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Tarek and Heather El Moussa discuss the seriousness of the flipping market today.
No doubt about it, these are tough times for Tarek and Heather El Moussa, who are struggling to make a profit on flips they bought before interest rates skyrocketed and the market stalled.
But you’ve got to hand it to the couple, who talk candidly about their problems on their show, “The Flipping El Moussas.” In the latest episode, they really put it all out there.
In the “Market Slows, Inventory Woes” episode, Tarek tallies where they’re at: “We bought 91 houses at the beginning of the year,” he explains, referring to 2022. “We were expecting the market to continue the trajectory that it was on, but that didn’t happen.”
Plus, mortgage rates have climbed even higher since then.
“So we paused all buying. The goal is just to get rid of the existing inventory,” Tarek continues. “We have 53 houses we need to finish and sell. But if we sold a house every three days, it would be four months to get rid of all the houses.”
So the pressure’s on as Tarek and Heather get to work on their latest project: a 2,968-square-foot home with four bedrooms and 3.5 baths in Ladera Heights, a hilly part of Los Angeles.
They paid $1.8 million for the home, which was built in 1960. They estimate the renovation will cost $295,000 to $320,000, and they hope to sell it for $2.5 million when they’re done.
However, that’s not how this flip’s story unfolds.
Find out what they do to the house and whether it pays off—and take heed of their hard-earned wisdom that shows, warts and all, just how tough today’s housing market has become.
‘Time capsule’ features can help sell a house Home with original midcentury landscaping
(HGTV)
The Asian-inspired landscaping in the front and back of the house is uniquely curated in a style that Tarek and Heather believe will appeal to buyers. It’s a time capsule—lovely if you like the style—and they believe it will be a strong selling point.
They decide to keep the foliage but change out the door, which is a tad dated.
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“I love those doors,” cries Heather when she sees the new doors with a light wood finish. “I feel like that fits the look so well.”
In addition, they add matching wood siding, bringing the design into the 21st century without losing its midcentury charm.
Finished flip
(Realtor.com)
Original flooring can be an asset Period slate tile floor that really works
(Realtor.com)
Heather loves the midcentury modern design of the home and all of its funky features, including the black slate floor in the entryway.
“I love this floor,” she tells Tarek. “I’m saving you money by keeping this flooring.”
Tarek is not fully on board because he thinks it makes the house look old.
“We can refurbish this,” Heather says. “It’s a cool selling asset and this is original. I would buy the house because tile is original, because I would think, ‘How cool is that?’”
“Fine,” says Tarek reluctantly.
It isn’t easy, but they find a way to keep it. They even use it for inspiration in the design of the rest of the house.
“I hate saying it, but I think you were right about keeping this floor,” Tarek tells Heather in the end. “I think it looks super cool, super retro.”
A wet room calls for a rain showerhead Wet room with a rain showerhead
(Realtor.com)
In the last episode, Tarek and Heather both agreed on their mutual hatred for the rain showerhead, giving voice to something we’ve always believed: Having water crashing directly down your head does not do you any favors.
But for some reason, they love it in this house. Heather calls the rain showerhead a success when inspecting the wet room, which features a shower and tub in the same space.
We’re honestly not sure why this rain showerhead is such an exception, but I guess everyone is allowed the occasional contradiction.
Back away from back orders Attractive lighting is important, but make sure it’s in stock if you’re in a rush.
(Realtor.com)
To speed up the renovation overall, Tarek meets with all of his contractors to try to sort out any slowdowns they’re experiencing.
“Time is money more than ever,” he tells them, referring to the heavy carrying costs each month they own the house. One problem that comes up has to do with holdups on materials needed to move a renovation forward.
“Right now we are having delays because we’re waiting on materials,” Tarek says. “So we have to make sure we are ordering things that are in stock or that we can get really quick. Let’s just say we’re waiting on lighting, and we find out that that lighting is not going to be available for 10 days. That same day, let’s just go to a home store and buy different lighting. And then when the ordered lighting comes in, we’ll put it in a different house.”
How does this latest flip turn out? Finished home
(Realtor.com)
“This is our style. If we were to buy any of our flips, this would be the one that we would live in,” says Tarek. “This is seriously my favorite house we’ve done, hands down.”
It is tres chic. The black and white color palette with warm wood accents might be hard for the El Moussas to resist, but will that style appeal to buyers on the open market?
Is this latest flip a flop?
The couple had bought the home for $1.8 million, funneled $304,000 into the renovation, and shouldered sales and carrying costs of $170,000, leading to their break-even price of $2,274,000. They decide to list it at $2,499,000.
“It hasn’t sold yet,” Tarek says as the episode ends. “But we’ve gotten a ton of interest, and we’re confident that with these modern upgrades and these amazing amenities, we’re going to find the right buyer to come through these doors in no time.”
Fast-forward about 78 days later, and the house is still sitting on the market—for the reduced price of $2,399,900. Time is also ticking, and the carrying costs are cutting into their potential profit by more than $10,000 a month.
There is, however, some good news: When they started this project, they had 53 houses on the books (35 in rehab and 18 listed). At the time this episode was taped, they had only 17 houses on the books, including six for sale.
“So we have almost survived this recession,” Tarek concludes.
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This article was originally published by a www.realtor.com . Read the Original article here. .