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The Dark Side of Flipping Houses

Oh yeah. It's not all glitz and glamour. Flipping houses has a dark side that people would rather just ignore. Everyone loves to talk about the big bucks and home run deals they are doing.

There are things that are not being shared. Things that make your skin crawl and your stomach turn. If you are going to make a serious go of this business it's best you know about the good, the bad and the extremely ugly.

The good is the freedom and money to be made. The ugly is the ugly houses. The bad is what I am sharing here. Those of you in the trenches may have flashbacks. It's all funny after the fact when you're not experiencing it any longer.

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Here are 7 of the not-so-glamorous aspects of flipping houses as experienced by yours truly:

Fleas

Have I mentioned before that I REALLY HATE FLEAS! Just typing this makes my skin crawl.

Something about a vacant house makes them multiply at insane rates. It's actually pretty incredible.

Just a couple of weeks ago I was looking at a house. The seller and I had been walking from the living room, through the kitchen and into the hallway, when I noticed the sure sign of a major problem.

From the vantage point of the hallway, I was able to glance quickly into two bedrooms. In the center of each bedroom was a small canister.

The flea bomb.

Immediately, I asked the seller when the bombs had been set off as I instinctively bent over to look at the bottoms of my jeans and shoes.

The answer came from both senses as I spotted the black specks of terror and heard the response from the seller. He had just bombed the house the night before.

I don't think it did any good. He must have gone with the cheap stuff from the dollar store or something.

Those damned little buggers were already scaling me and finding the most annoying places to burrow. With the thought of that happening, I quickly stormed through the rest of the house glancing quickly at everything and making mental notes of what was needed.

Outside the flea dance commenced for about 15 minutes as we talked numbers. I'm sure the seller felt the upper hand as I was busy zeroing in each little f-ing flea.

I ended up buying that house and have yet to be back over there to set off some more bombs. I'm going to have to face them tomorrow. Gonna have to put on my commando gear and scare the neighbors. :)


Code Compliance

The Prius with the emblem on the side. Keep an eye out for it.

It's not that we intentionally do things wrong, it's that they seem to want to find a way to make it seem that we have.

Ok. Maybe I'm exaggerating a little. They're not that bad (just in case they are following the blog...)

We've had some issues with code compliance in the past but nothing ever seemed more than just a hassle, so don't let this scare you away from rehabbing.

A recent event involved a house that was the ugliest on the street. We were in the process of making it one of the nicest in the neighborhood (in our opinion at least) when I get a call from my contractor.

Code compliance had just come by. Their reason for the friendly visit was that there was a shed in the backyard that was too close to the lot lines. The shed looks like it was put up at least a year or more ago. The neighbor (a little foreshadowing for the next item in my list) decided now was a good time to call and report the issue with the city.

Forget the fact that we were doing them a big favor and would have dealt with it had the neighbor just mentioned their issue with us.

But, back to my focus on code compliance. The problem I had with them was that they wanted me to jump through a bunch of hoops over the matter. I was to relocate the large shed or tear it down. Not only did I have to do that, but I also had to report what I was doing and when with them each step of the way. Just ridiculous.

Just let me do what you are forcing me to do and call you when I'm done. Just another set back that has to be dealt with with a smile and just move on. After all, the payday will make it all worth it.

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A$#*&@@ Neighbors

Maybe that's too strong of a word. No, no it's not. Just thought about a guy that I had an issue with not long after we got started in this business.

This guy was a real piece of work.

We were in the middle of a big rehab on a house. The house next door to the house we were working on was vacant. We needed to get a dumpster into the driveway but a large tree from the vacant house's yard had branches that blocked the dumpster from being dropped off. I informed my contractor to cut the branches, but only to the property line, which was very obvious because there was a fence not far away that separated the two lots.

About a week or so later, I get a call from my contractor telling me that the neighbor just got finished chewing him out. He was extremely upset about the branches being cut...a little too upset.

According to him, the branches were cut about 2 feet over the property line. I made a trip over to the house to talk to him. My main objective was to try and be friendly and tell him that if he ever had a problem to call me instead of just chewing out my contractor.

This meeting ended with him telling me that these things are the reason why he keeps three attorneys on retainer.

Ok. So you're that type.

Fast forward a month or so. The house is finished and we sell it. The new owner moves in and that's when the fun starts. While I am out looking at houses a sheriff shows up to my house and scares the heck out of my wife. She thought at first that something had happened to me. He was just there to serve me.

We were being sued. Guess who was suing. Yep, the guy that got his panties all in a bunch over some branches being trimmed. A quick trip by the house showed me the extent of his madness. He had since butchered the tree. You wouldn't believe how he destroyed that thing.

