May 7, 2020

An Auction House First Flip With Natalie Vane Schanne

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Today's guest bought her first flip at an event. She was in and out within about 11 weeks and made a $10,000 profit. 

She shares so much goodness with us, such as:

  • Things she wishes she had done differently
  • Why she thinks she left money on the table
  • What happened when she decided to sell FSBO versus listing it on the MLS
  • The big mindset shifts she had to make
  • and more! 

Tune in!


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Intro 00:01
You're listening to the flip houses like a girl podcast where we educate, empower and celebrate everyday women who are facing their fears, juggling family and business, embracing their awesomeness and wholeheartedly chasing their dream of flipping houses. Each episode delivers honest to goodness tools, tips and strategies you can implement today to get closer to your first or next successful house flip. Here's your spiky haired breakfast taco loving host house flipping coach, Debbie DeBerry.

Debbie DeBerry 00:39
Hey guys, I hope that whatever you're up to today, you're having an easy one. And I hope that you are taking some time for self care. I know I've mentioned that before. I'm gonna mention it again. Because it's really, really important that we are taking care of ourselves. And we tend to think that we're selfish, if we're doing that, right. Like, Oh, my gosh, my kid needs me 24 seven, how could I possibly shave any amount of time for myself? Here's the thing, you have to do it. Because if your cup isn't full, if you aren't taking care of yourself, and if you aren't checking in with yourself, and if you aren't just taking a freaking mental break for yourself, there's no way that you're going to be able to care for anyone around you. At least not without going absolutely crazy. And I don't want you to go absolutely crazy. Alright. Okay, so today's episode is with Natalie, she is sharing with us her story of her first look. And her first flip was in 2017. So she's going to take us back a little bit and share some really great information with us. She shares what her mindset was like, she talks about some of her limiting beliefs, and things she wishes she had done differently. And where she feels she needs to focus for her business. And it's just a really great transparent conversation that I think you're going to get a lot of value from. Alright, and we are still on waitlist for our coaching program and tribe. So if you are ready to flip your first house with step by step, hand holding and incredible support from a big group of women across the US, then let's do this get on our waitlist by going to first Again, that's first and get on the waitlist. Now, if you're driving, don't do it right now. Okay, do it when you are stopped. Okay, without further ado, let's get into this conversation with Natalie and hear all about her first flip. You want to just tell me a little bit about your, your background, and how well just give me a little bit of your background, like what you've been up to, I see that you're a real estate agent, how long you've been doing that, that sort of thing that works. 

Natalie 03:34
Um, so the backstory is I got a master's degree in civil engineering, I was working as a civil engineer for a while and I'm 36 living in the Princeton, New Jersey area, I'm mostly an investor I also got my agent license so that I could be able to walk into any house I wanted to which is if you are being an agent, totally and and and as I was going along, I got an MBA, I worked overseas and traveled the world and you get to a place really good. It'd be nice to settle down have some kids. So at the moment, I have a three year old and a one year old and living here in New Jersey. Like I said, I was going to school in Philadelphia, my husband was a lawyer, and we ended up here. I got my license in New Jersey in 2016. Because my mother in law seemed like she would need to sell like the grandfather's house, but then she gave me a shot.

Debbie DeBerry 04:43
Oh, man, that was a sure thing.

Natalie 04:48
So So I've um so so my first kid was about three months old or something when I bought my first flip. Nice. So that was In jail me to go into it and in the

Debbie DeBerry 05:03
yeah for sure

Natalie 05:04
yeah let's do it so so in the fall of 2017 I I've been going to Sheriff sales for a little while and Sheriff sales are complicated and interesting you're essentially buying all of the problems with the house so that's why I recommend people start with a reo which is the bank has cleaned up the title and beat your own water bills are paid and all that other stuff so so I was going to share sales and you know, watching now everyone was bidding against each other. But I got an email for an auction comm live event in Philadelphia at a like a conference hall. And they had probably 1000 people show up and they were auctioning live 300 properties. And in and I was like, oh, whatever. And I was used to bringing my, you know, a couple thousand dollars of cashier's checks to the sheriff sales. And so I was like, Oh, you know, whatever. And so I wasn't really I was just expected to watch and I want to and completely opposite from Sheriff sales where I had like, driven by the properties and like actually do something. I was just looking at this catalog. I was like, Oh, it's a four bedroom, two bath. Okay, and I was on Zillow. Like, I think it's worth about 200

