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Five Tips For Finding Your Next Frank Lloyd Wrong Home To Flip (with Video)

October 14, 2019 by Mr. 1500 Days 13 Comments

Live-in flips are how Mindy and I built the core of our nest egg. The huge advantage of a live-in flip is that unless you’re making loads of money, you don’t have to pay taxes on the gains. As long as you’ve lived and owned the home for 2 of the past 5 years, a married couple can make up to $500,000 in profit and pay NO taxes (the limit is $250,000 for the unmarried). And if you’ve made over $500,000 and have to pay some taxes, I don’t feel bad for you.

However, making money from live-in flipping isn’t nearly as easy as those TV shows may lead you to believe.

  • You have to tolerate living in a construction zone: A coating of fresh snow on the trees is beautiful. A coating of fresh drywall dust on all of your worldly possessions is infuriating. Been there, done swore at that.
  • You have to find people to do the work or do it yourself: We’re big fans of DIY because here in Colorado, any worthwhile tradesman is already employed and won’t even return your call. If they do, they’ll give you a ridiculous quote. And good luck hiring help from Craigslist. Been there, swore at that.
  • You have to find the right deal: This is actually kinda fun. To be successful, focus on a neighborhood and study it intensely. Be ready to pounce on a home once the numbers work. If you can swing it, offer to pay in cash to maximize your chances of sealing the deal. Remember that it’s better to wait a year or longer to find a great deal than to jump into an OK one.

And that last bullet point is what I’ll talk about today.

Five Tips For Finding Your Next Flip

The bad news is that you’ll probably never find the perfect home to flip. The good news is that perfection shouldn’t be your goal. The home we just bought (YouTube tour here) isn’t perfect, but it checks most of the boxes.

If you prefer video, check out the one I made below. If you prefer words, kindly scroll past and read on.

Note that you may also subscribe to our YouTube channel here. We’ll be documenting the entire flip on this channel, releasing a video about every two weeks.

1. Find A Fantastic Floorplan

The first thing we look for in a flip is a good floorplan:

  • Ranch: A ranch floorplan (the house is contained to one floor) is very desirable, but you’ll pay a premium for it.
  • Two-story: A well laid out two-story minimizes the home footprint, but has stairs which not everyone likes.
  • Split level: These were popular 40 years ago but have fallen out of favor.
  • Geodesic dome: Don’t, just don’t.

Our next home happens to be a split-level:

Split level! Welcome to the 80s!

We owned one of these once before and swore we’d never buy another one again. I even had a name for the floorplan; Frank Lloyd Wrong (The famous architect would have spit and cursed at the split level). This is probably a conversation I’ve had:

  • Mindy: So, do you want to make an offer on that house?
  • Me: Hell NO! It’s all Frank Lloyd Wrong!

But, but, but… This one has a nice, open layout with vaulted ceilings that I enjoy. And, I get a good vibe from the home. And just like Limp Bizkit and fanny packs, maybe the split-level will stage a comeback!

Wait, what’s that? Limp Bizkit didn’t come back and fanny packs still look ridiculous? Ummm, ummm….

2. Avoid Unusual Features

Unusual features include urinals (although I wouldn’t mind one), wine rooms, hot tubs, and other adult areas. Our home has a pool:

WTF was that? Sorry. Here is a better picture of the pool:

In Los Angeles, Las Vegas, or Florida, a pool would be a good feature. Not so much in Colorado. However, this problem can be remedied with a jackhammer and a big load of dirt right before we sell. In the meantime, the girls will enjoy the water on hot summer days.

3. The Work: Hire Out Or DIY?

We don’t hire out, so we need to buy homes that have issues we can easily fix. We’re pretty good at:

  • Flooring: Setting tile and installing wood floors is a lot of fun.
Beautiful, oversized travertine tile.
  • Plumbing and electricity: With PVC/ABS, waste lines are easy to run. With PEX, it’s quite simple and fast to install supply lines. Electricity scares some but isn’t difficult. Take your time, study the job, and never work on hot wires. If you’re unsure of anything, consult an expert.
  • Custom showers: I used the MMM method to build a custom shower some years ago and it’s held up spectacularly well.
The shower pan I built (still not raining in the kitchen below!)
  • Decks: Working outside on a nice day while listening to good music is very satisfying.
  • Cabinets, vanities, etc.: Easy.

Note the following about my list above:

  • $$$$$: All of these jobs cost a lot to hire out. Most of the money is in the labor. I readily hire out for skills like drywall (especially the finishing) and rough framing where the calculus is the opposite.
  • Cosmetic issues are excellent: Most don’t want homes with pink toilets or brown tile. Great! I’ll get a deal and then make the home beautiful.

