Doing flips: Kristi Charles turns foreclosed houses into dream homes
Kristi Charles stands in front of a foreclosed home she recently bought, fixed-up, and sold near Dexter.
Angela J. Cesere | AnnArbor.com
The property manager and former real estate agent buys bruised and abandoned foreclosed houses for a song, treasure hunts at local resale stores for many of the building materials, adds sweat equity (and the sweat equity of her father) and turns around and sells them at enough of a profit to start another house.
A house she is closing northwest of Dexter this week is her third so-called “flip” in a year. Her latest project on Huron River Drive is one of a handful of basic, three-bedroom, one-bath ranches built in the 1960s that together are known as Eckville, after the farmer who developed the small neighborhood, Charles said.
She passed the house daily on her way to work, and became interested when she heard it was going through foreclosure and would be on the market.
The interior was covered in dated wallpaper (including Care Bear embossed paper in one of the small bedrooms that had been painted over), there was a large hole in the living ceiling and the windows were broken and boarded.
But the worst part was the smell, Charles said. Utilities had been turned off when the house went into foreclosure, disabling the sump pump and flooding the basement with water.
“It wasn’t so much what it looked like, it was what it smelled like,” Charles said. “It had been vacant for more than a year and it had that old closed up smell.”
But the house was structurally sound, there was a new roof and the water damage in the basement could be cleaned up.
“It’s a very straight forward house, structurally it was good and it had a great location,” Charles said, with a rural setting and direct access across Huron River Drive to Hudson Mills Metro Park.
There were a half dozen or so bidders on the house, Charles said, and she paid slightly over the $35,000 asking price last July, and closed the deal in September.
She painted the aluminum siding a slate blue (matching the color of her sneakers) to set it apart from the white exteriors of the other houses.
She combed area resale stores and found:
• The granite bathroom vanity top at The Sharehouse on Jackson Road in Ann Arbor.
• An espresso-stained vanity at Restore, the Habitat for Humanity resale store on Aprill Drive in Ann Arbor. Cost for the two pieces: $90.
• A whirlpool bathtub, a luxury feature not found in most basic three-bedroom ranches, at ReStore. Cost: $75.
• Maple flooring throughout the house from ReStore. Knot holes and worm holes give the floor a rich texture, although they can be considered defects by purists. Cost: $2 a square foot, with the total costing less than $1,000. • She found the front door in Lansing for $99.
Many of the other materials were deeply discounted at retail stores, such as the ceramic tile for the bath she purchased from Home Depot and a roll of carpeting at Lowe’s for $100 that covered the three small bedrooms. All of the landscaping, including scrubs and plants, were purchased from Home Deport at 80 percent off at the end of the season last year.
“It’s really about shopping right, if you’re going to do this and still have a profit margin.”
Charles was able to re-use the blonde maple kitchen cabinets from another house. Not everything was a super-deal. The house needed new windows - the old aluminum ones were falling apart. Charles bought new windows and added a touch of style with the Prairie-style grillwork.
“They made all the difference,” Charles said. She also opened a back window into a sliding door for a better view of the open land and access to the backyard.
She had to replace the old, rusty furnace, did some replumbing and bought new stainless steel kitchen appliances.
Charles did much of the work herself, from stripping the wallpaper, painting, patching the ceiling, trim work, laying the tile and more. She hired a handyman to do the rest.
“I knew it would make someone a great little starter home,” Charles said. “I knew there would be a market for it when I was done.”
And she was right. Matt and Shari Emhoff didn’t expect to be able to buy a house. “We didn’t think we had enough money,” Matt said. But a USDA Rural Development’s Single Family Housing Guaranteed Loan program made it possible to buy the $109,000 house, he said.
It’s the perfect house for the couple. It has the hardwood floors, granite counter tops and Jacuzzi that Shari likes and its location across from the park makes Matt, a kayaker, happy.
“But what’s most important to me is that I don’t have to worry about it breaking down in two years. There’s a new roof, new furnace and new hot water heater. It’s in great condition,” he said.
When she’s done, Charles said she tries to sell the houses quickly.
“I try to hit just under the market,” she said. “And the homeowner will move in with a little equity, too.”
While the term flip has come to carry some dark meaning in the real estate business, Charles says that exactly what she does. A number of parties benefit, she said.
“It goes back on the tax rolls, property values in the area go up and the owner has a great starter home that’s move-in ready for $109,000.”
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Comments
aa_real
Fri, Apr 1, 2011 : 2:47 a.m.
As long as you know how to remodel properly and take the time to do it right, you are doing us all a favor while earning a living.
Rob Pollard
Fri, Apr 1, 2011 : 12:54 a.m.
