World Wide Property Sales
What is a Fixer Upper?
by Steve Cook
It always amazes me when I talk to beginning investors about the homes that they
are looking at and calling fixer uppers. They frequently tell me stories of
homes that they feel need to be torn down, and when I see them I think they are
in good shape, at least as far as a rehab is concerned.
But then I think back to when I first started in this business. I consider the
homes that I had been looking at and the difficulty I had in overcoming my
initial impulses and making my first investor purchase.
In my early days as an investor I pursued homes that I wouldn't waste a minute
of my time looking at today. I was one of those people who believed that this
couldn't work where I lived, and if I had stayed on the same path that I started
on, another casualty would have been listed in the book of failed real estate
newbies. I used to think that homes that had dirty carpeting, needed some
painting, and perhaps had a water stain on the ceiling were fixer uppers. Today
I consider those homes to be in move-in condition. In fact, people are probably
living in them now.
The first home that I ever bought as an investor was one that my initial
instinct told me was a candidate for the wrecking ball and bulldozer. I bought
the home for $38k. I completely fixed it up for $7k and sold it for $64,900. $7k
can go a long way. The home looked pretty good from the outside, thank God. If
the outside had looked like the inside, I probably would have walked away from
my first deal. When I got inside of the home I was totally bummed out. My heart
sunk, I felt nauseated and sick from the site and smell, and the heebie-jeebies
that I felt brought on an overwhelming need to take a shower - and I don't mean
in the home that I was buying.
The second we opened the door, the smell of cat urine just about knocked me
over. I have asthma, and this house kicked it in. The carpet was torn away from
the floors, and the walls were painted all different colors. I put my shirt over
my mouth and nose and began to venture inside with caution. I gingerly walked
across the floor expecting it to cave in. As I got near the kitchen, the first
thing that I noticed was the bright orange and green paint on the walls. I was
disgusted by the remains of dead roaches lying everywhere. The cabinet doors
were missing, broken, and hanging off. I couldn't tell you what color the floor
was supposed to be, and I never did find out.
By this time I felt a little more comfortable that the floors weren't going to
cave in beneath me so I ventured toward the stairs. As I climbed the stairs, I
decided to test them first by pushing down a little before allowing my entire
weight to be supported by the step itself. I walked up to the second floor and
into one of the bedrooms. It was painted electric blue, had holes punched and
kicked in the walls, and graffiti on all surfaces. The closet doors were on the
floor, and the door was hanging from one hinge. I was no longer surprised by
what I was seeing. I then walked across the hall to the bathroom.
The bathroom was no prize either. The floor in here was dangerous. Next to the
tub it was really soft and rotted through. I had to be careful. This room was
absolutely filthy, the sink was stopped up with something that appeared to have
been gooey, but had dried and hardened. The toilet was no better. I wouldn't
even pick up the toilet seat to see what was inside. The tub was rusted, had
stick on flowers in it, and the tiles were falling off the wall. I figured that
a stick of dynamite and $10k would do the trick to bring this bathroom back to
life.
Then we entered the other bedroom. This didn't have any damaged walls, but there
was writing on the walls and on the door. They had tried to cover the writing up
with a red and white paint mixture. They didn't do a good job of mixing it so it
looked really bad.
I had only one more place to check out, and it was the basement. I immediately
began to feel like I was walking into a dungeon, and was glad that there was a
realtor with me, otherwise I doubt that I would have gone down there by myself.
When we got to the bottom and turned a light on, surprisingly, this was the best
thing the home had to offer. It was by far the cleanest room. It just needed
some cobwebs cleaned up. And there was a new furnace, so I finally saw something
positive about this house.
I walked out of the home feeling like I had wasted my time. I couldn't believe
that someone would even try to sell such a home. I almost felt as though it
should be illegal. I wasn't going to pursue the home until a friend of mine told
me that he was going to buy it if I didn't. So just to keep him from buying it,
I did. I was scared. I couldn't believe what I had just done.
I talked to one investor about the home and he was willing to give me $40,000
for it. I was shocked. I had a $2,000 profit before my eyes just from one
conversation. But my friend made me keep this one to renovate. In the end, I put
in a new kitchen, carpeting, paint, fixed the rotted floor in the bathroom, put
down new vinyl tiles in the bathroom and kitchen, had the tub refinished, put a
new vanity and light in the bathroom. I completed the renovation for just under
$7k. The place looked and smelled new, and my initial impulse had been to tear
it down.
These days I walk into houses that are much worse than that one, and I see
beauty in them. I'm just about immune to the smell, if nothing else I think I
enjoy the smell because to me it says CHEAP HOUSE! When you see a home that
totally disgusts you, this is a good thing, because it means that most other
people are disgusted by it as well and won't be interested in it.
Bio:
Since 1998 Steve Cook has flipped many hundreds of houses as an active
Baltimore-area real estate investor. Steve's unique specialty is the "flipping
homes 1-2 punch", a proven system of real estate investing that powerfully
combines wholesaling and rehabbing houses. Steve Cook is dedicated to helping
others succeed through understanding and aggressively applying his time-tested,
step-by-step approach to flipping real estate.