Pros and Cons of the Flipping your House

CON: You could break the bank.

This "slow flip" idea I talked about last week does have its risks. For instance, we have made 23.6% progress toward paying off our home. Because we decided to buy a home that needed updating, we had to reserve cash for renovations, thrifty decorating and all of our other DIY projects to get this house in selling condition. This means initially we were not able to put as much money down on the house. Visually this is hard because we know the money is there but we will not "see" it and be able to count it towards our home payoff progress until we sell this home (or pay it off).

PRO: Money Honey

Obviously making money is considered a PRO for many reasons, but for us it would bring us one step closer to our larger goal of home ownership. Whether or not we profit from this home is somewhat of a mute point though. We have learned SO MUCH about painting, tiling, grouting, decorating, craiglisting, yard work.... the list goes on and on. We are so thankful for the opportunity to learn all of these things.

PRO/CON: 

Living in Your Project

While is it great to be in a place that is in need of rehab -- our minds are ALWAYS brimming with ideas and projects because we are so inspired by the place we do life in -- it is sometimes hard to relax in it. We especially found this to be true during the great Tile Incident of 2013. This winter Ty was working long hours, and I was knee deep in grout and working part time at the hospital. We needed home to be a place to relax and rejuvenate, but with our house in the transitional project phase this was hard to come by. Ty and I are also "project people." If you give us the option of resting or doing a project, we are going to choose the work. This made it even more difficult for us to slow down when we were at home because there seems to always be one more project to do!

                                           PRO: The Home Itself

Although even a "slow flip" is risky, we got to move from a condo into a home MUCH sooner than expected. We have loved having a yard, garage, and beautiful creek to admire each day.

PRO: Living the Dream

Renovating a home has been a dream of mine (Caroline, here) for a long time. I had no idea that I would get to do it so early on in our marriage. It has ignited my already growing passion for decorating, organizing and designing. It empowers and encourages me to be thrifty and to find easier, better ways to do home projects. It has also allowed us to start dreaming of our next home adventure....even though we still have a ways to go on this one!

So there you have it, the good, the bad, the ugly. Making a PRO/CON list helps me to zoom out and focus on the bigger long term picture. What does your PRO/CON list look like?

Flipping a House to Payoff our Home

Our journey to home ownership is a little atypical.   We purchased a home that needed "updating" because we wanted to minimize the overall financial risk that comes with simply flipping a home. (If you want to learn more about our journey to home ownership take a look here, here, and here). We wanted to find a home that was livable from the beginning. So, for instance, if I quickly discovered I just hated renovating, we still had a place to live without having to pay to make it livable. 

The challenge: Update our home on a limited cash budget spending ONLY what is necessary to raise the value of the home SO that we can ensure we make a profit when it comes time to sell.

This feels a little overwhelming at times. Like during the tile incident of 2013, we realized that we might NOT be able to do it ourselves. This is a scary thing when operating on a tight budget. If we can’t DIY it, how much does it cost to pay someone? How much does that take away from our overall profit? Will we have enough money to finish the rest of the kitchen? 

After reading stories of flippers, stories of home renovation gurus, and stories of couples just like us, we came up with a plan I like to call the art of the slow flip. 

The plan is to fix up our home using DIY home reno and thrifty spending, and then sell it for profit once we are finished. This time frame could be a year, it could be 4 years, it could be 6 months. I still get overwhelmed, terrified, nervous and excited about this plan. We are all in now, there's no turning back. And there is always the looming question of even if we are successful in updating the home, will it sell for profit? 

We are 9 months into our home “updating” and so far, so good. I do like home renovation – phew! We have managed to overhaul an entire kitchen, learned to lay tile on the floor and a backsplash, painted the entire house inside and out, decorated the living room, dining room, and guest room, and are cooking up some mean plans for the bathrooms. We still don’t know if our home will sell for profit or if all our hard work will be for naught. I guess the answer to that question will remain a mystery to us for now, but in the meantime we do plan to continue updating this home through DIY projects, careful spending, and thrifty decorating. 

 "oh, so you are flipping a house." 

Yes and No. The difference is...
1) We didn't want to be subject to the market's highs and lows when it came time to sell. We wanted to minimize risk by finding a place we could stay in long-term if necessary.

2)  We are living in our project. Most flips take place outside of the flipper's home. Flippers generally live in their own home, and "flip" another house they have purchased, and then make a profit.
For us, this is not just another house we are flipping, but our home.