I applaud Kristi for her hard work and shrewd investment. The more people we have like her who turn broken-down foreclosed houses into tidy homes that can be sold, the better. However, I do have a real concern with one aspect of the story: "Matt and Shari Emhoff didn't expect to be able to buy a house. "We didn't think we had enough money," Matt said. But a USDA Rural Development's Single Family Housing Guaranteed Loan program made it possible to buy the $109,000 house, he said." I wish Matt and Shari well, but this sounds worrisome. A big part of the reason we got into this mess is people taking out loans that they couldn't afford. I have no idea of Matt and Shari's income, but the USDA program typically does not require ANY downpayment. If you can't scrape up even enough for an FHA loan (3.5%, i.e., about $4000), it's very likely you are one life hiccup away from missing mortgage payments. We can't get into a cycle of foreclosed home-fix up-foreclosed home. Again, I wish everyone here well, but this casts a cloud over this story. For more about the USDA loan program, see here, <a href="http://www.thespectrum.com/article/20110305/REAL%20ESTATE/103050335" rel='nofollow'>http://www.thespectrum.com/article/20110305/REAL%20ESTATE/103050335</a>
Macabre Sunset
Thu, Mar 31, 2011 : 11:41 p.m.
For every Kristi who takes the time to analyze the market and pick the right house and make the right improvements, there are a hundred who watch late-night television infomercials and grab the first house they see and have no idea what to do. It's not easy. Doing this wrong was what led (along with the government's misuse of FMAE and FMAC) to the real-estate bubble. So congrats. This is a vital service to the community when done properly.
ReStore
Thu, Mar 31, 2011 : 7:59 p.m.
Please change the link for the ReStore. For online information about our store, please see our website: <a href="http://www.h4h.org/restore/" rel='nofollow'>http://www.h4h.org/restore/</a> Thank you! The Habitat for Humanity of Huron Valley ReStore is a home improvement warehouse that sells new and gently used building materials, furniture, appliances, and all of the products that you need to update, maintain, and furnish your space. We are open seven days a week — Monday through Friday 10am-6pm, and Saturday and Sunday 10am – 4pm. The products are sold at an amazing 50-75% off retail price and are donated by local individuals and corporations, providing them with a tax-deduction and the opportunity to support the environment and their community. Store Phone: (734) 822-1530 Donations: (734) 323-7028
Bertha Venation
Thu, Mar 31, 2011 : 7:33 p.m.
Great job, Kristi! I wish more people were into flipping. It looks difficult from what I've seen on TV, i.e., deadlines, budgets, unexpected disasters uncovered, etc.
Lynn Liston
Thu, Mar 31, 2011 : 7:14 p.m.
Kristi is really an inspiring entrepreneur. With her own labor, she has taken a home left behind by someone and turned it into a dream and an opportunity for a young family to own their own home. It's the ultimate recycling goal, to take something of no apparent value and turn it into a treasure. Far from being a greedy gravedancer, in the American tradition, Kristi has made a fair and reasonable profit working hard and providing a valued produce at a fair market value. I wish more of our trendy 'developers' would consider it part of their mission to create decent, affordable living spaces for ordinary folks who can't afford 'tract mansions'. You go, girl!
andys
Thu, Mar 31, 2011 : 4:58 p.m.
I read this and thought this women was inspirational. She's visionary, smart, hard working, resourceful, and innovative. Only in Ann Arbor is she to be scorned for her efforts. If working for a living, making a reasonable return for your efforts and investment is "greedy", then we we should all just quit are jobs, who are we to greedily demand compensation for our services, "like money changers in a temple". Or did the hash bash start today?
Dennis
Thu, Mar 31, 2011 : 2:42 p.m.
It can be called wrong because at the end of the day, when the profit is taken, someone loses their home, car, self-respect. It's called greed but then I wouldn't expect too many people to understand that. The last time I looked Greed was one of the seven deadly sins. I guess I wouldn't be so upset if people, and I'm not talking about Kristi because I don't know her, would stop lying to themselves by claiming they are Christians. After all if was the "Money-Changers" that Jesus drove from the Temple. I fully understand the "American Way" but at the expense of the "American Dream"? What would Jesus do? Flip that house.
ThaKillaBee
Thu, Mar 31, 2011 : 5:27 p.m.
It's not like she was actively pushing the people out. People who flip houses buy them after the process has already happened. They have nothing to do with whether or not people keep the house in the first place.
grye
Thu, Mar 31, 2011 : 4:52 p.m.
What's even better, Dennis didn't even read the comment that is 2 above his. Explains what happened to the other owner. No sympathy from me.
tdw
Thu, Mar 31, 2011 : 4:29 p.m.
I like to eat and have a roof over my head.Does that make me greedy ? I'll stop making money if you'll take me under your wing
Moscow On The Huron
Thu, Mar 31, 2011 : 3:55 p.m.
