending $72K.

Workman Before After v3 4Jun2014 EC

What did you spend the majority of your budget on?
Most of our budget was spent on updating almost all areas of the property – improving the exterior, landscaping, patios, kitchen and baths along with the major mechanicals. We ripped out the old, rotting back porch and replaced it with two concrete patios, new landscaping and mulch. We also removed all existing shrubs in the front yard and cleaned up the existing plants that weren’t destroyed/dead and painted the entire exterior of the property.

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Our company is synonymous with “like new” construction and we pride ourselves on turning over a property that lives up to today’s buyer standards.

Were there any problems with the property when you purchased it?
Nothing out of the ordinary. We have been doing this business for 16 years and have seen just about everything that can come up in a project.

That being said, we go to great lengths to investigate a property’s condition and construction expense and run a preliminary scope of work for every project before we put an offer on it. That way, we can estimate what the construction costs are going to be. The scope is also run at a “worst case scenario” (one of the reasons why we came in under budget on this one).

Workman Before After v1 4Jun2014 EC

What are some tips you have for other rehabbers to keep within budget?
First and foremost, it’s important to allocate budgeted dollars to capital expenses. You don’t want to go into a project with too low of a budget allotted for construction costs, run into unforeseen issues and be left with the option of either: A) not fixing the issue properly, or B) having to spend more money than originally planned, crippling your projected margins.

You should also anticipate your needs. If you do a thorough investigation prior to taking on a project and employ assistance from skilled general contractors, you can stay ahead of any and all issues that may occur.

Workman Before After v2 4Jun2014 EC

What in your opinion added the most value?
It’s tough to credit that to one particular item. As a whole, labeling a property on the MLS as “recently rehabbed” has a multitude of different meanings – real estate agents can say this if they have done something as little as add lighting fixtures.

The thing that separates us from the competition or “adds the most value” isn’t one item specifically, but more so the entire property as a whole. However, if we had to pick a room, it would likely be the kitchen.

For example, a 4 bedroom, 2½ bath home in a great school district is going to attract a family. If the kitchen isn’t spacious and functional, along with being up to today’s standards of quality and design, the property isn’t likely to sell.

Workman Before After v4 4Jun2014 EC

Did you sell the property? If so, how did you market it?
We listed the property for $239.5K and sold it in 17 days for our asking price to a homeowner who was eager to move their family into a quality home within the school district.

We actively marketed the property by listing it on the MLS and a multitude of other online platforms, as well as holding an open house and informing our extensive broker network of the new property.

What tips can you provide to investor rehabbers?
Don’t get fooled by the looks of a property, e.g., fresh paint, new kitchen, etc. Do your due diligence to determine the state of the plumbing, HVAC, roof, windows and any other big-ticket items prior to purchase. These are capital expenses in every property that could cripple your returns if not done right the first time.

Any “flipper” can put in a new kitchen and paint the walls a pretty color, but it takes a re-developer to provide a property that is up to new construction standards.


Rocker turned real estate pro
14 Mar 2014

Rocker turned real estate pro

Jenelle Isaacson is the hip owner of Living Room Realty. After starting her company 5 years ago while pregnant, Jenelle credits her creative background, fresh approach and attitude towards real estate to her success.

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Full Name: Jenelle Isaacson
Location: Portland, OR
Started investing in: 2001
Years spent investing in real estate: 13
Estimated portfolio size: $3.5M, 5 properties, residential and commercial real estate

As a woman in the real estate industry, what inspired you to get started?
I had previous success in sales in an art and jewelry gallery. During a conversation with my step mom, who had been selling real estate for a few years, she encouraged me to take those skills and see what I could do in real estate. I loved houses, interior design and had just bought my first house at age 26 which empowered me to make the leap into the industry.

When did you start investing and how did you get started?
A few months after getting my real estate license and helping a lot of my friends buy their first houses and fix them up, I found a house in my neighborhood that was a great value and snatched it up. My dad had just retired from teaching and we decided to fix it up as a family.

Besides each of us choosing to repaint the front door 3 times, we were on the same page. Each of us brought a different skill and that little house ended up making us a $7,000 profit each. Success! I got the bug from there.

