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Posted by on Jan 9, 2010 in Buying at Trustee Sale, Flips, Market Conditions, Thinking of Buying? | 18 comments | Print Print

Texas Flipping

Tom Tarrant is a San Diegan who moved to San Antonio to remodel and sell historic houses while waiting out the California Real Estate Collapse.  He has a great blog with videos about the details of home remodeling, selling flippers, and snippets about Texas!

I asked Tom about featuring him here, and how it all came together. He responded, “There were alot of California investors flipping and parking cash here in rentals in 2007-2008. I think Bruce Norris was writing about moving your money to Texas around that time. The local realtors had a hayday selling multiple properties to them so it was a mini bubble in its own way. Now its slowed down a bit, but all in all SA’s managed to escape most of the national housing mess. Most of the California investors are now gone or it seems cashing out to move their money back but thats o.k. with us as there is less competition on the fixer uppers.”

A link to his blog (scroll down to the beginning):

Tom Tarrant – Adventures in House Flipping

An excerpt, with links to two of his videos:

tomturrant1The Hat Trick House is finally done and officially on the market and in MLS. We’ve had a swarm of buyers throughout the rehab and 3 great offers before it was even finished. We went 9% over budget but luckily our estimated sales price is surprisingly up 25% due to market conditions! Our list price is $359,000, this will be the highest sale in our area and set a new high comp if it sells for that price. My wife and I staged the house and it’s all ready for an advertised open house this Saturday. We already had one showing today, one scheduled for tomorrow morning and an agent that sold another one of our properties (The Abandonded House) just called and her “picky” client found it today on Realtor.com and wants to see it. The agent from our first showing today said the master bedroom closet alone would sell the house. Really?

18 Comments

  1. I’m confused, first there hasn’t been a bubble, then the sales price goes up 25% (many years of appreciation). Is the bubble just starting due to govt intervention?

  2. That isn’t flipping so much as rehabilitating properties at a profit.

    Such good work, too! Talk about finding the diamonds in the rough and polishing them brightly.

    Tarrant & company are not just making money, they’re doing community service!!!

  3. I agree with tj & the bear… It seems like they are truly adding value while keeping the integrity of the house. Too many idiots try to take an old house and make it fit a McMansion mindset/design paradigm.

    I really liked the arches he added to the hat trick house – very in keeping with the period, even if they weren’t part of the original house… And that barrel ceiling, very nice and added some $$ to his rehab budget…

  4. Very nice stuff. Now we just need some of that level of artistry on the junk homes in Orange County.

  5. I’ve said it multiple times, but good flippers that renovate houses most home buyers wouldn’t touch with a 10 foot pole risk a lot of their own money. They also do a service to the rest of the neighborhood by making a blighted house on the street into a respectable one. They also deserve every penny in money they make due to the risks taken and the value added.

  6. I would never live in Texas, let alone buy there with their horrible prop taxes.

  7. JordanT, I agree — but for every good flipper rehabilitating distressed housing there are 20 more doing nothing more than sliding in some stainless appliances, slapping on a coast of paint and cashing in off the government backstopping bank losses. Jim is showing us some good flippers who are renovating next to the bad flippers who are just grifting like Jenae. There is a difference.

  8. Texas is not California. I hope as many Californians as possible leave for Texas after viewing these wonderful Texas opportunities. Call U-Haul Right Now, please. Get back to me in July from Austin…

  9. JordanT, I agree — but for every good flipper rehabilitating distressed housing there are 20 more doing nothing more than sliding in some stainless appliances, slapping on a coast of paint and cashing in off the government backstopping bank losses. Jim is showing us some good flippers who are renovating next to the bad flippers who are just grifting like Jenae. There is a difference.
    Art Eclectic | January 10th, 2010 at 7:26 am

    ———————–

    As everyone knows, I’m not a fan of flipping. What Tom is doing, however, is different. His “Abandoned House” is a perfect example of a rehab project (not a flip) that really does benefit the neighborhood and the family that will buy there. He took an **uninhabitable** house with major **structural** damage, and fixed it up into a nice place for a family to live. He added to the inventory available to organic buyers, as opposed to competing with them as most flippers do (at least here in SD) .

    Taking a perfectly livable home that isn’t “upgraded,” and slapping on paint and Pergraniteel finishes, then expecting a premium for their “efforts” isn’t doing buyers any favors.

  10. Thanks for the comments everybody, we are having fun and have enjoyed Texas so far.

    KevinC- Maybe I didnt make myself clear, there hasnt been a bubble. Prices appreciated about 8% the first year we got here (2006). Since then it has slowly dropped off to a small decline in 2009. Sales activity has been decreasing for the last 3 years as well. The suprise 25% increase in one of our flips came just in a specific neighborhood which we work while the rest of the city’s prices stayed flat. The Riverwalk was expanded 2 miles North into this inner city historic neighborhood and thus increased property values. The whole living downtown, loft thing doesnt exist here for the most part so this is all the urbanites have.

