Real Estate Investors – Follow a Flip
A Metro Atlanta Flip Story – Finding the House
I recently took on a new client who was interested in learning how to buy, renovate and resell houses for a profit. This is called Flipping and I am the Coach. Dealing with first time investors can be frustrating and stressful for all parties. It doesn’t matter how often you explain the “raw” truth about this type of investment, you worry about the dollar signs that keep rolling in the back of their heads.
We started out using a great real estate agent named Kelly Brown from Keller Williams Realty Connection. Kelly showed us homes in East Point, Hapeville and many other places in the Metro Area. The client came with us for the first two searches for property, but when nothing was turning up, Kelly and I found ourselves searching on our own. This was actually easier since we could see 10 houses in the time that it took us to see 2 with the client. Although it is necessary that the customer learn how to find these homes on their own, they are usually too eager to get started on the first house to go through the full search. Taking out a new investor involves taking time to explain why each house isn’t the right house for them and as far as they are concerned all the houses are the right house.
In the search we found the very spotty market that exists in Atlanta. East Point was OK but only certain neighborhoods. There were entire neighborhoods that were black balled because of recent real estate appraisal fraud. This meant that buyers had trouble getting mortgages on homes in these areas hence making it difficult for innocent home owners to sell their properties. There were big dollar neighborhoods like Jefferson Park – but in this area it was difficult to find the properties. Oh and of course each one of these preferred neighborhoods cover only a certain area which might be only a small number of streets. In Jefferson Park there is actually an area they call the “box”. Either the house is in the box or out of the box and the resale for these houses can differ dramatically. Hapeville was equally difficult to produce the right “first” property for the client.
Now keep in mind, our mission was to find a property that didn’t have to be totally gutted but just given a respectable face lift. For a first timer a total complete renovation can be overwhelming. We finally found a great house in Forest Park.
Forest Park is an area which carries a bad reputation for being a high crime area. Merely saying the name strikes fear in investors and it is an unfair rap. There are far more dangerous areas in the Metro Atlanta area then poor little Forest Park. Forest Park is a lovely area with a very proactive local police department and city government. Home of Fort Gillem, The Forest Park State Farmers Market, close to Clayton State University and an easy commute to Atlanta. The Forest Park of 5 years ago is not the city I see today. But like all potential properties we identified the price that the house “would” sell for and not “could” sell for if renovated and went from there. The neighborhood was nice, and the neighbors were nice. We were about to recommend buying a three bedroom, 1 bath brick ranch on a nice quiet street with a pretty yard. There were hardwood floors throughout the house, a wonderful kitchen with beautiful cherry cabinets (we call that built in equity) and an old bathroom with green tiles that was in excellent condition. The price for this house – $63,000. Houses in this area resell between $102,000 and $115,000. The client bought it sight unseen. The sight unseen part is what always makes me nervous.
The plans for the house would be to, replace the counters, sink, faucet, stove and dishwasher and floor in the kitchen. Replace all doors with new panel doors throughout the house. Refinish the floors, clean up the bathroom replacing the toilet, vanity top and faucets and resurface tub. We would install gutters on the house and a small deck. Clean the twigs and leaves from the yard to reveal the wonderful gardens and repaint everything.
The customer viewed the house, reviewed the renovation plan and was pleased. Read our next article to hear more about this Flip.
About the Author: MHR Consulting Group is owned and operated by Margaret Richardson. Margaret has more than 17 years in the construction industry. In 1984 Margaret launched her first business in Mendham, New Jersey called Land Department, Subdivision and Site Plan Expeditors servicing land developers and expediting their projects through the planning and zoning board approvals. After 8 years in business Margaret sold her company to a local real estate developer and started to explore other business opportunities.
She worked in Wall Street as compliance expert for almost 9 years and as a process improvement specialist for a large national distribution company for 5 years when she moved to Atlanta, GA.
Margaret revisited the construction industry and found that the same issues that plagued developers, general contractors and sub-contractors in 1985 were even more prevalent in today’s business environment.
Margaret has what every GC or subcontractor wishes they had in an employee. Full business experience, the ability to anticipate problems, forward planning and attention to quality and detail. Most cannot afford a staff person of this caliber especially if their business suffers from seasonal peaks and valleys. But now MHR Consulting Group has solved that problem.
Among our many areas of expertise we offer quality and detailed home inspection services to home buyers and sellers. Our detailed reports serve as a negotiation tool, a heads up to problems that should be solved prior to listing your home and most of our clients call them the best “owners manual” they could get when buying a home.