RE: Real Estate Podcast

Ben Harang, REALTOR® (00:14)
Hello everybody. This is Ben Harang Welcome to another episode of RE Real Estate Podcast with my cohost today, Clint Galliano. How you doing today, Clint?

Clint C. Galliano, REALTOR® (00:28)
doing wonderful, Ben. How you doing?

Ben Harang, REALTOR® (00:31)
Clint, I'm doing terrific. Had a little rain shower here this morning. It cleared up. Sun's out. Things are drying off. Life is good in Thibodeau, Louisiana.

Clint C. Galliano, REALTOR® (00:39)
pretty awesome.

Ben Harang, REALTOR® (00:40)
Yeah. So what are we talking about today?

Clint C. Galliano, REALTOR® (00:43)
All right, we were talking about, you know, topics we should cover. And we got to talking about HGTV and how we both kind of feel like the some of the real estate related shows on there are kind of a joke, you know, how they can renovate a house in 30 minutes and get it sold. And it's just a

Poppycock, I guess is a nice way to put it.

Ben Harang, REALTOR® (01:14)
Yeah. And,

and run into all kinds of surprises and deal with it and still finish it in 30 minutes. That's amazing.

Clint C. Galliano, REALTOR® (01:19)
Yeah, in 30 minutes.

So today we're going to talk about the good, the bad, and the ugly of flip houses.

Ben Harang, REALTOR® (01:30)
so let's talk about the good, Clint and I were talking about a scenario, earlier, you know, you walk into a house and you can tell if somebody just put the proverbial lipstick on a pig or they got down to the, to the bones and rebuilt it and the finishes look like new construction.

And it doesn't take long to figure it out. The fit and finish of a quality flip house, the flip house is in my mind a negative connotation because we generally see people cutting corners to try to maximize their profit and get out quickly. But somebody that does it the right way takes their time. They put in quality.

material quality workmanship and when they're done the door is closed properly, they don't hang or drag. There's no paint on the door hardware. There's no paint on the floor around the baseboards. The AC registers are not painted over. There's things like that, just the small details. They'll pick

They'll pick mid range appliances and not put in a used appliance they had in the shop somewhere. Or like I told Clint earlier, that stove that was in here, that's two out of the four burners work. That's good enough. We're going to just leave that in there. We're not going to spend the money on a new stove. The quality flips take care of all that.

When you're looking at a flip house, look at it through very critical eyes and flesh out any problems there might be. if you find a good one, it won't be a new construction, but the fit and finish should be like new construction.

Clint C. Galliano, REALTOR® (03:22)
I recently ran across, lipstick on a pig flip. I initially thought, and it may still be the case. don't know. I didn't delve too deep into it. I initially thought that somebody had bought the house, post-IDA and, you know, slapped a little bit of lipstick on it and was trying to sell it.

Ben Harang, REALTOR® (03:25)
Yeah

Clint C. Galliano, REALTOR® (03:41)
They were trying to sell it for sale by owner for a premium. And then a discount broker out of Baton Rouge picked it up and has it listed now at a significant discount from what the for sale by owner was trying to sell it for. But after walking through and seeing some of the stuff left in the house, I'm thinking maybe it's a family member that did it. But some of the

Ben Harang, REALTOR® (03:44)
Mm-hmm.

Clint C. Galliano, REALTOR® (04:05)
Some of the things that they did, it's like they put some maybe a new faucet, a new light fixture, but then it looked like they used one by sixes for baseboards and didn't even sand them. They didn't quite fit all the way, there were gaps. ⁓

Ben Harang, REALTOR® (04:18)
Ha ha ha ha!

That's good enough.

Clint C. Galliano, REALTOR® (04:24)
They, you could tell that the drywall was installed at a certain point of time because it had the rounded corners. Cause there was a time when that was the popular thing. And so rather than making choices about fitting the baseboard around, they just cut it at an angle and put it in there with all the gaps in between the pieces of baseboard and various trim.

Ben Harang, REALTOR® (04:34)
Mm-hmm.

Clint C. Galliano, REALTOR® (04:48)
There were sections with crown molding and then pieces where they just didn't even bother putting more crown molding. They just said, it didn't quite make it to the doorway, so we'll just leave it blank. And various things like that. And it's like you could tell they painted it. They did some updates, but nowhere near enough for it to be at

Ben Harang, REALTOR® (05:00)
Mm-hmm.

Clint C. Galliano, REALTOR® (05:13)
an actual true flip. know, it's literally lipstick on a pig. ⁓ And by contrast,

Ben Harang, REALTOR® (05:14)
Mm-hmm.

Yeah.

Clint C. Galliano, REALTOR® (05:22)
across the intersection, there's this other house and it was obviously a flip. It was redone, you know, so the brick was painted white. You could see where they did some updating. You walked inside and it looked like a new construction home. New flooring, looked like new drywall throughout, solid surface countertops, new appliances.

everything was great, know, new air conditioning system, you know, it just says, like, this is great. And it's, that's kind of the contrast, I guess you could say, between the two of how to do it right, versus, and go put a little effort into it and walk away with a bunch of cash.

