Would You Actually Make Money Flipping This House? - The Truth About House Flipping with Bryon Phelps

Bryon Phelps (00:01.784)
Hi, welcome to Real Talk with Sterling Real Estate Group. Today I'm excited to have actually one of our agents, Bryon Phelps here. And Bryon's gonna be talking about would you actually make money flipping houses? And Bryon, before we begin, I'm gonna say yes, because you have been extremely successful doing this. And I'm so happy to have you here so you can educate other people on how they can become successful. So thank you. Thank you for carving time out of your busy schedule.

So let's get into it. How would you get in the flipping houses and what would your very first flip look like? I don't think I would change anything if I did it again. When I did it, I was working a full time job and I did it as something on the side. It's a really hard thing to dive in, feet first. There's a lot of time. There's a lot of nuances to the ups and downs of revenue that comes with that business. Were you prepared for some of these? Yes. I mean, the way we approached it was related to

doing it as a side thing and ramping it up to where we felt, where I felt I could go full time doing it. okay And so I had a job backing that up at the time and then you take that leap and there was plenty of ups and plenty of downs and you sorta, but you try to do enough that you even level it out. To do it as a full time thing, you almost, you have to either have grand slams or you have to just have a lot of volume. And you were at that point doing that.

A little bit of both at different times. How long did it take you to get to that little bit higher volume of doing the flip? As a part-time, probably two and a half to three years. Okay. And the first year we only did two. Well, that's a lot, doing it part-time. I mean, you have a full-time job. Yes. And other commitments, and now you're trying to do that. So that's not a bad time frame. Right. Right. All right. What's the most amount of houses you did in one year?

I think the most we did, the most I did in one year was 17, I believe, which was a lot, yeah. And I wasn't doing the work. We had people, contractors, you have sort of a whole crew of trusted people that helped make that happen. But you still have to follow up and make sure everything's being done right. Yes, and stay on top of it to make sure the timing is quick enough. 17 houses in one year. 17 houses, yeah. That's impressive. Yeah. That's impressive.

Bryon Phelps (02:26.284)
I hope you guys are paying attention so you can follow in Bryon's footsteps. Bryon, so I love this. The HGTV effect, where it takes him 24 hours to flip a house. Everyone sees the flipping on HGTV and thinks it's easy. What's the biggest misconception people have about house flipping? I feel like there's a disconnect between real life and TV there. I think when people see

what they're doing on TV, it's this glamorous, we're going to update everything. know, where everything is going to be tile and quartz and all high end everything. But the reality is in the market that you're in, it might not support that. You know, lot of HGTV shows are in California. So spending $100,000 on a flip for a multimillion dollar house is fine. Spending $100,000 on a $200,000 house just doesn't really work. The numbers don't make sense. They don't make sense. Yeah. And it's very easy to.

It's very easy to fall in love with the flip and say, oh, I want to do this. I want to make it look like this. But at the end of the day, you need to always be sure that the numbers line up with the goal. The goal, right. And I know we're going to talk about that in a little bit, how you evaluate. But I do have a question for you. Was there a flip that you've ever done that you didn't want to sell, you want to keep it for yourself? Yes. Yes. Are you living there now? No, no. I never.

I never did. I'm still in the house I was in when I started. I've done less work on the house that I live in since I started working on houses. But yeah, actually, was oddly enough, I had transitioned for a couple of years to doing a lot of the work, like scaled back and did a lot of the work myself. And so there was a house we had in a local town of Round Lake, and I just fell in love with that house. We had done so much work and it was a...

At the time, the most significant rehab we had ever done ended up being a full gut. We restructured the layout and the floor plan. it still needed cosmetic things outside. It needed landscaping and everything else. But the house was this really old house and it had so much character and it was in a great spot. And I joked constantly about we should buy this house. A number of people I knew, I was like, you should buy this house.

