Homes get new leases on life

To help make ends meet, Bower turned to a home she and her husband had bought to remodel and sell. The couple had already remodeled the home when Bower’s husband died.

“That house sat there for some time, and I didn’t know what to do – we didn’t have insurance or income,” Bower said.

She finally sold the home after holding it for nearly two years. “I realized that I enjoyed real estate, so I thought I’d buy another house to get my mind off things by fixing it up. Real estate was going well, and I had some equity in my home. I quickly learned a ton of information about things I didn’t know anything about.”

It’s not flipping

One thing to remember about remodeling homes for resale: Don’t call it “flipping” – at least not around those who remodel and resell homes for a living.

“Flipping is where you buy a house and turn right around and put up a sign and sell it,” Bower said. “Renovating is where you really better a house. You make it so it’s a desirable home to own, whether it’s decorating or doing something more extensive.”

The allure of rapidly rising home prices in recent years has drawn people into the buying and selling of homes. Also fueling the fire is the popularity of national TV shows such as A&E’s “Flip That House” and HGTV’s “House Hunters.”

But reselling a home quickly – and for a hefty profit – isn’t quite as easy as it’s sometimes made to look. Some people who try it get a rude awakening.

“A lot of people think it’s a fast, easy buck – they quit their day job because they hear on the news or on the late-night shows that it’s a quick way to make money,” said Stacey Clem, president of the Greater Springfield Board of Realtors. “What they’re finding out is that it’s not as lucrative as they expected it to be. There are some that are making money, but not nearly as many as you would anticipate.”

Clem said the recent leveling off of home prices in this market adds another level of risk. “So people aren’t going to be able to buy a house, turn around and resell it in a few months and make a lot of money,” she said.

Ultimately, the key to success lies in the understanding both the market and what the individual buyer-reseller can handle. Bower said she learned that lesson the hard way; she did nearly all the work on the first house she remodeled and resold on her own, spending more than $40,000.

“As I progressed, I found it’s cheaper to hire it out,” she said. “The time it takes for you to do the work yourself – six months versus one house I finished in two weeks because I hired the right people – it would have helped us a lot if we had hired it out. Mortgage payments, insurance payments, taxes, they all eat away your profits.”

Old homes, second chances

Bower has become something of a home renovation expert – she has worked her magic on 10 homes in the last two years – but she’s by no means the only remodeler in the game.

Springfield Property Management Inc., the Springfield franchise of Dallas-based Homevestors of America Inc., has been operating since June 2005.

Doug Tapken, partner and general manager of the Springfield franchise, said his company looks for people who want to sell their homes – usually either people who are having a hard time selling their home or people who need to sell quickly.

Once a home is found, the next step is determining its condition, Tapken said.

“Depending on the types of repairs needed and what’s involved, if it’s cosmetic, those are ones that we’ll go right into, do the repairs, and list it with a Realtor,” he said. “With homes that need more major repairs, we’ll take a percentage of those and wholesale them to investors.”

He noted that the company will give itself a set window of time in which to sell the homes in need of repairs, but if they don’t sell within that time, the company will go in and get the work done.

In addition to providing investment opportunities for potential remodelers, the homes Tapken purchases also can provide, in many cases, a less expensive option for potential buyers.

Steve Snowden found a great bargain on his new home, and he was able to customize it.

The home, between Republic and Clever in Christian County, had been severely damaged by tornadoes that ripped through the area in the spring.

“It was tornado-damaged – it had taken off the roof,” Snowden said of the home he purchased from Tapken’s company for an undisclosed price. “Doug was afraid of mold, so he took it all the way back to the studs. In doing that, I got to pick out my flooring, carpeting, paint colors – I had quite a bit of say in how it turned out.”

Even with all the renovation work needed, Snowden estimates he saved about $9,000 over purchasing a home that was ready to move into.

Tips to remember

Interested in remodeling a home to sell? There are some things to remember, according to local veterans in the business:

• Know the neighborhood. The old adage “location, location, location” still rings true.

• Don’t be afraid to bring in professionals. The money you spend to hire a contractor can be saved through the speed with which they can complete the work – and the mortgage and insurance payments you can save.

• Know your contractors. Make sure the people you hire are licensed and have references.

• Don’t overspend. While quality of materials and workmanship are important, don’t price yourself out of the market.

• Expect the unexpected. There are nearly always going to be extra expenses – even with a thorough pre-work inspection. Try to stay within your budget, but be prepared for additional costs.

• Each home is different. As financial investors say, past success is no indication of future performance.