Hero Story for Review

[Nancy Filgate]

<p style=”text-align: center;”>How I Became a Serial Flipper & Ended Up Selling Real Estate</p>
I didn’t set out to flip properties, but I ended up doing it out of necessity. I unexpectedly found myself a widow when my son was 14 months old. I sold my house in NJ and moved back to CA to be near family. Fast forward a couple of years. I was working at the VA hospital, my son was in pre-school, and I was ready to buy my 1st house on my own. Most of the houses near my work had had some updating but the quality of the work was poor. I finally said to the real estate agent “Show me a ‘BEFORE’. Show me a house that nobody has tried to update.”

The house I purchased was UGLY, but it had good bones and was in a perfect location for me. Over the next 3 years, I remodeled the house. I did the demolition and design work, but skilled contractors did the rest. The carpet in the house was so hard and brittle and heavy that I had to use a saw to cut it into moveable-sized logs. I ended up with a terrible rash after removing the carpet.

That 1st house was built in the late 1940s. The old stove was very wide, and the refrigerator was very narrow. It turned out that the new stove fit perfectly in the old refrigerator space and the new wider refrigerator fit in the old stove space. Since the house was a one-story, venting the stove was not a problem. Aside from carpet, paint, and landscaping, most of the work was done in the kitchen & master bath. When the renovations were complete, the house was one of the most attractive homes in the neighborhood.

Shortly after the house was finished, the gas crisis hit. By that time, I had started back to school at Cal State Northridge and the long lines at the gas station made it imperative that I move closer to school. I found a little house near the University, but I didn’t have time to sell the 1st house, so I rented the 1st house, and as part of the rental agreement I gave the tenants an option to buy. It took a couple of years to remodel the 2nd house. Again, I did the demolition work, but I always hired contractors for the actual renovation. When I was a year away from finishing my BS degree, I started looking for a graduate school. In addition to having a good reputation in my field of study, I needed a university that had a safe and inexpensive residential area close to campus. That eliminated a lot of schools.

In August of 1979, I flew to Austin, TX to interview and I fell in love with Austin. That summer I bought a small house that was built in 1919 in the west campus area of UT. My real estate agent found 4 college guys to rent it for the school year. During my final year in California, I designed and redesigned the west campus house in my head. I ended up hiring an apprentice architect to work as a general contractor on a “cost-plus” basis. This was a major remodel. The house was built on a pier and beam foundation with shiplap walls covered in canvas and wallpaper. The home had gas space heaters in each room, and the electrical system was silk-wrapped knob and tube wiring. It took 4 months to gut the house, level the foundation, redo all the plumbing, rewire the house, insulate the exterior walls, do an addition in the back, vault the ceiling in the living room, put in a spiral staircase, add a half story including a 2nd bathroom, put in central heat and air, and completely a modernize the kitchen.

During the remodel, my son and I camped out in the large back bedroom. We survived with a refrigerator, a window air conditioner, and a trouble light suspended in the adjacent bathroom. It didn’t help that early on I slipped a lumbar disc trying to open a window and ended up spending several weeks flat on my back. Fortunately, I had enrolled my son in summer day camp so that he was not constantly on the construction site. For groceries, I sent my son to a small local grocery store with his little red wagon and a $20 check. Through all of this I learned several valuable lessons:
1. It always costs more than you expect no matter how carefully you estimate and the less experience you have, the higher the cost overrun.
2. The most expensive material is not necessarily the best.
3. Financing for a remodel is often difficult or unavailable.

Remodeling houses essentially paid for my BS and MA degrees. The lack of available medical insurance for independent contractors kept me from going into real estate until my son went off to college. I was in Greensboro, NC when I finally got licensed. Being an “outsider” in Greensboro and a newbie to the industry, I struggled to get listings. I got the problem listings that nobody else wanted and I got very good at selling them. an awful referral would come in and the agents in the office would say “give it to Nancy, she’ll sell it.” As a result of these listings, I started to work with investors and learned to spot the properties that had significant potential for an increase in value.

In 2004 I moved back to Austin to be near my new grandson. Austin had changed drastically since the 1970s and was also just recovering from the dot com bust. I gained a lot of experience listing short sales and working with investors. In 2013 I went to work for Smart Source Realty in Cedar Park. My broker, Chris Warren, manages 300+ properties in North Austin and Williamson County. It was the perfect company for me even though I do not do any property management. Working at Smart Source Realty gave me access to a large group of reliable contractors. A couple of years later, my son got interested in rental property and I spent the next 11 months at the 1st Tuesday foreclosure auctions in Georgetown. He bought some very ugly houses and I got to act as the GC doing the renovations to get the homes ready to rent. The real estate “bug” really bit him hard, and he eventually quit his high-tech programming job and became a Hard Money Lender.

My real estate business is completely separate from my son’s lending business, and I do not buy property for my account. I do some consulting work for him, I list his rental properties, and I also list any of the homes that he owns. I do not list any of the homes that he makes hard money loans on – the builders have their agents and my son, and I feel it would be a conflict of interest. When I go on a listing appointment for a distressed property, it is my job to get the best price for the Seller which means listing in the MLS. There have been 2 occasions where my son has purchased one of the homes that I initially went out to list. Both were special circumstances where the owner wanted a cash offer and a 5-day close. Both sets of owners were given the “as is” price and the “fixed up” price if sold through a listing in the MLS. Both insisted that a cash offer and rapid close were more important to them. If this were to happen in the future, my policy is to introduce the Sellers to my son, and they work out the price and terms. My son would then pay me to do the paperwork and take care of the details. My real estate business model is in direct competition with the real estate wholesalers. My value proposition is that by listing the property in the MLS and exposing the property to the total market, I can net the Seller more money and the Buyer has less risk because there is time to research their purchase.

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