After the downturn of 2008 when I got nailed with a house flip that was a flop I tried really hard to understand what I had done wrong and how to do better in the future. Along with $140,000 in untethered debt (but excellent credit – we never missed a payment!) I had gotten a chance to learn something. But, just like Winnie-the-Pooh, I wandered aimlessly for a while. Several months in fact. Think, think, think I did – tapping the side of my head like a stuffed bear in The Hundred Acre Wood.
What was it I was supposed to learn from this? Never buy another house again? Hmmn, that would be a sad lesson. All those dirty house out there need me. No, I didn’t think that was it. Never take another chance, um no, I wouldn’t give that advice to anyone. What a crappy way to live.
Finally it came to me. The only way out of this real estate mess was to head back into it. But from then on we had to live in the house we are working on. I have never been able to comfortably afford to pay two house payments, some people can, but we sure can’t. Flipping the way I’d been doing it was too dang hard, even when we were doing alright with them. I am small potatoes and will always be small solanum tuberosum. My eventual take away was that we had to actually own the home as our home. I still get to take chances but they are less chanceful now.
We have done two houses this way so far and it has gone much better. Financially, this really only works because we also have two rentals that are slowly increasing in value. I wouldn’t want to sell my house every two years and have to start over for the rest of my life, although I know people use that as a planning strategy.
Well, we have just wrapped up the biggest house project we’ve ever done and we lived here during the renovation. This is a sweet little house that had slipped down the hill a full five inches about 20 years ago but was stable after that, or so the story went. Actually, the hill slipped down the hill. All of the houses in the neighborhood were affected one way or another but this one was never repaired. After the original owner died the house went to her middle-aged kids who, of course, did not have the money or the motivation to sink into mom and dad’s old house. It languished for years, not quite a rental, not quite used although there was an artist in residence when we arrived, I don’t think he paid anything to stay here.
Buying it was a risk and no one else local had decided to take the risk. The house was on and off the market for a few years before we moved to California. But to me the wonderful view made it worth the trouble. We jumped in and did the needed foundation work along with everything else that was required. It was a mess but now it’s a nice house.
In California everything is what my mom calls “two prices,” or double the cost, so we spent a lot more money on this remodel than we would have in Oregon, in addition to the normal puttering around the house that we always do. We made sure to have everything done the right way, inspected and permitted by the City. I have kept receipts, photos, e-mails; you name it, I’ve got it. At the end, very little of the house was untouched.
After listing in April, we were blessed to receive four offers, one was low, but one was over asking price and the other two were near enough. Time for a little happy dance, but with me muttering, “don’t count your chickens before they are hatched.” Oh, but that was so hard. Jerry and I were both counting chickens right away. Unfortunately that sale blew up with accusations that the house was still unstable and we were hiding something. It was the buyer’s agent who came up with all of that, she had looked at the house to buy for herself years ago and passed on it. Too big a project, not enough return. She was suspicious of our efforts and eventually talked her clients out of it.
Ouch that hurt – but more than feeling hurt was the doubt that followed it. Maybe we had really done something wrong on the foundation repair. Or, maybe we had done our very best and done it right but some horrible problem had arisen in the two years since. What then?
So we started the sale process over with another family who also brought in a group of inspectors. At first things went pretty well, I was slightly defensive but ok. Then two extra inspectors got brought in and I started to lose heart and make back-up plans (ok, I just won’t sell it – it can be our third rental, you know, two in Oregon and one in California. That’ll be simple while we are living in Michigan). Finally one day, we all stood in the kitchen, the buyer who was not smiling, me, also not smiling, their agent and an engineer – I heard words offering great relief.
The work was done properly, there was nothing to worry about.
“Whew”, I said out loud, “this must be what it’s like to defend your dissertation.”