Dennis, what do you do for a living? Do you work for a company that sells a product or service? Why do they charge people for it like a bunch of money changers in a temple? They should just give it away. Why are they so greedy? Who built your house? Did they charge for building it like a bunch of money changers in the temple? Why didn't they build it for free and give it away? Why were they so greedy? Who built your car? Did they charge for building it like a bunch of money changers in the temple? Why didn't they build it for free and give it away? Why were they so greedy? Who grew the food you eat? Did they charge for growing it? Who transported it to the store? Did they charge for transporting it? Why are they like a bunch of money changers in the temple? Why didn't they grow and transport it for free and give it away? Why were they so greedy? Is it Christian to make a promise and then break it? Whey you borrow money for a home, you promise to pay it back, with the understanding that if you can't the lender may have the house. It was a free-will contract entered into by both parties. To do otherwise would be to break that promise.
grye
Thu, Mar 31, 2011 : 3:35 p.m.
Why didn't you buy it, fix it back to livable conditions, and then give it away? The house may have gone into forclosure for many reasons but that is water under the bridge. Someone took a little initiative and profitted from it. Sounds like sincere jealousy to me. Maybe you should try to be a little more innovative. Go Kristi!
Moscow On The Huron
Thu, Mar 31, 2011 : 2:39 p.m.
Wow! Smart, hard-working AND cute, too!
beatrice
Thu, Mar 31, 2011 : 2:34 p.m.
I happen to know the story behind the foreclosure. The "original owners" bought a ginormous RV probably with money from re-financing this home, and then walked away. As a neighbor, I appreciate the work put into this home for the good of our community! This house was an eyesore, and now it gives the rest of the community some inspiration to put towards their own home! Knowing I can buy upgrades at a decent price is really making me think of what I can do! Thanks Kristi- great job!
David
Fri, Apr 8, 2011 : 12:08 p.m.
It doesn't matter Dennis, if they don't pay the bank takes it plain and simple. They bank may be at fault but so are many others who bought homes they knew they couldn't afford. When the bank forecloses and they move out the story is over. The bank is going to get there money and regardless of what you think in a foreclosure the bank is losing money so why shouldn't someone who can make an investment and put in some elbow grease and turn the property around and make it into something another person can use? Many people want a home they can move right into, she is doing this for them, shouldn't she make a little bit of money from the deal? Nobody said the people were bad people and didn't deserve what happened. The banks did all kinds of crazy things to get people into mortgages they couldn't afford, but the people knew they couldn't afford them as well so blame can spread around. It doesn't make them bad people just people who either were enticed into a dream they couldn't afford or lost their income due to loss of employment. I feel bad for them, but we can't just "give" them their home. If we do that they hell give me my home as well. I am struggling financially just like everyone else I could use a free house as well. But I also understand that if I don't make my payments, the bank takes my house end of story that's just how it works.
Dennis
Thu, Mar 31, 2011 : 2:46 p.m.
I'm glad you know them but do you know everything about them? Did they "walk away" because there was no options left...I don't know do you? I do know that this is not true with every case. Before you judge walk a mile in their shoes. I hope that it never happens to you or your loved ones because it is devastating.
Dennis
Thu, Mar 31, 2011 : 2:12 p.m.
And what would be wrong with helping keep the Original Owner in the house. Do we continue to let banker's and entrepreneurs continue to "flip" houses. For the most part it is not the economy is not the "Original Owners" fault. It's the lack of manufacturing jobs, bad banking practices (including the banks unwillingness to work through mortgage problems). What if we had a foreclosure sale and nobody came? Then I guess the banker's would have to work with owner's to solve the mortgage problem. It's ironic that we can build homes in third-world for free and call it "freeloading" when we are asked to help our own in our own neighborhoods, States, Country. Try getting a mortgage modification.
Stephanie
Thu, Mar 31, 2011 : 6:21 p.m.
At this point (when she bought it) the previous owners are already LONG gone and have absolutely nothing to do with her or this story! I mean really. God knows there are problems with the housing market but whatever happened with these people and their houses is hardly her fault and she should not be blamed for it in any way shape or form. I'm not saying its the owners fault either. We all know plenty of people have lost or are losing their homes that shouldn't be but that's a whole other topic of discussion.
Moscow On The Huron
Thu, Mar 31, 2011 : 2:38 p.m.
"And what would be wrong with helping keep the Original Owner in the house." And who will pay for that? Do I get somebody to pay for my house, too? And why should anybody have to pay for their house? Shouldn't we all get a free one?
towny
Thu, Mar 31, 2011 : 12:51 p.m.
