Home Depot Archives

Flipping Houses is Dead in 2012, For Most People

How to Make Money Flipping Houses_InsertAh the glorious days of flipping real estate and climbing the property ladder. Buy a cheap home, toss some in some new paint, carpet, cabinets and maybe an air conditioner and furnace and pocket a quick $20,000 – $50,000.

I for one think flipping is dead for the foresee-able future, but let me make my case before you condemn me entirely. I want to first acknowledge that there are ways for professionals to make a small margin on flipping, and that I am directing this post towards “normal everyday” people. 

There are some good sides to having a downward economy when it comes to real estate of course. The biggest benefits that I can think of would be pricing, interest rates, and cheaper labor. After reading that last sentence you might think – cheap houses, lots of inventory to choose from, and easy to find labor – Sounds perfect for flipping…but not so fast.


Pricing: The reason why prices are so cheap is because there are no buyers and there is an excess of inventory, which is perfect for you as a buyer – but terrible for you as a seller. You will have to complete for the few buyers that are out there with quality, location, and price. That means no cutting corners and maybe cutting into your margin to persuade buyers.

Interest Rates: Low interest rates can be good, but they also can be a double edged sword. If interest rates turn around, it can hurt how much people can justify financing as a purchase price for your property. If you get stuck with a property for a substantial period of time and interest rates spike, you stand to get destroyed.

Cheap Labor: Cheap labor is pretty hard to argue against, except for the argument before – which is that there is excess for reasons that don’t hint towards strength in the housing market.


So let’s talk about hypotheticals.

You find a house in a neighborhood listed for 180k, where a similar house in good condition is listed for $250k . The house only needs approximately 30k in work if you do some of the work yourself. You purchase the house for $180k and somehow manage to stick to your budget (which is rarely the case). Maybe you replace the kitchen and install new paint and carpet (which is 30k alone). Okay – now’s lets talk about your break even scenario.

You have $180k in the purchase price + 30k in Work = $210k in the home

You carried the home for lets say 2 months which cost you $3k and you had closing costs of $3k = $216k in the home.

You opt into using a local broker and you list the home at 250k, assuming your broker takes the standard 6%, your break even is 216k = .94x, $229,787 assuming you sell it within the 2 months.

Now’s talk about reality. Most likely you are not going to sell it in 2 months and most likely you are not going to get full asking price since there are other homes in your neighborhood listed as well. Probably you are going to have to shave off $10-15k off the sale price and it is going to take 6-12 months to sell at that reduced price.

Factoring in $240k as the sale price and you hold the property for a more realistic 6 months (until time of closing) the numbers become: $240k – $210 (PP + rehab) – $9k (Carry Cost) – $14.4k (realtor fee) – $3k (closing) = $3,600 profit.  I would view that as almost a “best case scenario” as well, and would warn that its very easy for this situation to produce a loss. 

The point of this is that people commonly do not take conservative estimates in how long it will take to sell, what they will actually get for a sales price, and how much money it will cost to get ready and to actually sell the house. Now let’s step back and think about this though. You are tying up a lot of cash (20% down-payment, 30k in repairs, closing costs, etc.) for an optimistic $3,600 profit. I think I could make a good argument that this attempt to earn this $3,600 profit is probably just as risky or even risker than going to Vegas and putting $3,600 on black.


I eluded that *some* people would be able to flip still, so who can still flip? People who are able to find unbelievable prices through questionable means and people who can avoid fees on closing and selling.

When I say “unbelievable prices” – I’m talking not listed on the MLS prices. Let me give you an example, you see those billboards and benches for “we buy ugly houses.” Those are people who can flip because they lowball people with cash offers, but you can argue where they are making the money isn’t on the flipping process – their services as a  real estate pawn shop are where the margins are generated.

Avoiding fees, maybe you are a realtor yourself or have connections – if you have the ability to find ways to sneak in and out of real estate market without taking a 6-8% hit, you may have a competitive advantage.

Sadly I must once again warn though that the real estate market has a lot of moving parts and a lot of variables and once you “put a pencil to it” – it rarely seems worth the risk. The stress, the labor, the idea of tying up such a large sum of money – no thanks. If the market does turn against you, be prepared to take a GIANT hit or become a landlord.

500 Reasons To Not Be a Home Owner

tree_removal500 reasons or more specifically – $500 that I am now out because of being a home owner. I had two dead trees in my back yard that had to be removed and I had a follow up trip to home depot that combined racked up $500 of my hard earned cash.

The tree removal cost: $300 – the team dropped, cut up, (but did not split) and stacked the wood. They cleaned up all of the branches and hauled everything I wanted them too. They were bonded and insured (which is what I was paying for, since I would do it myself if I could). Two and a half hours, a team of 5 guys, 2 chainsaws, a big truck, rope, and some miscellaneous gear – and they were gone along with my cash.

I recently wrote about negotiating your professional services for your home – and this was a perfect example of when it paid off for me. Initially I was approached by a tree professional who wanted to “trim up and clean my front yard” (which had 3 trees) He quoted me $600 – which is hilarious since my front yard had very little work to be done. I told him I actually had work for him in the back yard. We went out back and he quoted me $700 for the two trees and the front yard cleanup. I wasn’t buying. I told him I just need the two trees and price was a concern. He quoted me $500 – then immediately $350 saying he just needed to get his guys work. I asked him if they haul the wood away – he said yes. I asked him if it would be cheaper if he left the wood, he said he has to pay to dump the wood (which I’m not sure I believe) and that he drop and cut up the wood for $300.