Bryon Phelps (04:49.582)
I still think about that one all the time. So that one sticks with you. That's the one. I think I remember that. That was a couple years back, right? Maybe three years back. Yeah, 2024. Yeah, I remember that. And I've seen your work. I've seen your work. Impressive. Yeah. Impressive. lot of things at that house. Well, I'm sure. Yeah. Well, if you're reconfiguring floor plans and all of that. How long did that take you? That took me a year, almost exactly a year. And it was

kind of happen stands how it happened because at the time I had my license but I was sort of looking for jobs transitioning back, like scaling back the flips in the position that we were in and I went in there, oddly enough I had my dad to help me out, he had retired and we said, I said, you wanna help me? just gonna clean this out and get it ready for contractors because the contractors we were using were, they were busy on other projects so we said, let's get.

the clean out stuff done so when they come they can get into it. And not a week into that clean out we had a huge, never saw this sort of thing. We had a crawl space that was completely deteriorated and we ended up having to jack the house and do all this are the the unexpected things that come with it. yes. And so then you're scrambling to figure out how are we gonna do this and the answer was I'm gonna do it.

He helped me through that project, which was a lot of fun. Working side by side with your dad. Yeah, absolutely. And we had our sort of crew of contractors that we've had through the years that come in on various parts to support. But we did so much of that. it was a lot of fun. Did he like it? Yeah, I mean, we left that and we did a couple more together. Yeah, yeah. Poor dad retired and you have him back out in the field. that's all right. That's good. Yeah, that's great. That's good father and son bonding for sure.

Let me see here. So let's go to when you're evaluating a flip which kind of ties right into that unexpected having the jack of the house, right? When you're evaluating a flip What numbers matter the most and what are you looking for before you even make an offer? Always want to see it. I always want to see the house. I'm not necessarily looking at the paint I'm not necessarily looking at the finishes a little bit of that always sort of assessing the

Bryon Phelps (07:15.886)
major components, the roof, your plumbing systems, your electrical, do you have to replace your whole electrical system? When it comes to the numbers, the three obvious ones are how much is it going to cost me to buy it? How much is it to cost me to renovate it? And what do I think I can sell it for? If you stop there, you're hoping to break even because there's a lot of carrying costs, insurance, if you're financing it, the interest on your financing.

whatever those financing conditions are, the payments with that. And then of course, the renovations and managing that cash flow. think there's a lot of great products out there that allow people to sort of cash flow through a renovation without having to have all the money necessary to do it. But that's still a big task to manage that, because if you get too in front of it, you can get stopped up pretty quickly. And you have to be careful. mean, I think you really need to know what you're doing. Do you ever do inspections when you're buying a flip?

Like a septic, if someone has a septic, you know, in our field, if you're representing a buyer and there's a septic system and they're like, I want to wave inspections. We're like, don't wave septic. Doing home inspections and now, you know, being an agent and investing in real estate. Right. If I'm working with buyers, always inspect. For a flip. Just in general. Just always do it. Yeah. As someone who has done that amount of work and

has an idea of what I'm looking at walking into a house. The only things I require inspections to close are septic and well, the things that I can't, know, the water's flowing in the house, but maybe there's some other issue. And the septic, I found... Those are big fixes. Not as like a problem, but we found in cases where people have been living there, assuming no problem, that when we have them inspected, you know, half the leach field's caved in and it's just supporting them because it's...

You know, the downsides. exactly. Yeah. So so when those things don't align, that's where it's a big surprise. But those are the hardest to see. Right. Right. So always septic. Always septic. If there's if there's a question, I mean, I'm no expert on basements. You know, sometimes I see cracks and I recognize that it's not necessarily an issue or a structural thing. And if it's if it's big enough that it could potentially affect the price, then we'll call someone in to look at it. But other than that, a gin.

Bryon Phelps (09:43.67)
general home inspection I don't usually consider myself. so well-versed now looking at it. Right, right. But that just goes with your experience level. Right, right. And I think, well, I'll wait till we talk later about some of the things you want to look at, but I think my experience as a home inspector guides what I know. Right. The pitfalls of selling it. Yes. So you're looking at both sides. Yes. Which is good to analyze. Right. If you're going to have any type of return on this. Yeah.

