Rob & Melissa Stephenson from Flea Market Flipper talk about why they stopped flipping houses and started flipping high-profit items.
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Reseller Hangout Podcast - Why We Stopped Flipping Houses And Started Flipping High-Profit Items
Rob: What's up, guys? On today's episode, we are talking about why we stopped flipping houses and started flipping items on eBay.
Rob: All right, guys, today we are talking about why we gave up flipping houses and started a flipping on eBay instead high profit items.
Melissa: Yeah.
I wanna add that you didn't really start flipping, you were doing 'em both at the same time, but when I first met you, you had flipped several houses. Yep. You just flipped a house after we met, but then we did a couple.
I think we did one or two together and then we kind of stopped. And so we wanna dive into why, why we don't really do it anymore.
Rob: Absolutely.
Melissa: And yeah, so.
Rob: Give you guys a little bit behind the scenes of what was going on in our mind. Cuz you hear about house flippers, there's people flipping houses, there's good money in house flipping, but what caused it, and I probably, I think around six. I did six houses. And then I went the opposite way and started looking into higher profit items to flip instead of houses. And like I said, we wanna give you the kind of the breakdown of why we did that and why it made sense for us in our business.
Melissa: Yeah. And I do wanna add that we think that real estate is a great investment and we still want to
get more real estate. I don't think it's ever a bad investment. And, but we've always regretted selling them. So any of the houses we've sold, we've regretted it and he made money on 'em, but we still regretted it, so, yeah. And we have good friends that make really great money. Bill Allen does amazing with his seven figure flipping and all the people that he teaches how to do it.
Our friend Dustin Heiner does amazing with rental properties. He does multi, what is it? Multi plexes, plexes and does and buys them and rents them. So, so definitely like real estate is great, but there's some.
Go ahead.
Rob: Yeah. No, don't get us wrong. Yeah. We love real estate and we will always buy houses and more hold them than flip them.
Yeah. But when you're flipping houses, you're doing it for short term investment, and where you're trying to get it at a distressed or a low cost, similar to what we do when we're flipping on eBay, it's a low-cost. We're trying to put a little bit of work into it, turn around and make some good money, but there is one downfall, well, there's multiple downfalls to both sides of it.
But the one downfall for me, comparing house flipping to item flipping, is there's a lot of red tape when it comes to flipping houses. There's a lot of stuff you have to think about that you don't really have to think about when you're flipping items, high profit items to be exact.
Melissa: So let's dive into some of what some of those are.
Rob: Absolutely.
Melissa: So, a big one is the amount of money you have tied up. So how much you have to invest in a single item versus how much you have to invest in upfront in a house to flip. It's a lot of money. It's a lot of money tied up for a longer amount of time.
Rob: So typically for a second home, a investment home, you're gonna put down at least 20% on that.
So if you're at a hundred thousand dollars buying a house for a hundred thousand dollars you're gonna have to put down $20,000 on it just to secure that house. You're gonna have to put that much money down. Now that's not all that you have to put down. That's just what you have to do to put down, to be able to buy that house.
You have to have that, have that money in your account, to be able to put down at closing.
Melissa: And then you have other expenses such as the actual rehab of the house, what it costs to redo the house if you're gonna do the labor yourself, or gonna, hire out the labor with contractors and different things.
So you've done a little bit of both, right? In the past you do a lot of it yourself, but then you've also hired out contractors for and stuff.
Rob: But even before you get to that, you have to pay up front. You gotta pay for that inspection. You have to have a inspector come out and do the inspection on the house.
If you're very handy, you can do it yourself. You can check the pipes, you can check the electrical, do the majority of it. But typically, even if you're borrowing money, a lender, wants to see the inspection on the house. So you're gonna end up spending roughly $500. That's probably even on the cheaper level right now for an inspection out of pocket, before you buy the house, you're gonna have to do a survey, another $500 out of pocket before you buy the house. These are just, that's all before it is. This is before you even get into the renovations, before you go in and do the cabinets, before you go in and do the floors, the bathrooms, all that other stuff. So you're going out of money before you even get the house, you're going out a out, and I don't even think you get that stuff back.
If you do the survey, you do the appraisal, another one on top of it. You have to get it appraised. You have to make sure that you're loan to value 80%, that the, the bank is loaning you for it, that it's worth that. So all that stuff, unless you're dealing with cash, and then it's just a whole button, a hundred thousand dollars out of pocket in the, in the get go.
Now, all that to be said, you're gonna have to put a lot of money outta pocket to get this. What type of return are you getting on this money? Or what type of return are you getting on this investment?
Melissa: Yeah. And so that's kind of where we went into the items more, because you can, you don't have to invest that much and tie up that much money at a time.
And the amount of ROI that you get on your investment is pretty crazy compared to like a house. Like what would you say? And like, you haven't done it for several years now.
Rob: No.