Ben Harang, REALTOR® (05:52)
Mm-hmm.

Yeah, yeah. And one thing you can do if you're looking at a flip house, look at it through very critical eyes and ask a whole lot of questions, including getting copies of the permits that they got to do the work. Because what you don't want is a whole bunch of work done that is not permitted.

You know, doesn't happen around here, but there's places in the country that will make you tear it out if it was unpermitted when it was done. but just if

Clint C. Galliano, REALTOR® (06:39)
And if

you piss off the municipal officials, even if you didn't do the work, they'll pull your power and let the mold start growing in your house if they don't want your business.

Ben Harang, REALTOR® (06:48)
Yeah. Yeah.

Right. Right. so, just be, be, look at it through critical eyes and ask a whole bunch of questions. Cause the idea that it started as a flip, it's easy to hide, to hide things with paint and drywall. So dig deep into it and make sure you, your home inspector understands that it's a flip house and let, let them go through it with a tooth comb also.

But just be very critical of it. I'm not saying don't buy it. You need to understand what you're buying and not be surprised because sometimes a poor flip house will look good. So you need to get past just the last coat of paint. Just because they're not good doesn't mean the finish won't be good. Sometimes the finish is very good, but the mechanics of the property were not dealt with properly.

Clint C. Galliano, REALTOR® (07:39)
Yeah.

Ben Harang, REALTOR® (07:39)
So

it could be deeper than just cosmetic.

Clint C. Galliano, REALTOR® (07:42)
All right, so we talked about the good, we talked about the bad. Let's talk about the ugly.

Ben Harang, REALTOR® (07:47)
The... Well, go ahead. Go ahead.

Clint C. Galliano, REALTOR® (07:48)
So I've got ugly stories.

There's a client I worked with, they're an out of state flipper. So basically they're a virtual flipper. So they find properties that they feel they can pick up for a good price and...

find local contractors to work on and then sell it and make some money on it. So.

Ben Harang, REALTOR® (08:16)
Mm-hmm.

Clint C. Galliano, REALTOR® (08:19)
The person that they were buying it from was redoing the drywall in the house and he had half the house hung with drywall.

and various other things. And at first glance, it was like, okay, well, this is kind of neat. And he had done the flooring in most of the house and it looked okay. And then,

Ben Harang, REALTOR® (08:34)
Mm-hmm.

Mm-hmm.

Clint C. Galliano, REALTOR® (08:45)
He recommended a contractor to the flipper. That guy wound up having issues in addition to flipping his Harley and getting getting hurt and to where he couldn't continue the work. And so we had to bring in another contractor and that contractor finished everything up, but he had to redo a lot of stuff. And what we figured out

Ben Harang, REALTOR® (08:58)
you

Uh-huh.

Right.

Clint C. Galliano, REALTOR® (09:11)
was that the guy that the flipper bought the house from, didn't get the drywall, he just laid drywall on top of everything. And so all of your trim and your doorways and your outlets and all was sitting almost three quarters of an inch in a hole. So that all had to be fixed. Half of the drywall where he was,

Ben Harang, REALTOR® (09:19)
Ha ha ha.

Right, recessed.

Clint C. Galliano, REALTOR® (09:34)
It's kind of like that meme picture you see on Facebook where they cut all kinds of small pieces of drywall to fit these odd cuts and angles and stuff. Some spots were like that. Flooring is kind of the same thing. Instead of trimming the flooring to fit in the hole, he just said, it's almost there. I'll just make it fit. And so there's like a bubble in the middle of the floor. And so all kinds of stuff to have to take care of.

Ben Harang, REALTOR® (09:58)
Mmm.

Clint C. Galliano, REALTOR® (10:02)
And, you know, so those are some of the things. Another one is where you walk into a little rent house, a little shotgun house, and it's got fresh paint, vinyl plank flooring, and you start walking and you feel the floor moving under you. You know, it looks beautiful. But then you walk in it and, you know, you feel that there's no support under the floors. Doors don't open or...

Ben Harang, REALTOR® (10:22)
Mm-hmm.

Clint C. Galliano, REALTOR® (10:29)
Doors are sitting almost at an angle in the door frames, things like that. Those are the things you watch out for. And then the other.

Ben Harang, REALTOR® (10:36)
Are you running down?

It feels like you're running downhill from the front door to the back door because the foundation is not level.

Clint C. Galliano, REALTOR® (10:40)
Yeah.

Exactly. know, the, the, and probably the, the worst thing like you were talking about is where, you know, there's something in the walls that they just covered up. You know, whether it's termites or mold or just rotten wood or whatever the problem is. And it just gets, oh, well we'll just put some drywall or some paneling over it and not worry about

Ben Harang, REALTOR® (10:55)
Mm-hmm.

Yeah. And you can't really see that when you're looking, because if it's covered, it's covered, but you can get a pretty good idea of the quality of work that was done by looking at the house in its entirety. If there's mismatched fit and finish, can suspect, can't guarantee, but you can suspect that they might've covered something up.

and didn't want to deal with whatever they covered up and figured nobody would ever know. And it'd be long gone by the time somebody found out.

