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The revival cycle

"Flippers" restore old homes and rescue neighborhoods in decline. Their numbers are rising thanks to a real estate boom.

By MELANIE AVE
Published February 13, 2005

	[Times photo: Bob Croslin]
	Kathy Young renovates and sells homes in the Kenwood area of St. Petersburg. Such private investors are credited with making over declining areas and returning them to their glory days -- one house a time.

With sweat beads rimming his forehead, Frank Godfrey looks up at his two-story house, covered in siding and sitting on a cracked foundation, and shakes a worried head.

The 1905 house on 19th Avenue NE in the Old Northeast neighborhood north of downtown St. Petersburg is his latest extreme makeover - a renovation project that has, unfortunately, only just begun.

"This house," he says, "is going to be a problem."

Godfrey, 40, is a letter carrier by day. But on nights and weekends, he could be called a "house flipper" - real estate slang for investors who buy, renovate and sell homes. They number in the dozens and these days can be found in most every older community throughout the Tampa Bay area, spurred by a booming real estate market and neighborhoods needing revitalization.

Some do it on the side, renovating only the homes they live in, while others have turned their hobby into full-time careers, improving several properties at once. Unlike large developers who make headline-grabbing announcements with massive condominium projects or big-box retail stores, house flippers often go about their business unnoticed.

But such small private investors are being credited with making over struggling and declining areas, rescuing them and returning them to their glory days - one house a time.

"It's a happening business," said Bill Duvall, a Seminole Heights investor and homeowner in Tampa. "It really is."

It's hard to determine the number of house flippers in the area because it is an unregulated, unlicensed industry. But real estate experts say it has jumped significantly in the past decade as property values have skyrocketed.

St. Petersburg ReMax Metro real estate agent Gary Smith, for example, estimates 15 percent of the buyers he encounters are people who want to flip homes. "The market is flooded with them," he said. "It's amazing. It's a feeding frenzy."

The impact of flippers can be found in numerous older communities including Seminole Heights in Tampa and the Old Northeast in St. Petersburg. Some people say house flipping can drive up property values, pricing out some people from their own neighborhoods.

But they also can transform an area. One of St. Petersburg's biggest success stories is that of Len Johnsen and Tom Barrett, who bought and restored a blighted mansion on 11th Avenue S and now plan to make over the entire block between Dr. Martin Luther King Jr. and Fourth streets.

"They create the vision," said Bob Jeffrey, St. Petersburg's urban design and historic preservation manager who also renovates homes. "That's how a neighborhood can start to turn around.

"If it didn't start with one person, it wouldn't happen."

Investors, not surprisingly, often target the diamonds in the rough, the worst houses in up-and-coming neighborhoods.

Godfrey and his wife Linda, a 42-year-old respiratory therapist, bought a two-bedroom fixer-upper on St. Petersburg's 10th Avenue N five years ago for about $118,000. They spent three years tediously restoring it as they shooed away prostitutes from the nearby street. The house, today one of the street's most attractive, sold in 2003 for $277,000.

At the other end of the spectrum is Dennis Johnson, a 44-year-old South Tampa land developer. He started his business with one home in 1987 on San Pedro Avenue. He bought it for $38,000, renovated it and sold it for $68,000.

Since he started flipping homes full time, giving up his job in real estate lending, Johnson has bought and sold more than 60 homes and been a part of 400 transactions. Now he rarely renovates the homes and usually sells to other investors - without his name ever being listed on a deed.

"If I keep something 60 to 90 days," he said, "that's a long time for me."

Hillsborough County deputy property appraiser Warren Weathers said flippers like Johnson have permeated the market slowly but surely. "I've seen it happen from Sulphur Springs to Seminole Heights to South Tampa," he said.

Karl Nurse, who has refurbished about six homes and serves as president of the Council of Neighborhood Associations in St. Petersburg, calls the investors who do renovations on the cheap "spray paint renovators."

"People see the homes look nice and think they're renovated, but the problems are still there," he said, urging buyers to get a thorough home inspection and check references and city permits.

Then there are the investors who join the growing industry only to fail because of unexpected renovation costs.