Melissa: But what would you say, like, say you put, and the market's so different now, but like if you bought a house for a hundred thousand, what would you be hoping to get out of that house?
Rob: Yeah. One of the last houses that I did, I think we had a return for thirty-some thousand. We sold it for $30, I think it was $33,000, if I'm not mistaken.
Melissa: Was your profit?
Rob: Was the profit on top of it. And I don't think that profit included the time that we, and we had this house for at least for four to five months doing the rehab, fixing it up, and I don't think the profit, that's just what we made on top of it.
The money that we got.
Melissa: That's what you split or was that your profit or that's what you split in the house?
Rob: No, no, that was the total profit. Okay. So that was the total profit was 30 some thousand dollars. So, and house flippers, some of 'em will get into it making $10,000, $15,000 profit on it.
So when you look at that in the time and effort and the out of out of cost that you have to go into the house, it's a lot of money. A lot of, I, I like to think of it as red tape. There's a lot of red tape that goes into house flipping, that you do not have to deal with when you go into just flipping items.
Now, some people are like, well, you can't make $10,000 flipping an item, one single item. Absolutely you can, you have to get into the higher profit items. That's what we do. That's what we specialize in, is the high profit items because of the little amount of money that you have to put into the item to get it.
Those are the items we look for. And there's no red tape when it comes into this. There's not a lot of red tape, I should say no red tape or not a lot of red tape. When you're buying an item, you have to do like you have to check it and make sure it works exactly. If you don't know how to do that, you have to pay somebody to do it.
But you're talking pennies compared to what you have to do on house flipping.
Melissa: So for example, that last turbo chef that we bought, you bought for $400. So we have $400 invested at the get go. So that was our money tied up in it. You spent some time cleaning it up and testing it and listed it and sold it for $10,000.
Rob: So to be honest with you guys, the total hour spent into that, buying the item, cleaning the item up, and then even shipping the item, I had less than five hours time in that. And the profits were, we sold it for $10,000. We paid $400 for it. We had to pay. What else did we pay on top of it? Shipping?
Yeah, so still we profited over $9,000 for roughly five hours of time into this. Now this is not something that happens.
Melissa: It's not normal. I mean, not like every day, but that's what, that's what we lean towards.
Rob: So, yeah. And the month before that, the month prior, we sold something for $7,500 that we pulled out the trash and I put $600 into it with new batteries.
This was the lift. New batteries and a new wheel onto it. And we did it and we turned it and turned it for $7,500. I don't remember what exactly the profit was, but roughly $6,500, $6,000, $6,500 on that. But it just goes to show you that stuff is out there. You can do that, and it's a lot less red tape. And if you want to make $20,000, $30,000 you can do it in three or four flips versus all the time all the money outta pocket that you have to do in a house flip.
Melissa: So yeah, and I was just thinking, we just had somebody join recently, our appliance flipping course, and he did flip houses. So, and if you are in that already, like you're in kind of a good spot cuz you already know like how to find deals and, and finding those appliances, those high end appliances, you know what to look for because you're, you've dealt with them before.
And he's like, yeah, just there's a lot less red tape really to deal with in those appliances. So like we've definitely honed into doing the appliances, but we do other stuff too. Yeah, but just the higher value items are definitely where, where it's at and what we look for to sell stuff.
Rob: Yeah.
And you think about, like, even just on the closing of a house, if you're buying a house, you got at least 30 days into just closing that house with the paperwork, with the title search. We didn't even talk about title search, insurance, title insurance, homeowner's insurance, all that stuff that you have to buy to be able to get that house.
Melissa: You have to have insurance on it even when you're working on it?
Rob: Oh, absolutely. When if a bank loans you money on that house, it's gotta be.
Melissa: Unless you pay cash.
Rob: Exactly.
Melissa: If you pay cash, you don't have to.
Rob: But that's not even smart to do that. You're self-insuring yourself.
Melissa: That's true, if you have a fire.
Rob: Something happens when you're working on it and you don't have insurance, you're out all that money.
If you spend a hundred thousand dollars on the house, something happens to it. Yes, you'd really need to have insurance.
Melissa: I need to plug in something wrong and it could catch on fire. That would not be good.
Rob: So you think about just the timeframe for you to acquire the house is gonna be at least 30 days now.
Now, not all of our items that turbo chef we had, I think sold in a month and a half. Yeah, but five hours worth of time into it, sold in a less than two months. And there was not a lot of time into it, not a lot of red tape. Like I said, and we do this, I think on average last year, we averaged about, what was it, $1,400?
Melissa: Per item. Yeah.
Rob: Yeah. $1,400 per item that we sold, which is not $10,000 and it's not $20 or $40. It's a good chunk of change for the items that we averaged on our last year's sales, that's what we,
Melissa: it was 58 sales last year.
Rob: 58 sales. So at an average of a $1,400 per sale. So, there is potential in high profit flipping, and it is a lot less red tape.