Unknown Speaker  06:30
I don't recommend that. ended up working out for me. So it was auction calm, but it was actually a live event. And both the properties that I won were Wells Fargo. I mean, sorry, they were Yes. They were Wells Fargo foreclosures. And I ended up not closing on the second one, because in Pennsylvania, if the owner stays in the house, you have to do this almost like 12 month process to evict them because they don't have a lease. And so it's called an adjustment and, and I didn't know anything about like, like, I knew the idea of cash for keys, but I was like, if I own the property, like why am I paying this lady $10,000 to leave and I was like that air sign ended up not buying that one. So the one that I bought was 110 year old twin homes. So it was side by side with another house, kind of like a side by side duplex, but each is owned individually.

Debbie DeBerry 07:31
Oh, got it, okay.

Natalie 07:32
And it was overlooking the high school football field kind of like a park. And which is kind of like a nice park view. And when I was bidding on it in in the auction, I thought it was buying whole house stuff on Zillow, it's a single family house. So I bid a bid 87 for it. So So I want half a house for $87,000. And the thing that saved my tail was that the house had actually already been flipped. Five years before a guy had come in, he had redone the bathroom he had painted the whole house neutral he had redone the cabinets and I don't know if it was a lease to own or whatever but but three years prior they had sold it for about 130 and I guess the person you know FHA person stopped paying unfortunately, I don't know what happened in their life. And, and I bought the house it was all kinds of crazy colors. It's like you can't pay your mortgage, but you can paint it blue. I knew it was like gray from before. And um and so I I went into the house and so the cool thing about vacant houses is that you can bring through your contractors to give you bids before you own it. Right. I was getting all kinds of bids from people before I owned it to the day one that I owned it like the guys there and stuff materials with painting Italy, you know, doing the drywall like, because I had watched some of my friends who were doing flips and they got creamed on holding costs. Yes, hell that way. Yep. And, and, you know, if contractors are busy, then they don't get back to you for a week. And if you're waiting on that guy, then you're like, Okay, well, Johnny's gonna do the house for me, but he can't start till next week. And then and and you just get creamed. Especially so in New Jersey, we have crazy taxes. I mean, it was across the river, but they also have crazy taxes and but like we have a crappy house and we pay $6,000 a year of taxes. And so that's $500 a month. Yeah, house is worth You know, 150 Yeah, what up so? Well. So, so that was my saving grace, but it was 110 year old house. And if you had oil tank, 40 year old furnace, you know, hundred year old windows. Oh, well, but, um, but I got lucky because I didn't have to fix those, and I sold it just fine. So there are some things that you have to fix and some things you don't have to. And that varies. And that's why it's so important to understand the nuances of your area, because it totally varies. And it's really easy to over improve. And it's really easy, equally to under improve, like, just know the right things. Right. So I researched all of the competitors. Yeah, nice. I don't research every house that was exactly like mine that has sold in this area. And I said, the highest that anyone has ever sold for in the past 12 months of a house just like mine, is $145,000. And I said, I'm going to target that. You don't want to get stuck in that place where you're like, Oh, I did this special thing. And it's worth 150 or 155. Right, you know, maybe you get someone who's nice to you, but otherwise you're taking a you know, a haircut totally. So I was targeting my 145 after repair value. So I spent about $30,000 fixing it, which is more than I needed to but I had to do a whole repaint I did full new flooring I took out it was carpet throughout and I actually had done new carpet and they had done new laminate and all of it was in terrible condition after only like three to five years but well that happens. Yeah. So I put in LifeProof floor all throughout the bottom and then I put in a new sort of Home Depot carpet on the top and so you know, like proof you know all in is like four or $5 a square foot and maybe that was over proving it but I knew the you know I want to make it tenant proof. You know why? I wanted to make something that somebody really wanted to have just in case I needed to hold it and I'm still be okay. I kept their cabinets and I put in granite granite cost me about thousand dollars. I redid it with stainless steel appliances, and that cost me about two grand, but it really brightened the kitchen because the laminate countertop had like gotten like water warped and messed up in the span of you know, not a whole lot of time. And so I was like okay, well, we get a good granted installers make everything look magical and I didn't have to rip out the cabinets. They were kind of like a chocolate not really on trend. But they were you know, sort of that recessed look, you know where on trend, but like, you know, whatever, six years ago, so color, but it was right pattern. And so that's what I did.