"It's not for the faint of heart," said Duvall, who said he lost money on his first makeover that became "quite an education" after he sunk $35,000 of improvements into a $19,000 home. He ultimately broke even - selling four years later for about $54,000.

"I was the laughingstock of the neighborhood."

But it's not the tales of renovation heartaches that usually attract these mom-and-pop investors.

A lot of people only hear the success stories, like the neighbor who made a wad of cash, said St. Petersburg City Council member John Bryan, a retired builder. But to do it well, local flippers say a person has to be part real estate agent, market analyst, contractor, home buyer, house cleaner, garbage hauler and landscaper.

Investors quickly learn to wear grubby clothes and to get used to paint in their hair and mud under their fingernails. "The drawbacks are you get dirty," said Scott Bellefleur, an investor and Century 21 Realtor who focuses on Uptown homes in St. Petersburg.

Successful flippers can typically earn between $15,000 and $30,000, with only a handful raking in more than $100,000 in some cases.

"There are a lot of novices who want to make a quick buck," Bryan said. "I don't know many who are getting really rich at it."

Many house flippers fall into the business after working in related fields like mortgage lending, real estate or carpentry. A good number have an affinity for older homes. A lot renovate their own homes and realize they have a talent for it.

That was the case for Stephen Kipp, a former marine mechanic and Long Island native who moved to the Old Northeast about six years ago and successfully restored a 1918 home on Eighth Avenue N.

He bought the house for $90,000, spent $60,000 improving it and sold it three years later for $290,000.

Kipp, 46, took off jalousie windows, renovated bathrooms and landscaped an overgrown yard. In the end, "it looked like it did when it was first built," he said. "It gives me pleasure in seeing a house that was going downhill to bring it back."

Kipp started restoring homes full time two years ago and now hires contractors to do most of the work. In the past four years, he's bought and sold seven homes. He is currently renovating three more in the Old Northeast.

The most successful house flippers often live in the community where they focus their real estate ventures, said Tim Burns of St. Petersburg's Historic Uptown Neighborhoods. And each neighborhood seems to have its cadre of flippers, most of whom know each other. They meet socially and through investor clubs.

"These rehabbers, it's not so much about the money," he said. "They're doing it for the love of the neighborhood and the love of that home."

Kathy Young, 62, admittedly adores old homes. But she said it's the money she makes that inspires her.

After renovating several homes on the side, Young, a deep-voiced, red-haired woman with the energy of a woman half her age, left her job as a mortgage loan officer to flip homes full time.

One morning last week she walked through her most recent renovation, a two-story, 1,400-square-foot house on 10th Avenue N with two bedrooms and one and a half bathrooms. She bought it for $185,000 last August and has listed it for $315,000 - with a renovated kitchen, bathroom, roof, air-conditioning, floors, fixtures and fireplace.

The house was on the market less than three weeks.

"I'd like to be altruistic and say it's something else, but it's really about the money," Young said. "This is a business."

And the money is good for many of them.

Duvall, the Tampa investor, said he once bought a Seminole Heights house for $9,000. He fumigated it, cleaned it up and hauled away truckloads of trash. He sold it to another investor for about $18,000.

"I was happy not to have done anything and still made $9,000," he said. "I'm actually doing a service and getting paid for it."

Few flippers seem worried that the real estate bubble may burst.

The Godfreys say they hope to fix their home's foundation and sell the 2,000-square-foot home within two years and find something smaller and do it all over again. They say they have faith property values will keep rising.

"People say, "It's topping out! It's topping out!"' Linda Godfrey said, during a recent break from renovating. "I don't think so."

Melanie Ave can be reached at 727 892-2273 or melanie@sptimes.com

Get a thorough home inspection to uncover any problems.

Request references on previous renovated homes.

Talk to neighbors about their knowledge of the renovation.

Check city permit histories. Make sure permits have been finalized for major projects like electrical, plumbing and roofing - work that must be completed by licensed professionals.

Source: Bob Jeffrey, city of St. Petersburg.

[Last modified February 13, 2005, 09:26:19]