Our beautiful state is filled with many opportunities for success. Flipping a home in Hawaii is one of the most rewarding ways to find your success!
Basics of Flipping a Home
A common phrase currently trending with low-interest rates and a ripe housing market is “flipping.” At its root, flipping a home involves doing your research, purchasing an undervalued property in subpar or “less than ideal” condition, making necessary repairs and renovations, and selling the property for a profit. While this was a simplified explanation, the overall concept can be a challenge but has the potential to yield great rewards for those who do their research and can put in the necessary work to see the fruits of their labor pay off.
It’s also important to note that even though I’ve been a Realtor® since 2002, you don’t have to be a Realtor® or have extensive knowledge about real estate to flip a home. Rather, it’s more important to have the right partners to assist you throughout the process: a well-informed and knowledgeable agent, a dedicated team to help renovate your investment, and a passion to see each project through!
Below, is a real-world example of how I used the above steps to flip my very first home.
The Search: Where to Start
As a long-time resident of Hawaii (since 1978), I was always fascinated with the real estate market - the diversity of homes and the vast opportunities for growth and success. One area I wanted to explore was the chance to flip a home in Hawaii, a place where I call home. After doing my research and learning about where to begin, I began looking over new listings that had just hit the market, and I came across what I believed was a great deal. I scheduled a time to view the unit the same morning I located it in the listing, and submitted an offer before noon the same day. My offer was accepted, and just like that, the adventure began. It all happened very quickly!
This first investment was a 739 square-foot, one-bedroom unit, in a 40-story building located in Waikiki. The unit had great amenities, including central air-conditioning, a roof-top BBQ area, fitness room, sauna, on-site security, and much more. The only downside to this unit was that it was on a low floor and it was leasehold.
Was it a Good Investment?
As an investor, I felt that all the terms of the lease were acceptable and hit all the marks I was looking for, with a low monthly lease rent of $44 and a lease expiration of 2059, which was long enough for a potential buyer to qualify for a 30-year mortgage. This meant that my monthly outlay would be relatively low while I renovated the property. I was also hopeful that I would not lose potential buyers because it should be easy for a buyer to obtain financing.
At the time of my purchase, other units in the building were selling for $235,000 in “above-average” condition, and I bought my unit for $180,000 in “fair” condition. My one-bedroom unit had gold wallpaper that might have been there since 1974 and reminded me of a scene straight out of Austin Powers!
(Source - MovieSceneCrew)
The kitchen and bathroom were both original and had eight-inch deep drawers that could not fit anything of normal size, rendering them nearly useless. The unit’s cleanliness also had much to be desired and needed some heavy TLC (tender loving care). At a glance, it seemed to be the perfect home to flip, especially in the Hawaii market!
Renovations: Do It Yourself vs. Contractors
As a “beginner flipper,” I thought that I could do most of the work myself and keep costs low. Boy, was I wrong! I ended up making the decision to do what I could manage on my own and hire a contractor for the labor-intensive and professional work.
I took the wallpaper down myself, which seemed to take forever and I ended up actually peeling concrete off the wall since it was on the walls for so long. After a few days of removing wallpaper, the walls ended up looking like a topographical map of the Hawaiian Islands because of the missing concrete. I had inadvertently added the extra step of filling and smoothing out these gaps, which took another few days. I took my frustrations out by demolishing the kitchen, bathroom, and floors with some friends, which went surprisingly well. This was by far the most entertaining part of the project!
As for the contractor I ended up hiring (who was also a friend), he installed matching cabinets and granite countertops in the kitchen and bathroom, and we laid 18-inch ceramic tiles in the kitchen and bathroom, in addition to carpeting the living room and bedroom. We also refreshed the unit with a fresh coat of paint, changed all lighting fixtures, outlets and switches throughout. Lastly, we installed a new stove, refrigerator, and microwave hood. The washer and dryer were still in good condition, which was an added bonus.
This turned out to be a great learning experience for me in managing a renovation from start to finish. From renovating, picking out materials and finishing, to coordinating with contractors, it was well worth the time and effort that went into my very first home flip here in Hawaii. Overall, I ended up spending a little over $17,000 in renovations and sold the unit for $250,000 (which I purchased for $180,000), which put me at about a $53,000 profit!
Not bad at all for my first flip! Looking back, it wasn’t as bad as it seemed to me at the time. The experience that I gained through this process was definitely worth it and really allowed me to help guide my decisions with future property purchases. I can say with certainty I was successful in flipping my first home in Hawaii!
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