Clint C. Galliano, REALTOR® (11:40)
yeah, another clue is where you see the cut of the drywall sticking out the edge of the outlet plate. It's another one that they maybe didn't do something right.

Ben Harang, REALTOR® (11:47)
Yeah.

Yeah. So there's small clues, but, you know, and even if it doesn't look pretty, it doesn't mean it's a bad job. It could just be strictly cosmetic. so you need to make your own decision on if you want to pursue a flip or not. but by all means get a comfort level, understand what you're buying and, and don't, don't be surprised after the fact.

Clint C. Galliano, REALTOR® (12:12)
Yeah. And like Ben said, it's always a good idea to get a home inspector to go through it unless you have that level of sophistication already. Get a home inspector to check out the systems, check the roof, check under the house if it's on pier and beam, check out the electrical, check out the plumbing. Make sure all of that's in good shape.

Ben Harang, REALTOR® (12:28)
Mm-hmm.

And even if you can do it yourself, it's probably a good idea to bring in somebody else that is not attached to the house. Cause you might like the house, you might like the neighborhood, you might have a family member living across the street. You might tend to overlook things because you really want the house. Well, the inspector won't care if you want the house or not, he's going to tell you what he finds. So I look at it as an objective opinion about the house. You can agree with him, you can disagree with him, but you have

his opinion about the current condition of the house, which I think is a valuable tool to help you make the decision on whether or not you want to buy it.

Clint C. Galliano, REALTOR® (13:12)
And then one more thing to check is make sure that the either yourself or the inspector checks the laundry drain. So drain for the washing machine, make sure that that drain gets checked. This happened to me actually. We bought a house, renovated it, put tenants in it. First time they went to wash clothes, the washing machine backed up in the drain and flooded the laundry room.

Ben Harang, REALTOR® (13:22)
Yeah.

Mm-hmm.

Clint C. Galliano, REALTOR® (13:38)
and come to find out they were on a community sewer, but the laundry room was just draining into the old field drain from when they were on a septic. So it went into the grease trap and then out into the field drain. And because it was separate, it was never tied into the main sewer.

Ben Harang, REALTOR® (13:52)
wow. Wow.

Mm-hmm.

Clint C. Galliano, REALTOR® (14:05)
It had collapsed. And so we had to run a drain from that washing machine drain and tie into that main line going back into the community sewer. And we had two options, well, three options. We could have dug around the edge of the concrete patio off the back of the house and buried that drain there and hope we got enough drop through all of that. Or we could have routed the

Ben Harang, REALTOR® (14:16)
huh.

Mm-hmm.

Clint C. Galliano, REALTOR® (14:33)
well, put a lift station in and put it all under the concrete. Or what we wound up doing is just ran it up against the house on the edge of the slab, the house slab with the drain and then dropped down into the main washout.

Ben Harang, REALTOR® (14:39)
huh.

It worked. then you also knew you had enough fall for it too. ⁓ And that's what I said earlier about cosmetics. It might not be the prettiest, but the work was done right and it works and it's functional. So just because it's pretty doesn't mean you want to buy it. Just because it's ugly doesn't mean you don't want to buy it.

Clint C. Galliano, REALTOR® (14:53)
It worked. It's not pretty, but it works.

Right. Yep.

Ben Harang, REALTOR® (15:16)
That's what the inspection periods are for and the inspectors and dig into it and ask the difficult questions and see what the seller has to say about it. If you ask for permits and warranty on the appliances and stuff and you get no response or crickets from the seller, that's probably a pretty good indication that you probably want to move on and not buy that house.

So. ⁓

Clint C. Galliano, REALTOR® (15:38)
Alright, Ben, I think

we've kind of covered it from top to bottom. We told a story or two.

Ben Harang, REALTOR® (15:46)
We do tend to do that in HGTV. I know a lot of people like to watch it, but it's all set in Alice in Wonderland world. It has no basis in reality at all. So enjoy the production because that's what it is. It's not based on reality.

Clint C. Galliano, REALTOR® (15:56)
La La Land.

Ben Harang, REALTOR® (16:04)
These things take time. They take money. They, you run into problems that you need to solve. It's a, it's an adventure to flip a house. So don't just be, don't just run up as soon as it's finished and buy it just because you think it might look good. Just again, ask those difficult questions and get some answers from the, from the contractor, whoever's doing it, the seller, and, make sure you get a comfort level and you understand what you're really buying. All right, Clint, I'm gonna shut up now.

Clint C. Galliano, REALTOR® (16:34)
All right, everybody go like, subscribe, comment and share at RERealEstatePodcast.com. You got all the things there. Ask a question, watch videos, subscribe at your favorite podcast app, leave us a message, all that fun stuff. All right, we've got another one in the can. We'll see you next time. See you later, Ben. You too.

Ben Harang, REALTOR® (16:35)
Yeah.

All Clint, have a good one.