Flipping Houses

During and after the housing boom, there was a common practice, developed in the 1970's I think. If you're a multi-talented general contractor with the skills and knowledge and some money saved, you buy a house on spec(ulation), officially move into it for the legally required 2 years with perhaps a trailer parked in back or alongside, and gut it, renovate the whole thing yourself, and at the end of the legally mandated tax period, sell for a profit then flip that money in a slightly bigger and better house, or one with less of a mortgage and more of your own money, so you keep more of it. Repeat. After three or four of these flips you're owning the whole house at the end and the money you keep is your own. If you reinvest in a house you're living in, its lower taxes or tax free. At least it was at the time. In the old days when houses were cheap, around $20K, this would have been chump change. When cheap houses are $300K? This is a retirement fund. It becomes a viable lifestyle choice, a career. There's a lot of physical effort and financial risk. At this point, rural homes are a huge risk thanks to gasoline/oil supplies being unstable thanks to middle east violence.

Contractors are still doing this, which is why you don't hear them whining much about the end of the housing boom. Yes, throwing up cheaply built McMansions was easy money, but the smart guys started flipping houses with value that would last despite the crash. Some lost money, some are wringing value out of them as rentals, and others went bankrupt on them and started over. Contractors are very determined people, and time is money to them.

Personally, I see the biggest potential for fixed real estate is tiny towns where there are still tiny bungalows to be had and fixed up, perhaps rented out or sold. Yes, you're taking a huge risk on the neighborhood, but with the Bear Market tearing apart retirement funds, small cheap places are the future. The formerly rich will either come around and accept poverty or they'll be found dead from suicide. Alcohol poisoning was the #1 killer of people in my home town, oddly enough. Apparently it is easy to overdose and die from it. I thought you just got a hangover.

I like small bungalows, I just don't know of any jobs in towns that still have them for a reasonable price. The bungalow is a pre-Car house, meaning they didn't come with a garage. Leaving your car on the street in most poor towns is an invitation to have it broken into, or be vandalized. Bungalows often got a carraige house in the back, which usually got converted into a one-car garage with its entrance from a gate on the alleyway, which is sadly an avenue for crime. The alternative, in some places, was a side driveway that passed beside the house to the back. If that gate is opened or climbed by a burglar, this gives them easy access to a breakable window or forceable door and you get robbed. From what I've seen, obvious security is a warning sign you have something to protect, which in modern times means drugs and cash. Subtle security is far more important. In a town like this one with dozens of banners declaring "Hydroponic supplies!" everywhere, you can imagine what people do with it. That's the downside of the mountains. One of them.

Bungalows are a security risk, and they're small, but they aren't organized around cars which means if we never manage to find a better battery than Lithium, we won't need garages in the future because we're all too poor to own electric cars. Its going to be for rich people only, no matter what that electric car guy says. Maybe golf carts, since those use really cheap battery materials, but lithium? That's rare as gold. Or silver, anyway. Not common enough for everybody, so worth stealing. So we won't need garages and most of those houses with the big 2-car garage dominating the front? That's going to get converted. If we're lucky, into a shop. If we're not, perhaps a couple bedrooms or a battery shed for solar power to keep the house liveable when the power grid keeps having brownouts and blackouts every day. That's the future we're heading towards, after all.

Since Bungalows are a classic design and very small, they're easier to heat and cool and should adapt to solar relatively well. They often have excellent natural lighting and allow the breeze to flow through because they're from the time of boilers and radiators, ice boxes, and no A/C. They would be ideal low-power demand homes. You just have to accept that they're small. They aren't built for huge personal space. For a single person like me, needing a bedroom and an office and internet, it would be ideal. I love the brightness and they fit in small spaces, with smaller windows than today so you can plant a garden to cover your view and not lose all your heat through the glass. Most are single pane wood frame windows. Most of those need to be rebuilt and the sash weight re-hung. That's what counterbalances an old window so you can open it. Many of the Bungalows had glass brick walls. Turns out glass brick is vacuum inside so are really excellent insulators, R30 is typical. So you build glass brick walls and you get light and still keep your insulation value. A very handy thing. When I studied architecture it was one of the old ideas that I liked. Same with deliberate reflective or bright walls to light up a glass brick wall and illuminate the space inside. In certain homes they'd build interior light shaft spaces to take advantage of this, sometimes called Light Wells. A clever designer would get three walls worth of reflection off this and put up some artwork or garden in the well too. Just remember to drain it properly if its exposed to the outside. If its got a skylight dome, be sure to wash it off as part of monthly maintenance.

Really, I think I could be happy with under 1000 square feet, provided I had a separate carriage house for a workshop and space to park my motorcycle and car for those rainy days. Put solar panels on the south facing roof surfaces, and hybrid solar water heaters with heat exchangers to preheat the water, you retain good heating in the winter off grid and provide power to a battery bank that runs your appliances, lights, computer, TV, video game console, refrigerator, etc. Retain your civilization. Even if everyone else is gradually following you, because its cheaper and more reliable than the government fail-o-tron. I suspect that once blackouts become common, we're all going to be installing house batteries with a shutoff like a house sized version of the one you plug your computer into. After losing a few freezers worth of good steaks and frozen pizzas, it is going to make sense to spend the money to route your mains into a box. House batteries can be lead-acid, after all, since weight is irrelevant. Or Zinc air since those are even cheaper. The tech exists to make a modest looking house energy efficient. Many homes where I live, which are ranch houses for the most part (big garage taking half the front), have solar panels on the roof. I can't tell by looking at them if they're PV or water heaters. Every little bit helps, provided it is done right. The simplest answer is PV leading to a DC immersion heating coil in the water heater, which the PV powers and saves you money on your hot water heating bill. The next step after that is a bigger water heater, then a hot water sump. Then radiators running from that sump to heat your home in the winter. Of course, most of your power comes in the summer when you can't use the hot water and don't need the heat so battery system is probably for the best, except batteries get loss. There's no perfect in this system.

The most important part of Bungalows is they are modest small efficient homes, not ostentatious. They appeal to me a great deal. And since they're not organized around a garage or driveway, they mean something post oil. Even the above model with a driveway sneaking past it on the left, probably to a carriage house in back, even with its big security hole its still a lovely modest home. It is classic and vintage and retains its value when all the ranch homes remain ugly and decline. Its a shame that Oakland has so many of these homes in poor repair and its violence may end up dooming them. The building style remains, however and new homes can be constructed this way in the future, and older homes renovated into variations of this style. Turn a two car garage into one, and put some windows up on the walled up half. Tear up half the driveway, plant a garden, turn it into something a bit more classy.

Can this tacky McMansion become something... classy?