When You’re a House Flipper, Stick to Your Knitting

My grandmother was a daisy. When I was getting picked on in elementary school, she
encouraged me to end the problem by planting a brick in the face of my tormentors, yet she fed
every bum who knocked on her door looking for a handout. She butchered her first chicken when
she was six-years old, nursed every major wound received by her adventurous grandson, and
could recite Shakespeare.

Her favorite sayings were, “Stick to your knitting,” and “Dance with the one that brought you.”

Early on, I had no idea what she was talking about. But, over time, I figured it out.

Simply said, stick with what you know.

That is extremely important when flipping houses. Always, stick to what you know.

We have a simple approach. We only buy homes when we can get a bargain. We fix them up to
fit the neighborhood. We sell them and move on, looking for the next house.

The only times Jefe and I have gotten in trouble is when we deviated from that plan.

The first house we bought was in an affluent suburb. Rather than sell it and reinvest the profits,
we elected to hold on to the property and rent it out. We believed the area would eventually be
zoned commercial and the property’s value would soar. What happened? After 10 years we
learned that it would never be zoned commercial. The city’s long-term plan was for it to remain
residential. After a decade of waiting and hoping, and replacing the furnace, hot water heater,
dish washer, etc., we’re listing it for sale.

Concerned that the marketing was flat, we agreed to rent out a flip house with a lease-purchase
agreement. Big mistake. For two years we listened to the tenants whine about every minor flaw,
and at the end of the lease agreement they opted not to purchase the house. Big surprise. Now,
we had go back into the house, replace the carpet, paint, and repair the ceramic tiles they broke.
We put it back on the market and it sold quickly. While we didn’t lose money, it tied up our
capital for two years.

Stick with the plan. If you have to drop your price to move the property, do it.

But, no matter how bad things get, I wouldn’t advise hitting anyone in the face with a brick.

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