SACRAMENTO - Even with the dramatic rise in home prices settling down, a veteran house flipper insists there's still money to be made buying real estate for a quick turn.
"We're back to a normal market and I am so happy," said Roseville real estate broker Scott Williams, who has flipped about 130 houses in the past decade.
Williams is pleased he's no longer forced to compete with multiple buyers bidding up prices on project houses he's interested in, allowing him to pick up properties with more profit potential.
Williams shared some of his secrets during a tour of two of his "flipperhomes.
He picked up a three-bedroom, two-bath house at 6132 Elder Creek Road in early December for $80,000 cash.
Williams saved money buying it directly from the owners but said he also buys properties through traditional listings on the Metrolist multiple listing service. Bank-owned sales are increasingly rare, he said.
The Elder Creek house sits on nearly a half acre but needed extensive work.
"It hadn't been updated since it was built in the 1930's," Williams said.
Williams budgeted $35,000 for improvements but ended up spending $50,000 because of extensive dry rot and a few surprises -- including adobe construction where he expected to find plaster walls.
The budget included new windows, blinds and paint inside and out.
Williams spent $5,000 to rebuild a garage that could have just as easily been torn down.
"A two-car garage is worth $15,000 in resale, versus having no garage," he said.
The biggest chunk of money -- $10,000 -- went into the kitchen.
"We used to go cheap in the kitchen," Williams said. "But the kitchen's the showplace of the house."
As a rule, Williams said, he installs stainless steel appliances and granite counter tops. "Granite only costs about 50 percent more than tile and people really like it."
Williams also put in new tubs and tile surrounds in both bathrooms, and used tile instead of vinyl on the floors in the kitchen and bathroom.
Cheap floors make a bad first impression, he said. "I use upgraded carpet in the bedrooms and a quality laminate in the living areas."
After spending a total of $130,000 to buy and improve the house, Williams was listing it for $180,000 and had just opened it for showings.
Later in the day at a half-plex in south Natomas that he bought in early January, Williams met general contractor Rick Hareland and electrician Mike Ott, two of the regular crew members who work for him on flippers.
The three-bedroom, two-bath home was built in 1981 and the three agreed it needed little more than basic cosmetic improvements.
Within a half hour, the team had come up with a budget of $20,000 and a project time frame of about three weeks.
"I think market value on this property is $170,000," Williams said.
He bought the half-plex for $120,000 and with anticipated selling costs of about four percent, is hoping for a profit of just over $23,000.
Williams is still active as a real estate broker, but said he's currently making more money doing flips.
By the end of the day, he received a full-price, all-cash offer on the Elder Creek house with escrow to close in two weeks. After selling costs, Williams expects to make nearly $43,000 for the property that he had owned for barely two months.