Guess he wanted to make a quick buck from us knowing that we had just sold the house. He figured we would just pay the small amount to just be done with him.

WRONG.

We did some digging and determined that he had not yet owned the house when the tree was cut. He had bought it as-is I'm sure and so bought it with the tree like that. I think we just had our attorney send a letter stating to basically 'bring it on' and it caused the guy to back off. We made it through that fiasco.


Dirty Toilets and Stinky Refrigerators

It doesn't take a whole lot of visits to fixer-upper houses before you come across the dreaded 'no-water-for-ages' toilet. This is where the water has been cut off at a property for a while, yet people still feel the need to use it.

Yes, you read that right. One of the absolutely most disgusting things you will come across. And come across it you will.

The stinky refrigerator is also a favorite of house flippers. Something about locking in all of the putrid decomposition of food for a long period of time that really ripens it. :)

When the power is cut off and food remains in the refrigerator, it doesn't take long before the smell will knock you over. Word of advice: if you go into a house that does not have power (or has a fridge that has been unplugged), you might want to reconsider looking inside.

We bought a burn-house that had such a refrigerator. It had been vacant for a while and the power had been cut off permanently when the fire occurred. I was there when the contractors were doing the demo.

Someone just had to look inside the fridge before moving it. Big mistake. It was only slightly open for a second but that smell quickly filled the HOUSE. Not just the room, but the house. And man was it foul!

Duct tape was quickly wrapped around it to prevent any further incidents.


Craigslist Contractors

You've got to be careful when using Craigslist sometimes (maybe most of the time). This is one of my favorites.

We had bought a house that had an above ground pool. The pool was rough. The water was dark green. I wasn't sure if the liner needed to replaced or not and was trying to avoid that expense. We must not have known a reputable pool guy at the time because I had found one on craigslist that advertised that he cleaned pools.

I told him to go by the house and look at the pool. He called me back and told me that he could clean it without replacing the liner. Great. Just saved some money and time... or so I thought.

He wanted to meet me in the parking lot of the pool supply store to pay for the materials to clean the pool. That should have been my first clue. He didn't even have the money to buy the necessary materials. I figured they cost quite a bit because the pool was in rough shape and might need a lot.

So Melissa and I went up to meet this character. And now the funny part...

He rolls up next to my truck and rolls down the window halfway, slides his dark sunglasses slightly down and looks at me with his horribly bloodshot eyes. His girlfriend is in the passenger seat looking sickly. Now that he's impressed me with his professional appearance and classy style (sarcasm of course), he asks for $20 cash to buy the cleaning materials.

Pump your brakes, son.

I just told him no thanks and we left. Crazy.


Prank Callers

It's inevitable that you will end up getting some prank calls when you put your phone number out there advertising that you buy houses.

Don't worry though, it is really pretty infrequent (probably once a year or so for me). I think it is more often when you put bandit signs out on a regular basis.

It's not hard to tell when it's a prank call. You can usually hear giggling in the background they always describe a real piece-of-junk house. Which is funny, because that is exactly what we buy. But they take it overboard and say it has 23 bathrooms and 2 bedrooms. So silly.

I love to just play along and see how long before they just give up. I'll tell them I'm VERY interested and what is the address? How much are you asking? When can I see it? Is pier and beam or slab? Does it have knob and tube wiring? etc. etc.

The other side of this is having fun with other investors. I usually don't go very long between calls where I tell an investor that I have a horse for sale. I could have sworn their sign said they buy horses.


Crazy People

Guess the guy from craigslist might fit this one. Not sure of his drug of choice.

If you invest in war zones, you will come across some real characters. It's a given. I don't recommend investing in war zones at any cost - bird-dogging the leads is fine - but taking ownership or even visiting these areas is ill-advised.

Don't know what I was thinking, but I got a call for a steal of a deal in a war zone and decided to take Melissa, my wife, over there (as she was with me that day driving around). She'd never been to this part of town. I believe it is the absolute worst in San Antonio.

While driving down a residential street some guy literally darted out in front of my truck. I don't even know where he came from. Must have been behind some bushes or something.

We did not hit him and only missed by inches. Melissa immediately informed me that I was to get her the hell out of there. I was not to stop at stop signs or red lights, I was to get her as far away from there as possible in the shortest amount of time.

I haven't bothered to look at any other properties in that part of town since then.


Hope you enjoyed the dark side of flipping houses. Not sure why people don't talk about these things more often...they're really quite entertaining. :)

I'd really love to hear your stories of the 'BAD'. I know you've got some. Go ahead, provide us with a good laugh or horror story in the comments below. I dare you.

-Danny Johnson

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Tags: Getting Started, Flipping/Rehabs