Yeah, mean, it's funny situation when you're selling as a standard home owner and you're selling to a buyer and they can run into things and you can sort of negotiate, I do want to do this, I don't want to do this. But you're under a different microscope when they see that it's owned by a LLC or a business and are assuming it's a flip. And so those things in my mind become sort of non-negotiable. So when the inspector goes through, I don't want them to find a...

Hey, this isn't okay, or this doesn't look like it was done right. It could have been that way when I bought it, but now I feel somewhat of the burden to fix it. Right. So that the reflection of what we're selling is what it should be. Right. Well, that's because you take pride in your work. Right. Yeah. So that that's important. Yeah, that's important. Okay. Risk, the risk in today's Heading in the 2026. Well, we're not heading. We are in it. Right. Yeah. What's the biggest risk flippers need to be aware of?

and what can kill a flip deal.

So just relating back to some of the things we've already talked about, not understanding your carrying costs and not moving quick enough. If you fall in love with that house and you end up spending three, four, five months longer than you anticipated, the market can plateau, it can change. And so the price that you originally had in your numbers that said, hey, this is what makes this success, can change overnight. It can make your listing drag on longer if you're trying to get a certain price.

Bryon Phelps (11:42.368)
And so really it's just moving. You want to try to exit the market and as close to the market you entered as you possibly can. And we all know things can change in three months, four months. Yeah. And I would say, you know, a quick flip is three months in an ideal, you know, where you're just doing some cosmetic things, maybe a couple major repairs. how much money if someone wanted to start floating houses? Yeah. How much money do you think they need to have?

Hand liquid to to go in and buy a house and let's say, you know paint floors kitchen roof a Little bit, you know, it's a little loaded depending on who you get connected with a lot When you build a great relationship with some of these lenders out there that do these fix and flip loans, right? You it decreases the amount you need to be comfortable

I say to be comfortable because it doesn't necessarily decrease it. always want the more you have the better. Right. I would say in the area, you know, for two hundred and fifty thousand dollar houses, you know, having a hundred thousand dollars available to you for purchasing for renovations is probably a a reasonable spot. Yeah. OK. Yeah. All right. And that very, you know, obviously a million a million factors can.

can come into play there. start ripping things out and you're like, look at that. Yes. Have you ever over improved a flip that maybe you didn't get your money back on? Or have you just been successful throughout your entire flipping career? No, no. I the first flip is probably one of the ones I regret the most, which is odd. But we bought a great house.

a house that was in a market that we usually don't buy houses in. You the distressed houses don't come out of these higher end markets. Usually I don't want to say they don't exist. They just the houses we would look at didn't typically come from those types of markets. Right. And so we had a high end one and we didn't really understand what those numbers look like or what our buyer pool looked like. And we could have turned around. was a. The situation, I don't exactly recall the situation, it was a

Bryon Phelps (14:03.278)
Someone living there by themselves in this big four bedroom colonial house. And it was probably in the same condition as when they bought it, when it was built. So dated, you know, it was not horribly outdated, but not modern that people would look for potentially in that neighborhood or market. And we tried to do those updates. in hindsight, we probably broke. We didn't break even. We made money on it.

But the way I look at it in my mind now is if we had just sold it as it was at a discount for the renovations it needed, we would have done as well as we did and probably hit a much larger audience that would have been able to afford that than what we did, which is we did all the updates and then listed it at a higher price and it ended up taking a lot longer than we expected to sell. How was the market then? How long ago was that?

That was in 2016 actually. So we're going back almost 10 years now. I mean the market was good then. I remember we got a lot of traction but like I said I didn't anticipate that sort of for the area it was in the cost of that house was such a small pool. And yeah it just didn't really. So really I mean if someone calls you and says Bryon I want to get into slipping.

Can you help me find something you're well-versed, you're gonna know what to look at? I mean, the buyer needs to understand and be educated on the area, what they think they can get, not, look at this, I can put all this money in and I know I'm gonna get X. We know that's really not realistic. You're looking at it for the area that it's in and what that area can sustain, Yeah. Absolutely. So it's a lot.