I debated it, but because the two trees were near a fence and two of my neighbor’s sheds that housed some of the yard equipment – I thought “mine as well pay $300 and have it taken care of versus $500 insurance deductible and money to clean it up later when it falls.” I told him that he had to also cut several branches off the power-lines in the front yard. He agreed to cut them away from the power lines.

As for the wood they left, I plan on using the wood for my fireplace inside my home. Sadly I do not have an wood burning insert which would be effective of cutting my gas bill down, but I’m not sold on the idea of buying one. Regardless I do enjoy a good fire in the winter time.

My trip to home depot included a lot of things, but a maul to split the wood and a fire wood rack clocked in about $90 of my trip. Ouch. Hope I get a week to split all of it after the holidays!

Have to love being a home owner.

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How to save 18.8% to 22.6% at Home Depot or Lowes

Lowes Coupon 2012Want to save money at Home Depot or Lowes? Save thousands of dollars with this technique.

18.8% without being a contractor. Impossible right? I did say this was “Epic” finances didn’t I?

Let me give a brief reason why this was so important to me, I bought a house that needed rehabbing. How much rehabbing? $25,000 worth. I did it all myself.

I did not take advantage of the full 18.8% to 22.6% due to time constraints, I averaged probably more like 14%, do not fail me. I am giving you amazing advice.  I am so happy with this advice I’m going to add a PayPal donation to my site (Button is on the right). If I save you hundreds or thousand of dollars, why not toss me a little something? Your choice. Regardless I hope it serves you well!

The are many ways of doing this, but I am going to offer you several ways.


The Easiest and Best Method of Saving Money at Home Depot or Lowes.

Lets start with the foundation of our journey. 10% off Lowes Coupons. If you are doing any major work on your home or business you need to obtain purchase Lowes coupons. They are honored at Home Depot for 10% as well.

Lowes Coupon 2012

Where are they? For now they are found at the Post Office. Where at the post office? In address mail forwarding packets, NOT the online packets – the non-internet changing packets. They are kept on the counter sometimes in the lobby but most of the time they have them behind the counter.

This has gotten tricky and messy. You don’t want to be the weirdo that is asking for those packets,  I don’t even want to drive to the post office. I’m lazy.  Also they started put in dummy coupons – instead of 10% off up to $5000 of purchase, they have things like $5 off $50 (which are trash comparatively). Well remember when I mentioned some post offices keep them on the counter in the lobby? Well most post offices do this because people steal them all to sell.

Coupon Price on Ebay – Roughly $2 –$3 each depending on timing. Note, make sure they are not expired.

This is the start of our journey. 10% off. Getting $3000 worth of new flooring, $300 cashback at the time of checkout. (Did I mention there was a paypal donation button?). But there is oh so much more.

Next Step, Buying Giftcards.

There are three methods for this, which is good because it presents options. I will offer you my best option first.

Option #1:
Plasticjungle.com – Where you can buy Lowes and Home Depot Coupons for 7% Off (Current rate). Did I mention, they TAKE CREDIT CARD? Another 2% on your credit card. That is 9% cash back.

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Option #2:
Buy off Ebay – Approximate savings, 3% plus Ebay bucks of 2% (or more depending on promotion, NOTE SOME PROMOTIONS EXCLUDE GIFTCARDS).  Plus Credit Card – 2% more. That’s 3+2+2 = 7% cash back (or more depending on promotions).

Option #3:
Buy Gift Cards from your local grocery store for gas perks. Kroger has run promotions in the past for 4x points, which is the only time I would take this option over the first two options. With my local Kroger I get $.1 off per gallon for  every $50 spent and when its 4x promotion that is $.4 off. You also get back 2% from credit card.

$.1 * 12 = $1.2 / $50 = 2.4% Cashback (All the Time)
$.2 * 12 = $2.4 / $50 = 4.8% Cashback (Only when 2x Gift Card Promotion)
$.4 * 12 gallons = $4.8 / $50 = 9.6% Cashback (Only when 4x Gift Card Promotion)

So lets call it roughly 4.4% – 11.6% cash back depending on grocery store and promotion and size of gas tank (I actually get more like 15 gallons at a time which greatly increases all of the cash back.)

Why can this option be good? When it can be done without delay. Obviously when they have the 4x promotion at my Kroger it is more than worth it, because if I get 15 gallons a time at 4x promotion its 12% cash back + 2% CC which is 14% cash back.


Combine the savings and go to town. No limits except whatever your gas perks program limits you too.

Option #1 – Buy 10% coupons, Buy Gift Cards from Plasticjungle.com and get 8.86% discount = 18.8% off

Option #2 – Buy 10% coupons, Buy Gift Cards from Ebay and get 7% discount = 17% off.

Option #3 – Buy 10% coupons, Buy Gift Cards from Grocery store get back 4.4% to 14% cash back = 14.4% to 24.0% off.

Did I mention I have a paypal donation button on my website?


When you go to home depot and pull this off and save 18% off on $2000 worth of goods, that’s $360 off your $2000. Gasp.

Side note to all of this, I saw a guy in Lowes buy appliances when I was looking for something and he was literally in the process of checking out for $3200 something — without a 10% coupon. I almost passed out. I scrambled pulled my wallet out and found one… “WAIT WAIT!!!!” I handed it to him. Cashier scanned, –$320 off.

“Thanks – that means a lot”

“No problem”  (but what I was really thinking, give me half.)

Next day, was short a coupon for myself…. *Faceplant* The guy was literally holding his child (who was sleeping) when checking out with all of his fancy appliances. I don’t regret it. Sure it ended up costing me about about $40 the next day – But “Lisa needs braces” (I assume his child’s name was Lisa, and it’s a The Simpson’s Joke)

Go out and SAVE!

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