What do you love most about investing in real estate?
Creating community. Every house, development and project is a chance to bring something new to a community. Putting together my team of contractors, lenders, inspectors and tradespeople feels like family.

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Also, my favorite deals are those that come to me from the most unexpected places.

It’s in those moments that I realize how a healthy, diverse community has supported my success.

I played in a girls punk band up into the time I started my career in real estate. Years later, a drummer in a band we played with saw I was now the owner of a real estate company. When he needed to sell his house, he came to me knowing I would be able to relate to him.

We worked together to help him get out of a tough financial situation and one of my partners ended up buying the house, rehabbing it and turning it into an amazing home for herself. It feels good to know that my connections made in the art and music world make me relevant to business in a way that I would not be without that experience. Everyone came out a winner.

Have you encountered any challenges that you think are unique to being a woman in real estate?
Being a woman in real estate can be challenging. I am petite and look younger than I am which can lead to people underestimating me, but I have learned to turn that into a strength. When I was first starting my real estate business, I endured a lot of sexism.

I often got asked if my company was just for women, a comment that always surprised me seeing that most people in residential real estate are women. Our company actually had a higher ratio of men to women than our competitors, but when I looked around at the other firms in our market, we were the only one of our size that was owned, operated and managed by women. I think this is what makes us even more competitive when it comes to going after market share.

It’s also a misconception that has benefited us at times. The majority of home buyers are single women who are attracted to our brand and company because we have so many empowered women who are successful in real estate.

What is your biggest accomplishment so far?
I think buying my first commercial property has been my biggest triumph. I managed to put together financing for a commercial building in 2009 after the market crashed. A lot of banks laughed at me, I was a realtor with a new realty firm in the depth of the housing crash. I also had a 2 month old and an 18 month old.

Getting together the finances and business plans to the banks was one of the hardest things I had done and not being discouraged was a real test of grit.

When I finally found an advocate at a local bank and some help from the city, we were able to put together the deal. I felt proud of what I had done and owning a piece of real estate on a popular main street in the city felt like a major achievement.

Have you made any poor investment decisions?
I’m lucky in that I don’t have any nightmare stories, but I have made decisions I would do differently. I wish I would have held on to more property in the beginning of my career, rather than flipping it.

At the time, I needed the capitol to work with and didn’t have the connections I do now for financing so selling property freed up the money I needed to rehab or purchase. Bringing in partners and getting more creative are things I consider now that I didn’t before.

Do you recommend women get into property investing? What would you advise a young woman who is thinking about getting into real estate investing?
Definitely, yes. Women generally have very good instincts for houses and neighborhoods.

My biggest piece of advice is to be selfish!

Don’t put your boyfriend on the house as a way to show him you trust, care, love, etc. him. Time after time I see women put their boyfriends and partners on their real estate purchase. Women want to share “home” and mistake making a home as needing to share an asset.

What do you think are the most important things every investor should know when investing in real estate?
Know yourself first, your threshold for risk and your ability to see a project through. Believe in yourself, no one knows more than you, has more talent, luck or opportunities than you do. You will learn along the way. Know your market, values and demand. If you are weak in any one of these, hire someone who can help you.

What are your investing goals for the future?
I would really like to do more commercial projects where I can take more risks and be an active collaborator in shaping the businesses that I lease to and develop for. A whole market concept or micro retail in an urban setting also sounds exciting with a residence on top for me and my family.


Flipping success in a smaller city
20 Dec 2013

Flipping success in a smaller city

K&V Investment Group is a real estate company focused on distressed property rehabilitation, management and investment sales. Their goal is to grow their portfolio steadily, aiming for long-term success through all economic and real estate market fluctuations.

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Company: K&V Investment Group
Co-founder: James W. Vermillion III
Location: Lexington, KY
Years experience: 3
Number of properties flipped: 2-9 currently under contract

Why did you decide to start flipping real estate?

I initially became interested in real estate because of the abundance of options. With so many strategies, financing options and types of investments, it was only a matter of figuring out which strategy best fit my goals and personal situation. After researching, I decided rehabbing was a good starting point.

