The Four Letter Word

Yes, you read correctly.  I am a real estate investor.  Let me guess, a picture of Than Merrill and the TV show “Flip This House” is running through your mind.  Ok.  Yes, we “Flip” properties.  However, our coaches and mentors told us that “Flip” is another four letter “F” word.  Honestly, I don’t totally understand why they felt that way, but they encouraged us to say “Rehab” instead of “Flip”.

I find it interesting how many different definitions there are for the word “Flip” within the real estate investor arena.  I have worked with investors and heard professional investor trainers teach that “Flip” means to wholesale and assign a property.  Others, obviously, think of the word “Flip” as a rehab, which is the most common definition.  Then there are also those who believe that “Flip” means to purchase a property, not do a thing to it, then sell it; but we are not going to get into that.  Then of course there are people who think of a camera.  For me personally, to flip a house has always meant to buy it, gut it, fix it, update it, and sell it. 

Our company specializes in residential properties doing rehabs and lease options.  We have done several rehabs throughout the greater Tulsa, Oklahoma area including Tulsa, Broken Arrow, Owasso, and Claremore.    Contrary to popular belief, we do not do the work on our homes.  When we started out, we did the first couple of days of work mainly emptying the house (referred to as “gutting”) and then updated and maintained the landscaping.  Since then we have established a primary contractor who is responsible for getting his own crews.  They handle the majority of the work on the properties.  We do not do any of the work anymore.  We decided that there are other people who specialize in that area and are faster at it than us.  Don’t get me wrong, that’s not to say that we aren’t willing to get our hands dirty.  We just prefer to work smarter rather than harder. 

Another reason we don’t do the work ourselves is because we have outgrown the ability of just the four of us (my wife, my dad, my mom, and me).  At one point in 2009, we had seven rehabs going at once.  That is far too much work for us to handle if we had been doing the work ourselves.

The primary and most important reason we don’t do the work on our properties is due to leverage.  If we were doing all of the work gutting, fixing, repairing, updating, and cleaning our properties that would require a lot if not all of our time.  That would not leave us with any time to run the business, market our services and products, and find more houses!  We would probably be limited to doing one property at a time from start to finish before we could go find another property.  Don’t get me wrong, there is nothing wrong with doing that if it is your desire.  For us, however, it doesn’t quite fulfill our goals. 

Here are some questions for you.  I would appreciate any feedback, comments, or questions regarding this information. 

1. What is your definition of “Flip”?

2. What do you think it means to stage a house?  Check back next week for a discussion on this…