Flipping that house? Beware of burglars, hoarders and budget-busting mistakes

After weeks of clearing junk, ripping out walls, and lugging appliances through a shabby, 800-square-foot house on the border of Fishtown, Stephanie Somers had finally turned the property into what she described as a “tiny, beautiful gem.”

It was a house-flipper’s dream: Only a few hiccups had emerged during renovations, Somers was within budget, and it took barely one week to put the house under contract. The only thing left was a final inspection before closing the sale — and reaping a decent profit.

“I double-checked all of the systems, cleaned every corner, touched up any imperfections,” Somers said. “I was confident that it was going to be a great inspection.”

So she was shocked when she got the inspection report back.

The house was unfinished, the report read. The air conditioning unit was gone. Copper plumbing systems were missing, and the fence in the backyard was broken.

“I almost fainted. That’s not my house — my house is perfect!” Somers remembered thinking to herself. “Well, much to my surprise, we were robbed.”

When flipping houses in today’s market, preparing for the unexpected doesn’t even begin to cover it.

More than a decade after TV networks such as HGTV demystified flipping properties for a broad audience, the real estate trend is back in full force after dropping off during the Great Recession years. According to Attom Data Solutions, a real estate company that tracks flipping, there were 1,282 flips in the Philadelphia metropolitan area in the first quarter of 2017,  a 19.5 percent spike from the year before.

(Attom defines the area as Philadelphia, Chester, Bucks, Delaware, and Montgomery Counties in Pennsylvania; Camden, Gloucester, Burlington, and Salem Counties in New Jersey; New Castle County in Delaware; and Cecil County in Maryland. A flip is defined as any residential property that is bought and sold to two unrelated parties within one year.)

Part of what’s driving local flips is profit. The Philadelphia metro area is the fourth-most profitable U.S. market for flippers, Attom found, offering a 111.7 percent average return on investment during the first quarter. Only the Pittsburgh, Allentown, and Cleveland markets were deemed more lucrative.

While all of that may sound alluring, flipping in the Philadelphia region isn’t always picture perfect. Behind the glossy before-and-after photos, local flippers say, problems abound.

Expect to encounter the aftermath of hoarders, local flippers say, and learn quickly how to outsmart burglars looking for easy break-ins. Unannounced “guests,” such as raccoons and squirrels darting out of dark corners, are typical, as are unexpected finds such as drug paraphernalia stuffed in floorboards. Roofs can collapse. Wood has rotted. In minutes, budgets can go out the window. And the worst part is: There’s no guarantee you will actually make money.

“People always think you can get rich quick, and that it’s sexy,” said James Crosby, a South Jersey resident who recently began flipping homes. “It’s not.”

A few years ago, Crosby, 26, purchased his first home to flip in the Moyamensing section of South Philadelphia. Having worked in his family’s heating business for years, Crosby was confident that he could do most of the work himself.

With some help, the flip was completed without much problem. He decided to hold the property as a rental and found a tenant not long after he finished the job.

But problems began quickly when his renter lost her job. Weeks passed; rent payments stopped coming. And the first-time landlord was doing something he said he never expected: starting the eviction process.

“I’m talking to attorneys, preparing to have to go to court,” Crosby said. “Finally, I just said to her, ‘Neither of us want to go down this road; we’re both going to lose money. Just give me what you owe, and get out by the end of the month.’ ”

“She got out, but she left her cat behind,” Crosby said. “For two weeks, I’m going back and forth every day feeding this cat, texting her, like, ‘Are you going to get your cat?’ ” In the end, Crosby delivered the cat safely to a shelter.

The cat turned out to be the least of his problems. In searching for a second house to flip, Crosby learned that finding a house can sometimes be as hard as flipping it.

“You look at homes where the entire back [of the house] is open, and trees are growing inside,” Crosby said. “Toilets that were filled. One house had squatters, and one had bottles of urine everywhere and drugs all over the table. When a whole place smells like urine … it’s not a sexy part of the business.”

Camera icon JAMES CROSBY
James Crosby flipped this South Philadelphia house to turn it into a rental property. But, he said, after his first tenant lost her job, he worried he would have to evict her.

Most of Philadelphia’s flipping is concentrated in gentrifying neighborhoods — places where investors believe they can buy cheap and sell big. The most active zip code for flipping in the first quarter was 19146, home to neighborhoods such as Graduate Hospital and parts of Point Breeze, Attom found. The city’s 19143 neighborhood,  in West Philadelphia, and 19145, in South Philadelphia, followed at second and third most active.

But just because the neighborhood is gentrifying does not mean buyers are necessarily interested: When Crosby completed his second flip, in Point Breeze this year, no buyer would bite. Eventually, he had to turn that property into a rental, too.

Even flippers featured on TV aren’t exempt from problems, which local flipper Rachel Street learned firsthand.

Street, president of Hestia Construction in Philadelphia, was featured on the DIY Network and HGTV for the show Philly Street Flippin’, which premiered this year. With cameras rolling, she said, complications emerged: Almost an entire room’s tile was installed incorrectly. And a French-style marble fireplace that she hoped to preserve in the East Passyunk home was shattered during renovation.

Camera icon JESSICA GRIFFIN / STAFF PHOTOGRAPHER
Rachel Street, star of “Philly Street Flippin’,” at a new property she purchased in South Philadelphia.

“There’s stuff that goes wrong,” Street said. “… And there are so many unknowns. You might open up a wall, and there might be a structural issue that you weren’t aware of. … It’s really easy when doing a rehab to reach the end of your budget very quickly.”

The work isn’t always problematic. Not all jobs are difficult, and money can be made. In luckier cases, the flippers have unearthed some pretty cool finds.

Earlier this year, Somers rushed to a garage in the city’s River Wards section that her husband, Chris, had purchased sight unseen from an investor who bought the property at a sheriff’s sale.

“We get in, I don’t know if this [former owner] was a hoarder, but I can’t see anything. It’s just a mess,” Somers said. “There’s sitting water, it’s blasting out of a spigot, and the place is filled with mosquitoes … it’s like a tropical rain forest in there.”

“But I bump into a tire that’s under a tarp, and I lift it up, and it’s an original Ford Model T car from 1927 — it’s amazing!” Somers said. “Then, I find another classic, muscle car and a tractor.”

“Sometimes, these discoveries in these homes, they’re sad, they’re very nightmarish. I can’t forget them,” Somers said. “Finally, this was a good nightmare.”

She hopes to make a tidy profit off the cars — and the renovated garage.

Camera icon David MaialettI / STAFF PHOTOGRAPHER
Much to her surprise, Stephanie Somers unearthed a Ford Model T from a garage she planned to flip in the city’s 19134 zip code.