Flipping Foreclosed Homes for Fast Cash with Spike TV's 'Flip Men'

Aaron Broverman

Filed under: Buyer Beware, Entrepreneurship, House & Home, Investing, Real Estate, Television, Auctions, Small Business, Mortgages, Your Home

The bank trustee arrives on the courthouse steps and throws out an opening bid for what you hope was that abandoned write-off of a property you drove by only hours, or maybe minutes, earlier. There's no telling what's inside, from bio-hazards or meth labs to grow-ops or squatters -- you never know what you're going to get.

This is a reality Utah's Mike Baird and Doug Clark face everyday, buying foreclosed homes sight-unseen, rehabbing them to their former livable glory and then hopefully flipping them for a hefty profit. As the stars of Spike TV's newest show Flip Men they have a combined 18 years of experience between them, but at one time flipping real estate was the furthest thing from their minds.

"Prior to meeting Mike, I had only purchased the house I live in. I knew nothing about real estate. I worked as a commercial airline pilot, so absolutely the farthest thing from real estate. The only thing I knew was I'd fly over it," says Clark.

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Mike Baird had been around real estate all his life, but despite his knowledge, he was still in way over his head.

"I didn't have any money, but I convinced somebody that I'm a hard worker, I understand value and that I'd actually looked at properties, so I got them to put up some money for me on my very first deal -- it was an absolute mess."

But after starting small, doing three homes in the first year, a mutual friend introduced Baird to Clark and the two had a synergy that pushed Baird's business into the stratosphere. "Doug is an absolute intellect. He graduated from the University of Utah summa cum laude in economics. He's very bright, he was a hard worker and we just hit it off.From a personality standpoint it worked, from a work ethic standpoint the partnership worked and it was from that point that we started working together and knocking these properties out."

You can too, as the two of them, formerly known as The Foreclosure Boys, takes you through their three-step process for spinning condemned properties into gold.

"Really, it's my belief that anyone can be taught to do this." Now, keep in mind that it's a very, very tight group of people, most of them are not out talking about the business. We are a very, very rare breed to be willing to do that," says Clark. "I met Mike at a foreclosure auction and he taught me what to look for, how to find the information on what homes are coming up, which is the biggest hurdle, how to research homes as far as the titles very quickly to see if it's a first mortgage or second mortgage that your buying and then learn from him, which homes make sense and the most important thing that Mike taught me was determining value. Once you arm someone with that knowledge, really anyone can start on a very, very small level."

Acquisition

The number one question Clark and Baird get asked multiple times a day is "Where do you get your list?"

"This is how it works, the banks hire local attorneys called trustees. Those trustees have the power of sale, so they can take that property and conduct this foreclosure sale," says Clark. "Well they typically, not all the time, but they typically put them on their website, so we're checking sometimes 20 attorney's websites that say these are the sales on certain days and we're putting those on our master list and keeping track."

Half of them get postponed anyway, so research like this can get very cumbersome, but googling websites means it can't start off any easier -- just stay away from the ones that charge you for the privilege. "None of those are within a year's worth of accurate information. They're old, old data, but what we are talking about is current attorneys in your area that are hired by the banks to sell these properties. If you go to those, they'll tell you the time, date and place. Then, you can go to the auction and start getting comfortable.".

The auction itself is very similar to those seen on Storage Wars or Auction Hunters, according to Baird. "This is a very similar concept, but we're dealing with so much more money and the stakes are that much higher. We're not dealing with storage units, we're dealing with homes and really, really big expensive problems."

Rehabilitation and Management

Speaking of expensive problems, one episode has the Flip Men battling a tree growing in the middle of a living room, but even that didn't turn the property into a write-off. "We're not scared to take on any project if the price is right," says Clark. "In the case of the house with the tree, that was purchased around the $30,000 mark, so it just made sense. We didn't know it had a tree in it, but we bought it right, expected the likelihood of problems, certainly encountered those problems and more, but because we bought it right, we were able to make that happen."

The Flip Men have bought and sold close to 700 properties and there are question marks along the way every time. "These budgets are goals. We set them, but we go over them. This is real. This is called life. This is when you buy a house and you say, 'I think it's going to take me $20,000 to get it done and it ends up taking $32,000," says Baird.

He still says it's important to set original budgets because you have a framework to work within, that way, when you go over your budget you'll know why. "You can at least look back at that property and say, "Here's why we went over, here's what we've learned for it and in the future, here's what I'm going to do."

With the help of their employees and several licensed contractors, the two are able to get the renovations done. However, when they first started, it was about learning by doing. "It's much simpler than people think," says Baird it seems overwhelming at first, before you learn the tricks of the trade, but building is very logical.and it's just getting in, asking a few questions and trying a few times and someone could definitely do a large majority of the work on most houses themselves and it takes very little education or experience in construction to get it done."

Closing and Liquidation

When you make your living flipping houses, it really helps when your partner is a licensed real estate agent. "I don't represent a buyer and seller in the traditional sense," says Baird. "I do represent ourselves in listing our properties and selling our own portfolio. We list all our homes on the multiple-listing service, get agents to take a look and stage our own homes."

Gone are the trappings of a construction site, replaced by real furniture and the homey feel of a model-home and if you're into it, a full tour of the property online or in-person. "Our philosophy is, if the showability is there and it's well priced in this marketplace and we do all the little things to make sure it's looking good and really beating the competition, that these homes will sell and they do."

"It's our belief that every house has a story and foreclosure affects everybody -- some directly and some indirectly, Whether you have a mortgage or your job is the greatest ever, your property value is affected," says Clark This is the time to acquire real estate. It's good for communities, it's good for individuals and we want people to see the show, wake-up and say, 'Yes, I can do this. Despite what I see on the news, despite what I read about the economy -- this is the time to get involved."

Flip Men premieres Tuesday, Oct. 25 at 10:30 p.m./9:30 p.m. CEN on SpikeTV.