Steve D Valentine walks through flipping a house bought for $475,000. He compares a quick cosmetic fix (paint, clean, minor flooring) that nets $35,000 profit in six months versus a full $100,000 renovation that yields $75,000 but ties up more cash and time. The choice depends on your capital, timeline, and what else you could be doing.
Questions this video answers
475 (spoken; implied $475,000)
Right around 625 (spoken; implied $625,000)
$100,000
About $75,000 (after cost of sale)
About $35,000 over six months (comparison figure)
Chapters
This is what we call lipstick on a pig. So let's take a tour. Here's what we did to the property. We actually bought this house for 475. That included a commission to our company for buying the property. And then we went through the process of looking at the remodel and do we want to do it, not want to do it. So we didn't. And we just went and did Lipstick on a Pig, which is we cleaned up this lot and then we went through and decluttered the house, painted it, did a little bit of flooring, and then just put it back on the market for right around 625. So it's kind of what we call a whole tail. So sometimes we don't always go through this process of having to do these big renovations. So here's the process we went through. We had to look at the numbers and say, hey, if we can get the house to 700,000, it's going to cost us 100,000, right? So, so we're going to have to invest 100,000 and it would produce maybe a $75,000 profit after cost of sale. And the other things that happen if there's no hiccups. Now if you fast forward and we look back at it or not fast forward, you know, we rewind and look at it. We also spread it out and said, hey, what happens if we just do minor stuff and sell it as is on the open market rather than doing the full renovation in a market that's a little bit dicey, Right? So we chose to kept the price down, do enough to where a new buyer can come in and look at the project and it's priced well, those types of things. So not everything has to be jumped into a flip. And keep this in mind when things are borderline profitable and maybe make a little bit more. So on this one, we might have made an extra $35,000 over a six month period of time, provided the market and everything did what it was going to do. But we could capture the right now price, which is profitability, by about half that. So we're going to make about $35,000 on this without as much effort and energy. So we're going to make half the profit, be out of the property, and then we can be on to the next project without feeling like, well, we have all of our guys, all of our crews, all of our capital tied up in this one. That might make us a little money. Now if we look back at this one and I said, hey, this one could be a $200,000 profit. We're going to have to tear the roof out, we're going to have to expand the footprint. Those types of things, it's worth putting the money and time into it. So those are things where as you look at houses and people talk about flipping and things, it's, it's really looking at the opportunity and figuring out which direction does it go based in the season of your business and life. Do you need to create right now income? Do you need to create long term wealth by owning rental properties? Are you looking for yourself? There's so many different ways for opportunities. And guess what? If I couldn't have done something with this house, I could have just sold it to somebody else and made $10,000 and not touched it. So the opportunity is where the income is. And then the income is actually when you're learning to connect the dots based on the time and space that you're at. And it doesn't have to be the same thing every time. It's learning that just because we buy something that's a flip doesn't mean we have to tear every freaking wall out. Look at it, examine it, figure out what is the best way for me. Is this tying up my people? Is it tying up my time? How does that look and how does it feel? And start looking at the profitability and the cost of lost opportunity when you have too many things tied up on a project that is borderline. All right, guys, hey, let's keep in touch. Subscribe here, Connect. Check out my podcast, Real Estate Revolution. I do monthly free calls for the real estate community and if you're borderline, like unhappy with your brokerage, your team, any of those things, I will have a 30 minute call with you and I will dissect where it is that you need to move to to find your happiness and joy based on what your business looks like. So if you want to have that conversation about where you're at in your business, I want to help guide you. Of course. I'm at real brokerage and I'd love for you to be there with me. But guess what? If it's not a right fit for you, I'm going to make sure you know what is. Have a good one, guys.