4. Buy In A Neighborhood You Like

The big risk of a live-in flip is that a lot can happen in the time it takes to complete it. We plan on taking somewhere around three years to complete the work on the home we just bought. What will the economy be like in three years? I have no clue. The whole damn thing could implode and home prices may take a hit.

Buy a home in a neighborhood you love in case your flip takes longer than expected or the economy takes a break.

5. Price

And finally, we arrive at the most important consideration, price! Any home (except maybe that geodesic dome) can make a good flip if you can get it for a good price. If half the home is sliding down a mountain, find out how much it costs to get the foundation fixed and set your offering price accordingly. No big deal.

The best way to figure out what a home should cost is to look at sale prices for similar homes in the neighborhood. Comps!

We had been looking at homes in our new neighborhood for about two years and saw three other examples of the model we just purchased:

  • $600,000: This one is on the same street, but a smaller floorplan than ours. We have a bonus bedroom and bath. However, this home was in pristine condition and all of the work was very high end.
  • $500,000: This one is on a busy road and the interior is just OK.
  • $420,000: This one is also on a busy road and needed a load of work. Much of the exterior was rotting and the interior was in need of some major help.

We purchased ours for $365,000 which still surprises us. We had the home inspected by multiple pros and the mechanicals/ foundation are solid. The home needs new windows but is perfectly liveable now. I think we got it for a low price because of the pool and the fact that we’re entering a slow-selling season.

Since our flip is long-term, it’s difficult to predict how much we’ll profit when we sell the home. We estimated that we’ll put about $100,000 into the home to make it comparable to the $600,000 one. At that point, we’ll be in at $465,000. Of course, that doesn’t include the cost of my labor which brings me to a final thought.

Make Sure A Flip Doesn’t Consume You

I was crazy when I embarked on my last flip way back in June of 2013. I put an addition on and gutted most of the original structure. I did this while maintaining a full-time job and raising two children with no family (babysitters!) in the area. It wasn’t a wise decision.

This time, I’m going about the flip a little differently. I’ll only work on it while my girls are in school. And I’ll make time for myself too. No more letting my health and social life go to hell while I swing a hammer non-stop. If it takes me an extra year to complete the work, I won’t lose sleep.

So, my parting advice to you is to enjoy life if you intend to flip a home. Don’t sacrifice sleep or quality of life to meet a monetary goal.

It’s pretty fun to have a lot of money. It’s even more fun to live life well.

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Filed Under: home flipping, Real Estate

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Comments

  1. Ryan Schlomer says

    October 14, 2019 at 5:09 am

    Awesome info. I keep telling my boys (4 and 3 years old) that when they are older I will buy a house that we can all fix up so they can make money and learn some things (construction, research, planning, etc.). Part of their research will be to read your posts and watch the videos. Eight years from now? How early is too early to start with them?
    Ryan Schlomer recently posted…The Easy Way into the Upper ClassMy Profile

    Reply
    • Mr. 1500 Days says

      October 14, 2019 at 11:51 am

      Ryan! I don’t think it’s ever too early! Even young children can do tasks like move rocks around and sweep!

      Let me know what I can help with!

      Reply
  2. freddy smidlap says

    October 14, 2019 at 8:05 am

    was mindy your realtor on the buy side? that 3% savings would be sweet on a few hundred grand. we own an old house and i loathe working on it. i do it while loathing and under protest. we just sealed the driveway and i hated every second of it. i don’t think a flip will be for us for those reasons. we’ll stay put until we leave this area and the bonus is that i love our house because it has character.

    seems like you don’t mind the work. by the way, you can probably sell a pink toilet for quite a bit on ebay. i sold a teal blue bidet last year for a few hundred bucks and shipped it to florida.
    freddy smidlap recently posted…Two Years Blogging and Still Going Strong? Who Knows?My Profile

    Reply
    • Mr. 1500 Days says

      October 14, 2019 at 11:50 am

      “was mindy your realtor on the buy side?”

      Yep. The main reason she got a license was to save us money in transactions like this. It’s a HUGE life hack!

      I love the work!

      And yeah, no pink toilets in this home. I’ll keep it in mind for future toilets…

      Reply
  3. Mr. Tako says

    October 14, 2019 at 4:30 pm

    Fun video again, but I thought the lighting was a little “harsh” this time. I totally agree with the premise that the cosmetic stuff is pretty easy… if you have the time.

    I think a lot of 9 to 5’ers hire it out because they don’t feel they have skills and the necessary time to complete such projects. But it really isn’t all that bad.

    For a hundred grand, I can replace a few toilets. ๐Ÿ™‚

    Reply
    • Mr. 1500 Days says

      October 14, 2019 at 8:53 pm

      Yeah, we didn’t mean to record at night. We just ran out of time.