How did you get started?

After I decided to start rehabbing, I teamed up with a personal friend and we spent several months learning all we could about the business. As we were learning, we constantly developed and modified our business plan until we felt comfortable enough to start executing.

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With our business plan in place, we set the foundation for our flipping business. We formed a Limited Liability Company (LLC), met with potential lenders, became licensed agents and began our search for contractors. At the same time, we were hunting for our first property to rehab. We went to foreclosure auctions, searched the MLS and bid on online auctions, all with no success. While frustrating, we continued searching until we got our first property under contract.

How do you decide where and what to buy?

We look for properties in desirable areas that we can buy at a discount, which enables us to renovate the property and exit with a profit. You cannot rely on one indicator to analyze a property and need to consider as many variables as possible to ensure you are purchasing the right property at the right price.

How do you find your properties?

We search the MLS daily and do our best to keep tabs on the market and maintain an awareness of changes in conditions. In addition to using the MLS, we discuss investing with other real estate investors which can lead to opportunities. Recently, we have seen the market tightening up and have expanded to several smaller cities and towns where there is less competition.

K&V bathroom before and after

How do you finance your real estate investments?

The majority of our purchases are financed through the commercial lending portion of a local bank. The lender finances both the purchase and rehab costs, which leaves us responsible for the down-payment, closing costs, holding costs, renovation costs beyond the approved budget and any other associated costs.

In addition, we have started using a hard money lender when a fast closing is required or we are unable to get financing from the bank. In a few circumstances, we have also used private funds and plan to expand that method in the future.

What are the most common rehabs you have to make when flipping a property?

First impressions are critical to buyers, so enhancing curb appeal is important to make a quick sale. While landscaping and exterior improvements do not always need to be drastic, presenting a clean, attractive property will go a long way in getting people in the door.

Once in the door though, we provide a “new” looking home that is consistent throughout.  I always recommend rehabbers budget for a professional paint job, new light fixtures, interior doors, door and cabinet hardware, floors, etc. There are times when not all of those items will need to be replaced, but unless they look brand new, we upgrade them.

How long does it typically take for you to complete a flip project?

Usually between 4-6 months, although project lengths have varied from less than 2 weeks, to 9 months.

What are some ways you sell the property once you have completed the rehab?

We start by marketing the property while the renovations are underway. This can lead to a contract to sell before the property is even completed, limiting the holding expenses. When it comes to marketing our completed rehabs, we do not do anything special. Since we are licensed and real estate agents, we list the properties ourselves.

K&V living room before and after

How much do you typically make on a flip?

Unlike many rehabbers, we have experienced a wide-range of profit levels due to the range of properties we have flipped. Rehabbers in larger markets are able to focus on a few areas where most properties are very similar, thus they have little variance in purchase price, holding costs, rehab costs and ARV.

Being in a smaller market, we have had to take on a variety of projects, from historic single family properties, to townhouses and duplexes. In addition, the scope of work in our projects has ranged from primarily cosmetic to complete renovations.

Have you lost money from a flip?

While we have made our share of mistakes, we are fortunate to have not lost any money on a project. I credit this to focusing a lot of energy on analysis ahead of purchasing and including contingency funds in our budget for unexpected events or holding time.

What is the most common way people lose money when flipping properties?

There are several very common errors that lead to most failed flips. The first is overpaying for a property. The profit in flipping comes primarily from the purchase, so being able to identify solid flip candidates and purchasing them for the right price is a critical step. Overpaying for a property dooms the deal from the beginning.

Another common mistake is underestimating the rehab budget and timeline. Investors are notorious for using best-case scenarios in determining the renovation cost and timeline, which leads to blown budgets and additional holding costs.

The other major mistake I have seen repeatedly is overestimating ARV, again, due to using best case scenarios during analysis. This happens when rehabbers pick comps that support the top price point, and ignore those that validate a lower price.

What are some things you recommend staying away from when trying to increase a property’s value?