It's a lot of probably research that you had to start and I'm sure there were things that you learned as yeah along that that you went along the way. Yep. Is there anything there that I might have missed? With with that would absolutely kill a deal that would kill a flip deal. I think the two biggest ones are not planning your carrying costs long enough. And over renovating. Okay, they're both financial. Yeah.

Bryon Phelps (16:24.098)
But in the scenario of flipping, that is a bottleneck that can trap you. Because if you don't have the right money to lead the next thing, you can't keep the money flowing. Or if you don't have enough to pay that next thing, puts a stop on that contract. puts a stop on everything. And once you spend over on the renovation that you may or may not have needed to do, now you're limiting the money you might have available for.

Those carrying costs exactly. Yeah. So someone going out to do their first flip really should you suggest that they work with someone that like yourself that knows what they're doing to kind of guide them the first time through? Yeah, absolutely. I think I don't think partnering with someone could be understated and that doesn't have to be financially. It doesn't have to be. We had guides that had been doing it for years in the system that we were doing it in. And so there was a lot of

there's a lot of guidance that was happening. Which is good. is excellent because there are those little things always around. mean, been in real estate for however many years and any agent can tell you that every single deal is different. Yes. And it's no different with flipping. Every house is a new surprise, a new set of challenges. Surprise. Yeah. Oh, you got to love those. Hopefully good surprises. All right, we're going to do a speed round. OK. You ready? Yeah. Hardwood or LVP floors for flips. LVP.

Products are really great these days for turnaround time. I would say LVP. If you have hardwood and can refinish them, do it every time. Okay, all right. So don't rip up the hardwood and put in... Don't rip them up. Okay, all right. if they're not quite savable or in your budget, LVP for now is fine, yeah. Paint it white or add character? Limited character. I used to go white, neutrals.

I just like giving the place a little more life these days, but it's not wild colors. They're somewhat muted tones. Yes. Okay. All right. Buy the ugliest house or the outdated one? Yes. Yes. I think both. some cases they're the same, in some cases they aren't. One of the worst houses I had ever walked into was the nicest house from the outside.

Bryon Phelps (18:46.72)
It had everything updated, the windows, the roof, the siding. said, what? This is great. And I went inside and there weren't stairs to the basement. And so that's a...

That was a big renovation, but not the ugliest house, but in a lot of cases they're the same. Okay, all right. So, all right, that makes sense. Where do you splurge? Where do you splurge at when you're doing a flip? The kitchens and bathrooms. Okay. It's always, if I could do tile, I like to do tile. I think it shows really well. It makes it... On the floors or backsplash kitchen or both?

So in the kitchen, the splurge is the backsplash. If I can do the backsplash, I've gotten creative with backsplashes. I really like a tile backsplash. And the counters, I think the counters are an easy place that when you're renovating your own house seems very expensive. But I think when you're doing a complete kitchen rehab, the added cost in counters can really swing the wow factor when you walk into a house. That's not where you're gonna scale back on money. Right. It's on the counters. Right.

What color typical of a kitchen? So, you know, cabinets, you white? On flips, pretty much do white. We have tested the waters a couple of times with some two-tone things, maybe a different island. But when you're flipping, as much as you'd like to put character, I think it's important that you're reaching the widest audience and staying in line with selling it as fast as you can. Right. And that can go real, you know.

People can put your own pots of color in too. Exactly. People can paint the kitchen whatever color they want if the cabinets are white. Right. But if you use certain tones of wood or certain tones of colors of cabinets that limits them. and might not be everyone's. So what about countertops, granite, quartz, if you're doing a white, you know, I mean, we all know there's some beautiful pieces of granite and quartz out there. Yes. Are you staying, you know, with with like a white gray not

Bryon Phelps (20:45.358)
crazy, the crazy granite, you know, colors and so you want something. Yep, I keep it. I like white. mean, my experience, I have granite counters in my own kitchen, but they're, you know, they the speckled that I feel like they're sometimes hard to see if they're clean. Right. I I like a clean, you know, white with some, you know, splashes of gray and it are fine. Definitely been updating to quartz all around, even in rental properties. I'll put that in there. You can get.

better rent sometimes, it's durable. So you would choose, we're going down a rabbit hole now, you would choose quartz over granite. Isn't granite, well, not is it, granite can hold the heat. It can. If you put a hot pot down, it's true. you're not gonna burn granite, That's right, but if you put a hot pot down on quartz, you're done. That is true. I get a lot cleaner look with the quartz. Okay. It does, yeah. I mean, it's hard to be as durable as a natural stone.