Debbie DeBerry 13:08
Okay, so all in on your renovations it was?

Natalie 13:13
So I paid about 30,000 

Debbie DeBerry 13:16
yep. Awesome. And were there were there any surprises? 

Natalie 13:18
Of course there were. So my first surprise was, I thought I had just sort of like a gutter clog and I would be able to fix it. I had sort of water coming in under a window. And I I wasn't able to repair that. So I spent almost $2,000 for a roofing replacement on part of the house and a gutter redoing those probably more than I need to pay but I couldn't find anyone who would offer it to me cheaper, like I got two or three bids and 1800 bucks was the cheapest that was, you know, two grand that just vanished. And when I bought the house it had a so the back of the house. So like I said it's a it was you know, attached to another house. And so there was a there was a detached garage will kind of look like a two car detached garage. But one half was mine and one half was there. Okay, and so mine had gotten fixed up and the FHA flip, there's really laughed at how weird. So so to get my certificate of occupancy to sell my house. They made me demolish the whole garage. Yeah, so we had to demolish the whole garage because they weren't going to fix up their side. And my side was like, Oh my god, I could have gotten away with like, nothing but they made me demolish the whole structure because their side was completely dilapidated. And they weren't going to fix their side. And I was like, really guys, really like you can't i can't just sell it. With with cuz, cuz i think you know, it's essentially like, you could probably fit two cars in there. And so I do that as an asset, you know, it's got a roof on it, it's like a two car shed, but detached garage with a with a car door that wasn't opening. So we demolished the Gosh, and then and life was good, but I didn't make that call to demolish the garage or to fix it, because I was going to consider fixing it for the neighbor, if the buyer preferred to keep it got it, because mine wasn't bad, but but her side was bad. Got it. Um, and so the hugely lucky thing for me was that the neighbor house was for sale on MLS, I initially thought that she would help me out, like fixing up the exterior of the house. But she seemed like she was in a pickle of a cash situation. And so she didn't help me out very much as i was renovating the front porch, and things like that, when you put it on the market Did you get a sale pretty quickly. So so that's the thing, I never put it on the market. I stuck a sign in my window. Uh huh. And someone who was going to tour the neighbor house, gave me a call and toured mine as well. Got it. So that's, that was probably one of my mistakes. When I put it on the market, it was essentially a sign in my window that said, you know, house for sale, because I wanted to fizbo it, I want to as an agent, I wanted to see if I could sell it without paying an agent 3%. Gotcha. And I ended up both paying an agent 3% and paying 3% and seller concessions. So that was about $9,000 off of the top, which ended up being so so instead of having like a $20,000 profit, I had a $10,000 profit. Gotcha. But, you know, making a $10,000 profit on my first deal. Hey, I was happy. Yeah, I wasn't. I was under contract, and six weeks after I purchased it. And I had sold it after 11 weeks. So I bought it essentially December 1, I was under contract. You know, like mid January, and I sold it a little after Valentine's Day. Fantastic. And I thought that that was great. Yeah, because, you know, quick cosmetic in out no permits. Um, it's, I would rather, you know, have a success under my belt. And it certainly gave me the confidence to move forward after that. Because my next rehab after that was a 70 $80,000 rehab. So nice. So it was definitely nice to have a win under my belt, so that I'd be able to juggle everything. Going to the going to the renovation, I was the general contractor. So I have hired essentially subs under me. I had an employee put the scope of work on the internet, I put it on Craigslist, which was a little ridiculous, but I put the scope of work on Craigslist, and I had probably about 10 groups of contractor type people come through and offer to do the job for me. And I hired one guy who was Guatemalan, and it seemed like he had a crew of people under him but it it actually ended up being just him. And he was decent for a while. And then I had to sort of fire him mid renovation because he stopped showing up. So that's that's one of the fun things when you're working with people that are getting paid, you know, 200 to $300 a day, they get distracted by their next job, and they don't necessarily are focused on your so when I started hiring other people to come, assist, move the job faster. He got upset and he he stopped coming as much and so it just became a difficult situation. Gotcha. Well, kudos to you. So a lot of people it takes, myself included. It takes us a while to learn the lesson of get rid of people when they're not performing. Oh, absolutely. I had read too many stories about you know, you give somebody a $10,000 down payment and then they demolished

Debbie DeBerry 19:57
Oh gosh. Yeah. Looking back across the project, what were maybe a couple of things that you you wish you had done differently. I know you mentioned, maybe not listing it, or actually listing it on the MLS. 

