Zach Riggs discovered his interest in flipping houses during what seemed like an unconventional time for the industry: The middle of the recession. By day, he’s an agent with Keller Williams Realty. On the side, Riggs operates ZR Construction LLC to buy, renovate and resell 10-20 homes annually in Springfield.
Riggs is a regular contributor to the data that earned Springfield the No. 10 spot on personal finance website WalletHub.com’s top 25 cities in the United States to flip homes.
“I was actually helping clients buy and sell through the recession and then, as my business grew over the years, I had more disposable income and saw the opportunity,” Riggs said. “I thought I might as well take part in that myself.
WalletHub’s 2017 list analyzes the nation’s largest 150 cities based on house-flipping market potential, renovation and remodeling costs, and quality of life. Those dimensions were evaluated with 22 metrics and corresponding weights, graded on a 100-point scale, with 100 being most favorable.
Springfield recorded 64.6 points overall, good enough to improve from 19th last year. On the 2017 list, the Queen City ranked 115th for market potential, fifth for renovation and remodeling costs, and 49th for quality of life.
El Paso, Texas, topped the 2017 list at 69.6 points, followed by Sioux Falls, South Dakota with 69.5; and Fort Wayne, Indiana, with 67.4. Springfield’s house-flipping peers are Greensboro, North Carolina, and Chandler, Arizona, ranked Nos. 9 and 11, respectively.
Husband-and-wife flippers Ryan and Kim Maddox also are tapping into the market through The House of Maddox LLC, founded in 2006. Ryan Maddox works as associate broker at Southwest Missouri Realty and Kim Maddox is an Ozark Public Schools kindergarten teacher. Together, they discovered an interest in flipping houses in the 1990s.
“We did it as a hobby before it was a business,” Ryan Maddox said. “We bought our first house at an auction in 1995 and had no idea what we were doing. We bought it to live in and ended up remodeling it and kind of fell in love with doing that kind of thing.”
Their flipping business picked up in 2014.
“We sold some commercial property and were able to fund a few flips,” Maddox said.
Something old, something new
With the improving economy, Riggs said it has become more competitive to find houses as more businesspeople took an interest in the industry.
“There are not as many houses available to buy at a good price. There are so many people that are investing in flipping houses now that borrowing money is easier and the market is moving quicker,” Riggs said.
“It’s affordable; we have a pretty steady market.”
Riggs said he flipped about 20 homes in 2017 – doubling his 2016 jobs, which he said he mostly kept as rentals.
“This year, I started finding more opportunity, but they didn’t necessarily fit a rental portfolio,” he said. “I’m shifting a little bit just to continue doing my sales business and focus on what I really enjoy, which is investing.”
The homes he purchases, primarily on the south side of town, typically need a lot of work.
“If it’s in perfect shape, there is no way to make money,” Riggs said. “They are going to want to get retail for it. I’m looking for houses that need a lot of work, but I always want to buy in areas that are desirable.”
One of his most recent projects was remodeling a duplex near Missouri State University, and he plans to keep it as a rental. It was purchased about a month ago for $60,000. Another example was a 1,660-square-foot, three-bedroom, two-bathroom home on Battlefield Road, which he purchased for $65,000 and sold for $125,000.
“I had to do work to it; I put in about $20,000,” Riggs said. “I wouldn’t say that’s totally common. I’d say that accounts for maybe 15-20 percent of the projects in a year.”
On average, Riggs said he has a $15,000-$20,000 profit on projects.
“It just depends on the house and project and what you pay for it,” he said. “You don’t always do a full remodel and expect to get a lot of money out of it. Sometimes you have to scale back and do little.”
Other times, Riggs said he purchases homes and sells them as-is to other investors – something that accounts for about 25 percent of his business.
The House of Maddox plans to double its flipped homes in 2018.
“We’re going to flip some this year and, ideally, keep some [as rentals],” Ryan Maddox said.
Another 2018 plan, he said, is to tap into the Airbnb market with a home the Maddoxes purchased for about $100,000 near MSU that was designed by Springfield architect and builder Carl Bissman in the 1930s.
He’s seen the Airbnb market grow in other cities.
“Dallas and Branson have a tremendous amount of them,” Maddox said. “Springfield has some, but it’s definitely not a flooded market. We hope to kind of tap into the concerts and ball games and graduations. I think it will grow.”
According to Airbnb’s website, there are 79 listed whole-home rentals around Springfield and more than 300 throughout Branson.
While Airbnb is new ground for The House of Maddox, the couple always has been open to unique options when purchasing homes. Last year, Maddox said they flipped a house that was sold for $79,500, followed by one in Fremont Hills that was several hundred thousand dollars.
“We’ll look at any home as long as there is potential to make a profit,” he said. “If the home is in an area that will support it, we’ll spend a little extra.”
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