It's a lot less, on me mindset. It is a lot less stressful.
Melissa: A lot less hoops to jump through.
Rob: Yes, it's a, it's just a lot easier. I mean, for the turbo chef, we paid $400. We paid, that's the only money I paid outta pocket, $400. The rest of it, I spent a couple hours cleaning it to make it look like it was brand new, picking it up and then shipping it, like I said, less than five hours total into that. And I would much rather do that with $400 invested to make $10,000 than I would to spend a hundred thousand dollars out of pocket or get a loan for a hundred thousand dollars just to maybe even say double that, make $20,000 on a flip.
Melissa: And a hundred thousand dollars. Houses are hard to find.
Rob: Very hard to find right now. Very, very hard to find.
Melissa: That was more like when you were flipping houses. That's what it was.
Rob: It was. You're talking about 20 years ago when I was doing this, so now the price is way up there.
Melissa: Yeah. I guess cause you'd just flipped a house when we got moving met, so that was 16 years ago.
Rob: Yeah. You're talking 20, 15 to 20 years ago is when I was actually flipping houses. Yeah. But then that's when we leaned into the higher profit items, realized how much less red tape there was, how much easier it was to be able to do these and find these items. You can take even more time looking and finding that perfect item at that perfect price.
Which they are everywhere. You can find those items, that you can turn in and, and resell for a good profit.
Melissa: So now there was something that you did love about flipping houses, which I think you still get from the items. So you loved the hunt for the perfect house. Yep. Right? You liked the actual, like negotiation.
You liked the negotiation.
Rob: I did. I liked talking with people. Trying, it was a game to try and get people to, to talk them down and negotiate with the house. I did like that.
Melissa: And doing like, seeing something transform. So like looking at something and transforming it into something new. I mean, that's, it's fun.
And that's why a lot of people like DIY and all this stuff and, and doing redoing houses and stuff, and then the thrill of the sale, like when you sell it and you make a big chunk of change, that's nice. But now you could do that on a little bit smaller scale and have. All those things happen more often than.
Rob: Exactly you get to still do the hunt, you get the variety. See, I need variety. I need variety in what I'm doing. That's why house flipping's cool. I mean, you're dealing with different houses, different areas and all different types of things, and that's what I deal with higher profit items as well. I might be like prior month it was a lift.
It was a cool lift. I got with the kids, I gotta have, do some videos, some fun social videos, that we gotta do riding the lift around. The next month was, the actual turbo chef and we have a couple more turbo chefs that we're waiting to sell right now. A, welder. We have some expensive stuff right now that's on the market, that it's high profit flips and it's just so much fun to be able to find those, fix 'em up that they need to be fixed or just flip them, be able to turn around and sell them.
So it's lot of fun.
Melissa: Bus washes now.
Rob: Bus washes. Crazy, crazy stuff. I mean, the line is endless. The line of stuff that we flipped, the weird, unique, the fun, the cool stuff that we have flipped. Yeah, it's a long list of things that we have done and it's a lot of fun.
It's a lot of fun to be able to do it.
Melissa: So are you going to flip the hovercraft though?
Rob: No. We have a hovercraft that we will not flip.
Melissa: That is, I knew that was gonna be a no.
Rob: Yeah, absolutely. Some things we have to keep, we gotta play with them. One day we'll sell it, I'm sure. But right now.
Melissa: That'd be a good project for you and the kids right now.
Rob: It would.
Melissa: If you get that thing up and running, it would, and then when you're done with it, we can sell it and make some money.
Rob: Have some fun first for sure. But that is, that is pretty much our, synopsis on, if you could say on house flipping versus high profit. And I really do wanna add in high profit.
That's the only really comparison you can do. Yeah.
Melissa: Cause it's not just, we're not doing loads of volume every day where we're stuck in listing shipping mode all day, every day. I mean, resellers are some of the hardest workers that we know. And, but that's not really what we're comparing. We're comparing some of the higher profit flips.
Rob: So it is, it is a hard comparison when you're comparing $20 to $50 flips and to add up, to get to $10,000, $20,000. That's a lot of, lot time invested. Finding the item listing and picturing the item, fulfillment, shipping those items out, that's a lot, a lot of hours. That it would be in some cases, I mean, maybe a house would be better.
Exactly. It might be easier to do a house, but in what we're doing, trying to do those higher profits, those higher profit flips on the single items, that's where it really, really does make sense.
Melissa: You're all about working smarter, not harder.
Rob: Absolutely.
Melissa: So the fastest way to get to your lazyboy, right?
Rob: Absolutely.
Melissa: That you can later in the day. So, no, that's awesome. So you guys are awesome. Thank you so much for listening. We would absolutely love it if you would like and review this podcast. We would appreciate it. You guys rock and yeah. Thank you so much.
Rob: Definitely!