Natalie 20:22
Um, one thing that I'm still working on is essentially building a team, the people who seem like they're the most successful, have built a team of people that they trust, that they don't have to be looking over their shoulder, they pay him decently, but but certainly not top of the market, because it sort of swings between the two where, you know, you find somebody on homeadvisor, thumbtack, and they want, you know, $10,000 to paint your house, and then you find somebody on Craigslist, and they'll paint your house for $100 a day, but you have to supervise them and right 1500 dollars a year your house is painted.  I mean, that's really my, my main thing I because I burned through probably, you know, five or six people, and I, I, I don't feel like I've developed any kind of team. Yeah, so that's the thing, you you, you're the goal is to like try out people and then you have a teammate, right. But then, you know, after, after the job was done, I paid them thousands and thousands of dollars, but they they weren't a trusted party I had gone I had gone sort of through the whole cycle of, Oh, I'm so excited to hire you and you're doing a great job and come back tomorrow to Oh, you're not doing such a great job. Can you please fix this for me and via you know, them getting upset about you calling them out on quality issues, you know, hey, this caulk looks weird, or the paint stripy. And the more attention to detail you pay or the trim isn't cut, right? And then they're like, Oh, well pay me to fix it. And I was like, why am I paying you to fix it? You're the one who messed it up? You know? I'm buying double materials here. What's the deal?

Debbie DeBerry 22:13

Natalie 22:15
And I don't know if it works. So that's another limiting mindset thing I have, you know, maybe, maybe people pick on me more, because I'm a woman. But I feel like, you know, I can be just as successful as guys. And I think that I'm, I'm very, very good at doing a good job of finding the deal and figuring out what the cops are and designing it appropriately with the right colors and the right finishes so that I can sell it because yeah, I've always had a great success, selling and marketing my properties. I mean, I'm you know, all my flips have been in, you know, under contract within three weeks.just, you know, you hit the market. Right, got the right price, you got the right finishes, and it just boom, you know, get it done. Yeah.

Debbie DeBerry 23:08
Um, I like that. You talked about the mindset stuff. So what were what were some of the maybe some of the things that were holding you back, or not, maybe not even holding you back, but what kinds of things were you thinking before your first flip? Maybe what were some limiting mindsets or limiting beliefs that you had before your first flip that you had to sidestep in order to actually move forward on your first flip? 

Natalie 23:37
So the first one is the financing piece was to, you know, how am I how am I going to get enough money? You know, no one's gonna trust me $100,000 to, to do this deal. And I actually learned that the Bank of grandmother is wonderful. And she was getting she's getting paid 1% on her CDs in the bank. Okay, and for her 7% interest only, you know, paid monthly and repaid in full at the end of the job and it works. 

Debbie DeBerry 24:14
That's right, I forgot. I forgot to ask, how did you find out? Yeah, that's right. Bank of grandma. I love it. 

Unknown Speaker  24:22
And I mean, but then there's so many people in your life that are making almost nothing on their money. Now, even right now I've got money in the bank at essentially zero percent.

I'm sure you can hear my baby bouncing in the background. And the other the other mindset issue that I have, that I'm working through is that I have to take advantage of somebody to get a good deal and to make money in this business. And that's not true. Especially when I'm buying from a bank, I don't, I don't feel that guilt. But sometimes when I'm thinking about buying from an estate, I feel I feel a little guilty. So I'm still personally working through that one. Because the numbers don't work if you offer top dollar and, and so, and one of the things that I'm able to do is I'm able to create a whole bunch of jobs for people, not only the people who are painting the house, but also the people who made the paint and the people made the tile. And, you know, it's a whole symbiotic relationships. I love turning something from ugly and vacant into a beautiful house that, that you know, a happy, you know, family or whatever is now living in I mean, I create beautiful homes for people at an affordable price. I know that that's, that's a great thing.