Good job girl. Gravedancing or profiteering no way. Some of the foreclosed homes are sold with a owner occupant stipulation which will exclude so called flippers and most are sold to all bidders. This is the American Way ( Buy Low and Sell High) for a profit how could any one say this is wrong. It happens everywhere and involves Automobiles, Homes, even at the grocery store they sell products for a profit to you. Most products you buy in everyday life someone is making a profit. Everyone had a chance to put in a offer on this house. Kristi I take my hat off to you for your hard work and willingness to take a gamble. She could of got burned on this house that does happen often when unforseen problems and costs come up on these unknown propertys.
murphthesurf
Thu, Mar 31, 2011 : 12:11 p.m.
i see nothing wrong with what shes doing! after all whats the alternative? this seems like a win win situation for all involved! the banks happy ,the new owners happy the sellers happy! that only leaves the poor guy who lost it and maybe it helped him too ? who says lifes always fair!!
applehazar
Thu, Mar 31, 2011 : 12:03 p.m.
Great job Kristi. Time and hard work pays off.
tdw
Thu, Mar 31, 2011 : 11:59 a.m.
Funny.As soon as I saw the headline I was wondering how many people would accuse her of blood sucking.The house was already foreclosed and empty.I guess some would rather it be empty and falling apart rather than pumping some money into the economy
skigrl50
Thu, Mar 31, 2011 : 11:53 a.m.
Well sure Kristi made a profit, that is what she is doing for a living... working, and working hard at a job! Really folks, give her some credit. The bank will let a repo sit forever, they've written off their loss...
81wolverine
Thu, Mar 31, 2011 : 11:34 a.m.
I disagree with those who call this "gravedancing" or "profiteering". What's the alternative for the house? No one is going to buy it in that condition. It was unsellable in it's former state. Is that doing anyone any good? Hardly. At least now, a young couple can afford to move in, adding to the neighborhood instead of having an eyesore sitting there. The issue is that the U.S. is going to have a huge number of these kind of bad-condition houses over the next 10-20 years, and entrepreneurs like Charles are doing society a service by fixing them up.
Ally
Thu, Mar 31, 2011 : 11:31 a.m.
For all the nay sayers. Would you rather the house sit empty and die, be demolished with tax dollars and then sold at auction to a builder who will build a new house on the site and gain an even bigger profit? You cant get a mortgage on a home that was in the condition this one was in when it sold. So who do you suggest buys it? Someone who sees the amazing property and tears the house down an adds on till it is worth $300,000 thus eliminating the opportunity for affordable housing. Yes lets shove all the people who mow your yards and cook your food and clean your bathrooms at work to one corner of the county.
Ally
Thu, Mar 31, 2011 : 11:32 a.m.
was to say OR adds on not AN adds on. Opps :)
Dennis
Thu, Mar 31, 2011 : 11:19 a.m.
Regardless of the "spin" it's still "GraveDancing".
tdw
Thu, Mar 31, 2011 : 12:29 p.m.
So what do you suggest ? let it rot ?
Huron74
Thu, Mar 31, 2011 : 11:01 a.m.
Nothing a admirable here. Simply a profiteer picking the meat from the bones of the dispossessed. Boo hiss.
David
Fri, Apr 8, 2011 : 4:45 a.m.
Get off your soapbox. She put her money up, put the hard work into it and turns eyesores that bring down neighborhoods and property values down. It would be better to leave it empty to rot and decay to the point that it is condemned and then demolished? Who wins in that situation HURON74?? They couldn't afford to keep the house they left it (abandoned it) what has she done that is so wrong??
Jimmy McNulty
Thu, Mar 31, 2011 : 11:39 p.m.
And what do you propose would be a better outcome than someone taking a chance and putting hard work and money into the place?
ThaKillaBee
Thu, Mar 31, 2011 : 5:25 p.m.
You're right. Best to let the house sit empty.
RxDx
Thu, Mar 31, 2011 : 11:23 a.m.
Yeah, well it could have been me profiting. But that's not the major issue here. Not letting a house decay is a way to preserve resources. Keeping things running and maintaining them has a very high environmental return. Investing in a neighborhood and doing things to keep it viable is good social practice. When I drove past the house all I saw was time, resources, and raw materials that were going to waste. If you make a little money in the deal - good for you. There is profiteering from good honest endeavor, and then there is profiteering on the grand scale that we are currently seeing in the United States, like Rick Snyder's budget of: let's tax the elderly and the poor and cut school funding, so that businesses don't have to pay that tax on their profits.
RxDx
Thu, Mar 31, 2011 : 10:43 a.m.
Now I'm feeling a little jealous, I also drove past that house all the time and thought about flipping it. Nice job Kristi. Also nice to know that Matt and Shari bought it. Congrats to you folks.