    JordanT- property taxes are close to 3% in most areas. Pretty hard to swallow. Yes the houses are cheaper but most everyone has their taxes impounded so their mtg payment is close to other states when including property tax. One positive is though, no state taxes. Maybe this is the best system,all I know is Texas has a budget surplus while California is bankrupt.

    3rd Generation- I get your sarcasm but tons of Californians have infact moved here. Texas is the #1` inward migration state right now and has fastest growing population due to the economy. http://money.cnn.com/2009/12/23/real_estate/fastest_growing_states/index.htm

    All I see is CA plates. It’s a running joke with the locals. It’s not for the faint of heart though, 59 consecutive days this summer with 105+ degree heat and now winter temps in the teens. No fun for rehabbing.

    We really cant wait to come back to San Diego and we are watching your market closely. In 2006 it was either move out of California to invest or go back to work for the man. Texas is in fact really investor friendly. RE contracts are only 8 pages, sellers disclosure is 3 pages, and all buyers have an “option period” for 150 bucks you can back out of any contract without using normal contingencies. No 3.3% state withholding either.

    Thanks again everyone for the comments and good luck in 2010.

  11. CA renter,

    Can you imagine what this group could’ve done with that Fairbanks Ranch place?

  12. I really liked that Fairbanks Ranch house! 🙂

  13. Tom–We own commercial properties in DFW–one thing that we like is that if a tenant does not pay rent, we post a notice and can “lock them out” in 24 hours–it works–we have owned there since 2005 and have only needed to post lock-out notices 3 or 4 times and always collected without actually locking anyone out.

  14. Tom–By the way, you are a brave man to actually move there. You left out the part about the freezing cold snaps that they tend to have–I got an email yesterday of a water fountain at the property next door frozen SOLID!!!

  15. Interesting attempt to try to draw a judgmental line here between “good” flippers who do major remodels and “bad” flippers who buy below market, do cosmetic fix ups such as paint and carpet, and make a nice profit.

    So if Tom happens to find a deal that only requires paint and carpet and he still makes a nice profit is he supposed to turn it away? If he does the deal is he now an evil flipper?

    I have a lot of respect for Tom, and also enjoy reading his posts on SDCIA. But perhaps folks should stop calling what he and other entrepreneurs do “flipping”. It is merchandising, buying at wholesale and selling at retail. It predates the bubble. Happens in all kinds of businesses. Nothing wrong with doing it in real estate if that is your inclination, whether it be the cosmetic or major rehab variation if a buyer is willing to pay your price.

  16. Kingside,

    That deserves some thought. I even hate to be referred to as a flipper because of the negative connotation but it’s the term everyone knows so I am even using it in my marketing. Of course we all like to buy something with enough equity in it that we dont even have to touch it. I guess it demonstrates that there are tons of different angles to work in real estate. It comes down to what you are comfortable with and/or enjoy. I really like the creative side of the larger remodels so I think thats why I gravitate towards them now. Dont get me wrong, the quick wholesale deals are good too. I heard it compared to elephant hunting. Looking for that huge payday on a deal. You might only get one or two a year as they dont come along often. You have to be willing to shoot a few rabbits along the way though if they cross your path.

    We are forcing these houses to appreciate, not only by the rehab but by adding the square footage. Buyers put alot of weight on price/s.f. here in Texas. I always said people dont buy based on $/s.f., they buy on emotion. Now I am covering both angles I guess.

    Thanks for the comments.

  17. Interesting attempt to try to draw a judgmental line here between “good” flippers who do major remodels and “bad” flippers who buy below market, do cosmetic fix ups such as paint and carpet, and make a nice profit.

    So if Tom happens to find a deal that only requires paint and carpet and he still makes a nice profit is he supposed to turn it away? If he does the deal is he now an evil flipper?

    Kingside | January 10th, 2010 at 7:57 pm
    ———————–

    The distinction for me is whether or not the flippers/rehabbers are competing with organic buyers who are just trying to buy a house. If they buy something that is totally uninhabitable and do a **good** structural remodel, then they are adding to inventory, not taking it away.

    I view housing as a basic necessity. IMHO, basic necessities should not be a profit center for speculators who are not buying out of need. It’s too easy to corner a market when dealing with finite resources that are basic necessities (which includes housing/land), and I’m totally opposed to enriching “capitalists” at the expense of people who are just trying to purchase basic necessities. No, people are not “entitled” to own a house, but I feel we have to look toward the greater good of society and determine whether or not society is better served by stable housing markets and owner-occupied homes — bought without gimmicky or risky mortgages, OR wheter we are better served by flippers who do basic cosmetic fixes (often of very poor quality) who then sell at a premium to families who are just trying to buy basic shelter. It’s a subjective issue, obviously, but one I feel particularly passionate about.

  18. That anon#17 was me (CA renter), in case it’s not obvious. Posting from another computer today.

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