There aren’t any specific aspects I would warn investors about, just make sure you do your due diligence. We have rehabbed properties with foundation issues, water damage, mold, etc., and while many investors look at those problems as red-flags, we look at them as potential opportunities. The key is to make sure you are aware of the issues and are able to accurately budget for the solution.

Not sure what house flipping is? Read our article 4 essential house flipping rules for beginners to learn more!


Green rehabs give a fresh start for older homes
26 Jul 2013

Green rehabs give a fresh start for older homes

There are many positives to living in an older home, both functionally and aesthetically. Residents of older dwellings generally feel reassured that the building has ‘good bones’ because it has been standing for decades. Some investors are attracted to older homes for their distinctive style that more modern homes often lack.

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However, many older residences come with serious negatives that could drive away even the most experienced real estate investor. Lead, asbestos, and mold are just some of the problems that tend to plague older properties. Most would gladly turn their back on a home like this, especially investors looking to flip the property, but not all investors feels the same.

A movement in the real estate industry known as green rehab is gaining popularity all over the United States. Many companies are so dedicated to this growing market that it is the only type of real estate they invest in. These businesses combine the worlds of house flipping and sustainable living to create homes with old world charm and modern efficiency.

One green rehab company in Norfolk, Virginia is bringing exactly what its name implies to the otherwise unwanted homes they work on: a fresh start.

Founded in 2011, Fresh Start Homes CEO, Glenn Espinosa believes that the focus on profit alone plagues the world of flipping houses. He explains, “a lot of flippers are quickly treading that fine line between maximizing profit and putting out shoddy, uninspired work.” Fresh Start Homes, however, takes into account what works in the long run since the utility bills of eco-friendly homes are starting to attract a new category of potential buyers.

FreshStartHomesProject4

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Fresh Start Homes begins every rehab project with a baseline energy audit which most homes they work on fail. While that might not sound like a major concern, Glenn explains that a failed audit means “that for many years…the previous homeowners were literally throwing money out the door each and every month.”

To prevent the next homeowners from high utility bills, Fresh Start Homes consults a local energy expert during the renovation. This allows them to select the most cost-effective rehabs. All homes also receive re-hauled HVAC systems, comprehensive foam sealing, energy efficient appliances, water saving features along with new windows and lights. All materials with toxins and allergens are replaced with cleaner, healthier materials and any mold, lead, and asbestos is removed.

When renovations are completed another energy audit is given to compare to the initial baseline audit. Glenn explains that Fresh Start Homes uses these two numbers to “calculate an exact percentage improvement for the home that will help us in advertising and marketing the home for resale.”

While this sounds like a lot of unnecessary work, it pays off financially for Fresh Start Homes as well as for the future homebuyer. A recent renovation project only increased construction costs by 7% or $4,500. This property also received a prestigious 5+ star certification from leading home energy audit index HERS Resnet, which added to the overall value of the home.

Fresh Start Homes delivered on their first priority of every property by saving the future homeowner nearly $150 on monthly utility bills. “To put it in better perspective,” Glenn says, “[that’s] $50,000 over the life of a 30 years mortgage.” Assuming a homeowner remains in that house for thirty years, they would have saved enough money from utility bills to buy a new car, fill the tank with gas, and go out to a nice restaurant for dinner.

FreshStartHomesProject3

These types of numbers are not unique to Fresh Start Homes though. Green rehabs fill a growing niche market of investors who love the look of older homes but hate the high costs that come with running them. By combining the best of both new and old homes, flippers can make up for any additional costs in the higher selling prices these in-demand properties earn.

Like any real estate investment, those interested in purchasing properties to renovate with green technology should do their homework. Just because a product is labeled “green” does not mean it is the healthiest or most cost effective choice.

Knowing the local housing trends is also necessary for flips. For example, homes located in dryer climates should stay away from planting grass in their lawns to save water. While a front yard full of lush green grass certainly seems eco-friendly, it actually has a negative impact on the environment as well as drives potential buyers away.

Once investors have done their homework about green rehabs and the area they would like to invest in, flippers can expect profitable returns from their projects. Fresh Start Homes has certainly experienced this and plan to aggressively step up their expansion in the next year to cope with the high demand for their green rehabs.



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