      Reply
  4. Leif Kristjansen @ FiveYearFIREescape says

    October 14, 2019 at 6:36 pm

    You also should mention tip 6: Make sure you like doing renos.

    My wife and I slightly renovated our first home and nearly strangled each other in the process. No more of that thank you very much! I tick her off plenty already ๐Ÿ˜›

    Reply
    • Mr. 1500 Days says

      October 14, 2019 at 8:53 pm

      Haha, right!

      Our renovations aren’t without drama, but we do enjoy them.

      Reply
  5. Joe says

    October 16, 2019 at 7:48 am

    Those are great tips. Thanks!
    We just moved into our duplex and it needs a $*&T ton of work. I’ll DIY my best, but I need to hire some stuff out too. I’m discouraged right now. There are too many things to do. Just fixing stuff already took 6 months.
    We need to remodel 2 kitchens, new carpet, finish the basement, renovate the bathrooms. It’s nuts. Not sure if I can do it…

    Reply
  6. Cathleen Cooks Stuff says

    October 16, 2019 at 3:43 pm

    We’re in a 5 year+ live in flip…or maybe not flip. Looking for another place to live, but, damn, prices are steep right now. Still have tiling in the kitchen to do, and new windows- I’m hoping to learn how to replace windows when we do- it’s a bit tricky with a single wall construction house, but once I learn, won’t be a problem for the next house, The plan is to keep the current house, and get a HELOC on the $400k in equity we have, and rent out with some cash flow (not considering expenses, yet, and we’ve been doing research on Bigger Pockets…a lot.). Good luck- and don’t do both of the bathrooms at the same time. Let me tell you- we only have 1 bathroom, and redoing it (2 separate times!) sucks when you gotta pee. Last time was when I was pregnant this summer, and couldn’t walk on the new tile for a few days. Also, toddlers WILL jump on your just set tile.

    Reply
  7. Kevin Potter says

    October 18, 2019 at 4:55 am

    Great advice – it’s NEVER as easy as it looks on TV…. and we flipped a couple of houses when the kids were little and working full time and you advice about not sacrificing time with kids and your health is wisdom that comes from age and experience. Good Luck and we will be following along the way….

    PS – I like the “Cousin Eddie” look on the diving board – you just needed a can of the meister brew eh!!!

    Reply
  8. B.C. Kowalski says

    October 18, 2019 at 11:33 am

    Interesting food for thought. My house could be a flip right now, as is with little work (other than the new fridge, and the cool dual-flush toilet my friend helped me install, which still calls forth in me a Tim the Toolman Taylor grunt). I bought right before the market flew out of control, and with the current bidding wars going on for homes in my neighborhood, I could probably add 20% to the price I paid. But them I would be homeless in a bull home market.

    Frank Lloyd Wrong cracked me up, because my understanding is that he’s quite over-rated – many of his homes experienced major issues because his designs were focused more on aesthetics than actually, you know, working. They do look pretty cool though.

    I think this is one FI area I will probably stay out of, other than fixing up my place for me, but my sister’s inlaws make a living flipping homes. They’ve taken a break from it until the market cools but if I ever change my mind I might seek out their advice!
    B.C. Kowalski recently posted…What do baseball, bicycles and financial independence have to do with each other?My Profile

    Reply
  9. wendy says

    October 19, 2019 at 11:30 am

    Nice tan lines Carl, just don’t get frostbite!

    Dino head for the wall is definitely a tasteful and hip accent piece for the great wall in the living room and a small drone is key for dusting in those upper corners….

    Reply

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Freedom!

My goal was to build a portfolio of $1,000,000 by February of 2017; 1500 days from the birth of this blog (January 1, 2013). And hey look, I’ve since retired!

Investments only
1/1/13 (The Start): $586,043
1/1/14 (1 Yr Later): $869,635
1/1/15 (2 Yrs Later): $987,351
1/1/16 (3 Yrs Later): $1,057,961
1/1/17 (4 Yrs Later): $1,257,128
1/1/18 (5 Yrs Later): $1,527,701
1/1/19 (6 Yrs Later): $1,549,440
1/1/20 (7 Yrs Later): $2,035,040*
1/1/21 (8 Yrs Later): $3,379,746**

2021: Investments only
1/1: $3,379,746
2/1: $3,616,567

Overall
2021 investment gains: $236,821
Investment gains since 1/1/2013: $3,030,524
Net worth***: $3,756,567

* The big jump between 2019 and 2020 was partly because we bought another home, but kept the previous (much more expensive) one as a rental, so now count it as an investment.

** Tesla.

*** Includes our primary home equity in addition to our investment portfolio.

Finally, we still have about $370,000 in mortgage debt (which I love!). No regrets about the debts!

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Investing is risky business. The information contained on this site is for informational purposes only. As with all matters financial, proceed with caution. Do your research and seek professional advice.

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