Debbie DeBerry 25:58
Absolutely agreed. And I love that mindset shift. Because it really, one of my big things, I have the same thing. When I first got started, I had that exact same thing like I don't want, because what I saw was I did see other investors taking advantage of people. And I didn't, I knew that that was never going to resonate with me. And I knew that I had to figure out how to do it without taking advantage of people. And was it possible? I mean, that was my big question. Was it possible. And I had to keep reminding myself of this isn't about me, like, none of this is about me, it's about helping the homeowner, because a lot of people when they go talk to homeowners, their their mindset is, how do I get the deal? How do I get the deal? How do I get the deal? And so if I can approach it as How can I help this homeowner? Like how can I actually help this person? Then for me, that resonates with me, and I try to do that throughout the like across my business? in it helps me get out of that mindset of investors take advantage of people, and it's finding, you know, figuring out tricks and how what works for you, to bring you back to center, so to speak. 

Natalie 27:21
Absolutely. And some people really are happy that you're you're there to buy grandma's house. And yeah, they don't have to show it, they don't have to clean it, they don't have to take more than a couple boxes of stuff they want and just they've got the cash and it's done. And they can pay off their credit cards or whatever. They don't want it to sit on the market. They don't want it to be shown like so. So we definitely can help people. and and if we want if we're not competing with the We Buy Houses, yellow. You know, postcard guys, and maybe they sell the house for $10,000. Less.

Debbie DeBerry 28:04 
Exactly. Yeah. Yeah. I'm glad you shared that. And then. Yeah, I mean, I think a lot of us struggle with that. Um, so I think, you know, you sharing that is, it's important, because people can see, oh, look, another person who thinks the same way. And she's successfully doing it. So it you can do it. All right. Is there anything else you want to share? Before we get off the call? 

Natalie  28:41
The main tip that I would give people isget, you know, sort of get over yourself and take action. I mean, I walked into that auction. I wasn't expecting to win any houses. Oh, and I won a house. And then I flipped the house like I had so so obviously have the background of, you know, you know, what it's going to sell for, you know how much things are going to cost? Because you don't want to get yourself into a rotten situation where you've paid too much, and you can't make any money. But, but it's certainly I learned so much more in the 12 weeks that I owned that first flip than I had in the previous five years studying it. And you get yourself into that mindset of I have a problem. So I have to solve it. And you are just laser focused on Hey, how do I do this? Yes. Who can I reach out to who knows the answer? Perfect. Yeah. And and, and that's That's one of the greatest things if you never put yourself into that position where you've got a fire, and you have to figure out how to put it out, you just kind of float along for a long time, right? Real Estate Agent, I work with a lot of people who say, Oh, I want to buy a fixer upper, I want to buy my first flip. And two years later, they still haven't done a deal. Right. And in the meantime, I've done several deals. So right, this, I mean, you they're like, oh, bring me a good deal, Natalie. And I bring him a good deal. And they don't act on it. And I was, okay. If you're not going to bid on this one. I'm gonna buy it. 

Debbie DeBerry 30:38
Right. Right. It's it's taking action. You're totally right. And the thing is, is I think a lot of people need to realize, like, come to terms with, you're never going to take action. And that's your decision, right? Like, decide, you either decide you're going to take action, or you're just going to watch, but either way you're deciding, but to be okay with that. 

Natalie 31:00
And it's okay. Not to ever take action. 

Debbie DeBerry 31:06
I think that's perfect. That's a great note to end on. For sure.

Natalie 31:10
Well, thank you so much, Debbie. Really appreciate your time.

Debbie DeBerry 31:12
Thank you so much, Natalie, I appreciate you sharing your story and helping inspire other women to just go out there and freakin do it. Take care. 

So good. Right, Natalie, thank you again for spending some time with me, and and sharing all of this awesome information. And just your journey with us. I think it's incredibly helpful and inspiring. And thank you very much. All right, you guys. Thank you again for spending some time with us today. And until next time, go out there flip houses like a girl. Leave people in places better than you find them and make it a great day. Bye.