Calcasieu’s abundance of storm-distressed housing may look like a gold mine to some, but house flippers need to know what they’re getting into
Published 10:34 am Tuesday, January 17, 2023
Investing in storm-distressed housing has proven lucrative. One Acadiana Parish media source reported a three-fold return on investment in Calcasieu Parish for flipped properties, using the real estate market data source ATTOM.
But let the would-be house flipper and buyer be aware. Rebuilding a house is probably not as glamorous as it looks on those home improvement shows, and not all properties are re-created equally.
Summer Richard-Boudreaux, licensed real estate professional for Castle Real Estate and a member of the Southwest Louisiana Association of Realtors, says that rehabbing area housing can be profitable. However, a three-fold return on investment probably isn’t representative of the big picture.
Email newsletter signup
“There were so many homes that were left in a nearly-demolished state that investors were able to get them for pennies on the dollar due to the property being totaled out by insurance,” she said. “On a standard flip in a market that had just been through multiple natural disasters, I would say that profit could vary greatly.”
House flipper Tawanna Champagne agrees. She and her husband Tony make a living flipping houses, building additions, doing flooring, remodels and more. He is a carpenter by trade, and serves as contractor for the couple’s business. One of his grandfathers was a plumber. The other was a painter, so he grew up “fixing” and “fixing up” properties. Flipping houses since 2011, they were able to pick up some damaged properties for great prices after the 2020 storms.
“When we rebuild a house, we take it down to the studs,” Champagne said, “new plumbing, new electrical. We only work on one house at a time and my husband and I aren’t totally reliant on our crew. We’re at the property working – even if they don’t show up.”
Champagne said today’s home improvement can lead the inexperienced to take on work that proves more difficult than expected. Making mistakes and having to fix those mistakes can be costly.
Though she never came out and spoke against other investors who operate their businesses differently than the Champagnes do – “I like to sleep at night,” she did say – she has this warning for every home buyer.
“It’s up to you to practice due diligence,” she said.
One way to do that, according to Champagne, is to get a home inspection. It can cost from $250 to $350, and if the inspection reveals an issue that needs repair or attention, the results of the inspection are leverage used to negotiate. The homeowner will likely need to make the repair or change the price to reflect the issue.
Champagne also advised the following: 1. Know the market to determine if expectations line up with today’s market pricing. 2. Know your credit score and work on improving it if it needs improving, and 3. Seek out help from the city, parish and financial institutions about first-time home buyer programs.
Other top tips when buying a flip, according to an online CNBC article include the following:
Make sure the flipper used a licensed contractor.
Request an updated disclosure statement from the seller.
Request a list of work done, including receipts and warranty information (water heaters, plumbing, electrical, HVAC).
Look for water damage and old wiring.