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'Flipping' houses for profit started long before TV show

Norwalk Reflector Staff • Oct 28, 2015 at 3:52 PM

The A&E TV show "Flip This House" may lead people to think that buying a house to renovate it and sell it later for profit is a new phenomenon.

Norwalk resident Jack Twaddle started doing something similar about 60 years ago. He began a partnership decades ago with his brother-in-law, Bob Herner, and Herner's brother, Jack.

"We've got one (now). We're debating what to do with it," Twaddle said.

One attorney even warned the trio from creating a partnership.

"It's not going to work. Partnerships don't work," Twaddle recalled about the lawyer's words.

The 76-year-old Norwalk man has no background in real estate he worked 11 years as a heavy equipment operator. He retired after another 37 years with the Huron County Highway Department.

He bought his first house for about $3,500 at age 17 on "all credit," with his father signing for him.

Twaddle kept the home for three to four years and added a roof. He also had some masonry work done in the basement.

The house, which had been leaning severely to the left, was straightened with a new foundation and using "come-alongs," said Twaddle's friend, Norwalk Realtor John Soisson.

"They were able to build an incredible amount of equity over the years," Soisson said about Twaddle and the Herners.

A woman who rented the home while Twaddle was in the Army wanted a bathroom in it.

"It didn't have a bathroom when I bought it. It didn't have a bathroom when I sold it," Twaddle said. "She couldn't afford to make it what she wanted."

So the two made a deal and the woman bought the house from Twaddle.

Since selling that first home, he and his partners have bought about 20 houses, some at sheriff's sales. Others were admittedly "run down."

But Twaddle never lived in any of them. He sees real estate investment as a hobby.

"We just thought it was a good thing to do. We didn't have any intentions," he recalled. "If we could help somebody with (getting) a house, we would."

Soisson said the "flipping houses" idea has been around for many years.

"It's a fairly contemporary term," he explained. "I think TV has helped the term. It's an old concept.

"Real estate has been a great investment since this country was established," the Realtor added.

What Soisson has seen most commonly is skilled laborers buying "a distressed home," making some improvements themselves and then putting the house back on the market.

"The margin goes away when you pay to have it done," he said.

The Realtor estimated most people should reasonably expect to make as much as $20,000 on "flipping" a local home valued between $100,000 and $120,000. Soisson pointed out that the A&E TV show shows how much the buyers paid for the homes, their asking price and budget, but the program never reveals the selling price.

It's common for people to buy a property, intending to "flip it," but they decide to make it a rental property.

"What I've seen is the trend in flipping the house is they wanted to do that ... but they turn it into a renter," said mortgage broker Marty Horvatich, the co-owner of Huron County Mortgage Services.

"I think once they get to the point of getting it fixed up nice, then they hate to get rid of it."

The length of time buyers keep a house before selling it depends on how much equity they have amassed. Or, as Horvatich put it, the person also may get sick of being a landlord.

Soisson believes it's hard for people to avoid the temptation of making money quickly. However, he said the successful "flippers" have used the homes as rentals.

"I've never believed in the get rich scheme," the Realtor said.

Twaddle also warns residents that buying a house with the idea of making a huge profit is a misconception.

"If someone expects to follow in our footsteps, they're not going to get rich," he said. "You've got see the finished product without spending too much money."

Soisson agreed. "You've got to know what you're getting into," he said.

Potential buyers should look for mold, lead-based paint and structural problems.

"If you're going to buy a house to flip it, buy it in a good location," Soisson said. "The best house is (in) a good location."

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