Flippers Styling for the Aspirational Set
If we were ever going to get into the flipping business, we’d certainly opt for a strategy similar to the one featured in today’s House & Home section of The Times. John Alvarado and Blair Gordon seek out run-down, below-market properties in high-end neighborhoods and then renovate and style them as if they planned on…
If we were ever going to get into the flipping business, we’d certainly opt for a strategy similar to the one featured in today’s House & Home section of The Times. John Alvarado and Blair Gordon seek out run-down, below-market properties in high-end neighborhoods and then renovate and style them as if they planned on living there the rest of their lives. This strategy has been extremely successful for the pair over the twelve houses they’ve bought and sold over the past four years (though it’s only fair to say that even flippers with bad taste and little attention to detail have also flourished in the booming market). However, by focusing on “aspirational” communities with limited supply of housing, the duo think they are hedged somewhat against a cooling market. They figure that their current profit margins of 40 to 50 percent might go down to 30 percent if the market levels. Personally, we think it would be a blast to do what they do for a living, but we aren’t as optimistic that about what would happen to their profit margins if the market actually went down. We certainly think quality renovators like these guys are adding value that is rewarded in the market–but we think this value creation is far overshadowed by the direction of the overall market. Of course, that kind of caution is why we’re sitting here in a dingy cubicle and these guys just put over a million bucks in the bank from their most recent project.
Flipping With a Twist [NY Times]
New post on an old story: these guys apparently got trapped with the housing bubble along with a lot of others. At least one of the places they renovated in Key West and was originally listed at $1.5 million went into foreclosure. Sadly, the beauty was not kept up by the lender and mold/mildew started to destroy it. The most recent price on the place was hovering around $600k.
I bought, I gutted, I renovated to high design/quality standards. Now I’d like to “flip” but wife has become too enamored of the results and won’t let me sell.
Great name for the article…two gay guys “Flipping with a Twist”
It sounds as if these guys have great vision and excellent design skills, not to mention great marketing talent — hell, the NY Times article is proof of that.
I’m trying to do what these guys are doing, but I have to admit that they’re probably a hell of a lot better than I am. Buying, gut renovating, and selling a house is still flipping, but the added value should hold up even if the market drops.
Very few people have the whole package.
I agree with Anonymous 11am. This isn’t merely putting in a cheap almost temporary kitchen and then trying to flip the property for 50% more than you paid for it 3 months earlier. Nice to read about good news like this.
This story is not my definition of flipping. Flipping to me is buying the property or often merely getting a cotract to buy a property and then selling the contract or property without taking real possestion – and adding nothing to value of property.
Buying fixer-uppers and rehabbing is real work (hard work) – its not merely milking the real estate craze. These guys are using their skills to create or re-create a product.
Their core business model makes sense and is not unique to these two men. I used to do legal work setting up partnerships for wealthy individuals investing in real estate who would do this sort of thing. What you need to make it succeed are start up capital, willingness to commit for a set period of time and reinvest your earnings back into new projects, vision with respect to the renovations (including help from experts such as architects, real estate lawyers, expediters), and time to manage the process and make decisions. If enough people (but not too many) help initiate the partnership (or LLC) it can be a very rewarding experience financially, and I suspect personally. With sound property selection, it is a business/investment strategy that is viable in all markets. Believe me, people have been doing this in some form or another for quite a while and have been making a lot of money in the process. I’ve always dreamt of doing it, but never had the seed money to contribute or time (all tied up in my own renovations etc.).
Agreed that these guys could be in for a surprise if market tanks