But quartz is... You just have to be careful. I love the quartz, Yeah, it is a nice look. All right, fun question time. What's the craziest or most unexpected thing you've ever found in a property?

Bryon Phelps (21:59.736)
So nothing that horribly crazy. We've had everything from cars to tools to old toys that you would forget existed since your own childhood. I've seen all of that. But the kind of craziest thing was a house. It was two houses on one lot and it was a hoarding situation. And you went in and I saw a lot of it. There looked to be a lot of clutter and I had a giant budget for cleaning that house out.

I mean, I think our budget to clean the house out was about $12,000. I mean, it was a lot of stuff. The basement was full. The upstairs was full. There was paths through the house. And when we closed on the house and went in and started looking at what was there, it wasn't junk. It was hardly any junk. And so we ended up opening it up and we sold everything and we made money cleaning it out. It took us about two weeks to clean it out as opposed to, you know, maybe the half a week or week it would have had to be.

someone to come in and do it, but there were instruments in there. think there was two pianos buried in there. There was basically a whole basement worth of sort of catering equipment that was brand new in boxes. Really? There was all sorts of old technology that we found some contacts in the area that try to revive old technology for sort of passion projects. you ever find cash in a house buried in a wall or in an attic?

Or in that or in that typical situation. No, we've never found the we occasionally find the crusty dollar bill that's in the wall or something like that, never never the never hit the jackpot. I mean, I can't tell you how many saves we safes we've opened up that are left behind. And usually it's like a silicone packet or, you know, it's like it was bought and never used. Or it's like their tax documents that they're saving on, you know, saving is never anything that opens you like. Right. Yes. Yeah, exactly.

Exactly. that's great. I love those stories. Yeah. I hearing those stories. So wrapping up in closing, if someone listening is thinking about flipping a house in 2026, what kind of person should actually consider doing this and who probably shouldn't consider doing it? That's a great question. It's a whole mix of things. think, you know, people who are good at project management would be great at doing it.

Bryon Phelps (24:18.776)
people who aren't afraid to get their hands dirty. Even houses where we've had full contractors in there, I always find that there's something I'm doing to finish it or something that we find after the fact. So kind of a mix of skills, but definitely the drive to push it across the finish line. If you're thinking this would be a fun thing in your mind watching HGTV, that's gonna be the house that's costing you tax dollars and interest rates two years later that's sitting there not getting approved.

So if you're eager to do it and driven to do it and have some of those skill sets and aren't afraid to get your hands dirty, then that's probably the perfect person to do it. And probably highly organized, right? Yes. If they're managing everything. Yes. And knows how to budget. That's right. stay on budget. That's perfect. Yes. All right. And having that slush fund on the side just in case those unexpected, yeah, the house has to be jacked. That's surprises come up. Right. All right. Is there anything that we're missing, Bryon, that our listeners should know about?

flipping houses with Bryon Phelps. I think that covers, you know, at the high level, not looking at a particular house. think that's a very good overview of what you can expect, what you can run into. You know, there's a million spreadsheets people can find for calculating whether it's a good deal or not. And that's objective to what you're looking for achieving in that. You know, are you looking for experience? You're looking to make the most money. There's a lot of a lot of things to figure out.

There's a lot of tools out there that people can find and a lot of good resources. one of them is you. Yeah, absolutely. You want to tell our listeners how they can get a hold of you? Sure. Call or text me at 518-441-8186. All right. Wonderful. You guys, if you're interested in flipping, give Bryon a call. I promise you'll be in great hands. And thank you for tuning in for another episode of Real Talk with Sterling Real Estate Group.