3) Sometimes flipper's will have two mortgages or a construction loan - one for their home, and one for the house to be flipped. We are do have a mortgage but all of our renovation work is paid for with cash.

Is your journey to home ownership/living debt free a little less than typical?

Feel free to post comments/ask questions in the section below or email us. 

Living in the "It" City

As you may have read in Part 1 of the GREAT Shift for SPL, we want to incorporate our LARGER journey to home ownership into the blog...and most importantly, bring you along in the journey. It is often hard to stay motivated when looking down the long road to home ownership....
so we thought, why not have some accountibility?! We are not called to walk down hard roads alone.

Now, lets talk about Nashville.

Living in the "It" City of the moment has its perks (don't mean to brag, but I am pretty dang pumped about this news).  New companies, new restaurants, and new shops mean new jobs. There is a constant in-flux of new people. And Real Estate is BOOMING. Houses are selling in record time in the city of Nashville. Take our condo for instance, it sold in less than 48 hours. Most homes in this area of Sylvan Park do the same....with multiple offers and above asking price bids. It is a seller's paradise.

Insert: OPPORTUNITY

When we saw that homes in our area were selling in record time and for record prices, we knew that a door had opened for us. Although we had not reached our goal of paying off our mortgage, we did know that the condo market can be volatile and wanted to capitalize on this rare opportunity to sell at a high price in a hot market. 

Begin: Dreaming

Knowing that we could sell our home for profit gave us the freedom to explore some of our other dreams: 

like gutting and renovating an entire home. We had already had fun accomplishing some smaller DIY tasks in the condo, and this seemed like a great opportunity to take that dream one step further. So we listed our condo, and began searching for a home that needed "updating." 

At the end of July 2013, we moved into our home by the creek. We were able to make a 20% down payment, and put the rest of the profit from the condo toward the renovations for house (like the kitchen overhaul). We are very thankful that the opportunity to live in a home came sooner than expected. 

Where are you on your journey to financial freedom? 

Paying off debt? Buying your first home? Mid-way through paying off your first home? Saving for a down payment? Wherever you are, we want to meet you there. 

Feel free to email us at sylvanparklife@gmail.com us with questions or comment in the section below! 

Let's do this together. 

What are you willing to sacrifice?

I want to share this article with you guys. It is from a few years back but it is an encouraging story of one couple's journey to mortgage payoff. It begs the question, what are you willing to sacrifice? Here is a small snippet from the larger article - found here.

“My wife and I purchased our house in the fall of 2008 for $300,000. I believe the interest rate was 6%. We used the equity from our old house to pay off three small auto loans and to make a 35% down payment on our new house. The big down payment made it easy for us to refinance it two times since 2008 because we were never under water.

We didn’t want to buy a huge house with a huge mortgage. We decided not to let the bank or agent tell us how much house we could afford. WE did the math, WE knew our budget; therefore, WE decided how much we were comfortable paying each month. We found a house that works well for us within our budget.

Sure, it doesn’t have the desirable three-car garage that we wish we had, but a bigger garage comes with even a bigger mortgage, so we decided we could live with a smaller garage but with the smaller mortgage. [...] Back in 2008 the bank would have let us borrow two times the amount that we borrowed. Ouch!”

Two big take aways for me -

1. Decide early what you can afford, NOT what someone tells you that you can. What are you comfortable with paying each month? I will tell you that Ty and I are uncomfortable in our current house payment. That is a big and hard thing for me to admit but this house buying experience has taught us our limits. 

2. Lately I have had a case of the must-haves. I must have an en suite master bathroom, I must have a laundry room, I must have... and the list goes on and on. It is so hard to maintain perspective and ENJOY where I am living now when I am constantly looking ahead. When I keep the bigger picture of paying off our home early at hand, those things don't matter and once again I find contentment in our wonderful home. 

For this couple, living below their means and having a mortgage that they were comfortable in provided more peace than the fancy home with the big mortgage. Yes, it required sacrifice but it also gave them flexibility and allowed them to achieve their goal of financial freedom.

What do you think of this couple's story? Can you relate? 
What are you sacrificing to achieve your goal of mortgage freedom? Are you driving around your car from high school? (we are!) Are you going out to eat less, and staying in to cook more? Are you living in a place that's not quite your dream home?