A local woman who moved back from Cincinnati a couple of years ago is attempting to carve out a niche for herself in the business of “flipping” houses. Houses are termed as being flipped when someone buys a house or houses at a bargain price, remodels or repairs the properties, then sells them for a profit.

Cynthia Block, daughter of former U.S. Secretary of Agriculture John “Jack” Block, said there’s more to making money flipping houses than just finding a bargain.

“There are some guys flipping homes that are making very good money,” she said. “You’re going to have to buy houses that have been foreclosed or a very low-priced house. Then you have to be very aware from the get-go as to what your costs for material and labor will be.”

The niche Block hopes to fill includes craftsmanship and custom design in the houses she buys. A house at 507 Mill St. that she had totally gutted and rebuilt from the ground up, is listed at $119,500 through Cooley ii Real Estate.

Sometimes you win, sometimes you lose

Charlie Cooley, owner of Cooley ii Real Estate, said there are a couple of people flipping houses in Knoxville and some in Galesburg. He said it’s a part-time job for most who attempt it in this area.

“Unless they have several properties they have done and kept as rentals,” Cooley said, “it’s a tough business right now.”

Realtor Chuck Ross of Mel Foster Co. in Galesburg said he has had a couple of clients who bought houses, rehabbed them, then resold them. He said some people made money, others did not.

“Some have made better returns than others,” Ross said, “A lot of it is timing.”

“Sometimes it works out, sometimes it doesn’t,” Cooley agreed. “You don’t always pick a winner.”

Ross said contractors, people with construction experience or those who are handy often do much of the work themselves, reducing costs. Even that work has to be factored in, though.

“You’ll always want to say you’d like to make something on the labor you went in and did,” he said.

“You look at how much return you want to make on your investment,” Ross said, adding that it’s a good idea for a newcomer to the business to sit down with a qualified person and talk possible pitfalls.

Block ran into one of those pitfalls. It illustrates why hiring a contractor and sub-contractors can become problematic. She said the project on Mill Street was hampered when some workers left her high and dry, causing work to take seven months. She said that is “way too long.”

Block credited Gavin Jones, who did much of the work, and her partner, Mary Saline, for helping make sure it did not take longer.

Location, condition, price

A factor for success, Ross said, includes “buying the property in a neighborhood that will support the future value of the property.” He said he’s had clients buy and refurbish houses in the North Kellogg, North Prairie, North Cherry and North Broad streets area of town who have done well.

“There’s only three things that will prevent a house from selling,” Ross said, “location, condition and price. If there’s a deficiency in the first two, it can be overcome with an attractive price.”

Materials, labor and costs on the “back end,” such as hiring a Realtor, closing costs, taxes and whether one plans to pay to keep the grass mowed while trying to sell the house are other costs that should be taken into consideration, he said.

“You have to think about the building codes,” Ross added.

He said when he sits down with someone wanting to enter what is a fairly complex business, he gives the person a conservative range of the perceived value of certain properties. Ross said if the person feels she can make a profit by “flipping” the house or houses within that range, it may be worthwhile to give it a try.

Block’s first attempt was a Victorian, which needed a lot of work, at 710 S. Broad St. She bought the house for $42,000 and sold it for more than $120,000. Even with the labor and materials, she said she is making money.

Block learned another potential buyer for the house on Mill Street when she was trying to land it was going to make it into a rental property. While she was quick to point out there is nothing wrong with renting, it is doubtful such an extreme makeover would have been done had the house become a rental.

Her approach goes a bit beyond the usual “flipper.”

“I’m looking to find a niche market,” she said, showing off the recently completed “extreme makeover” of the Mill Street house. Block is confident the house will attract a buyer. Even with her “design” approach, though, the basics still enter into her success or failure.

“I hold onto this belief, if you build it, they will come,” she said. “Of course, location, location, location. We are smack dab in the middle of the schools.”

jpulliam@register-mail.com