For flipper, journey from project to plum is the highlight

McClatchy Newspapers (MCT) - Elizabeth Keller loves houses, but doesn't have a home.

She and her husband are living in a spectacular house she built on Sterling Road in the Charlotte, N.C., neighborhood of Myers Park. With five bedrooms, six baths, 5,700 square feet and a carriage house apartment over the garage, it's a place many home buyers would covet.

Not Keller. She's hoping to sell it for $1.95 million and move on to temporary quarters _ perhaps a house in dire need of repair, a no-frills apartment or a spare bedroom in her daughter's home.

Keller is a house flipper, and she delights in the work, not the finished product. Like most artists, she's eager to start over with an empty palette, imagining the possibilities.

House flipping _ buying, fixing up and selling a house for a profit _ became popular fodder for TV shows in the last few years. However, fluctuations in the housing market have discouraged this practice in most places. But generally, the up-and-coming entrepreneur buys an inexpensive property, repairs it as cheaply as possible and tries to turn it quickly.

Keller, 59, is the antithesis of the TV flipper. Over the past 20 years, she's flipped eight houses _ buying them, living in them and rebuilding or renovating to exacting standards in her own time frame. She's bought and sold numerous houses in North Carolina including in Myers Park, Dilworth, Chantilly, Weddington and Matthews.

She's not discouraged by the economic downturn. She picks her projects carefully and knows they'll sell.

"It's more of a hobby and a pleasure than support of a family," she says. Her husband, Jesse Pike, is a longtime pharmacist who doesn't mind their frequent moves as long as Keller does the packing, she says.

"We just kind of live where we are," she says. Often, many of their belongings are in storage while they're housed in close quarters. The advantage of not having a permanent home, she says, is not having a mortgage. She plows the proceeds of one house into the next, and tries not to "overreach" financially in her projects.

"She creates the design for the house with her architect, she builds the house, she decorates it, and she stages it," says Robert Dulin, a Realtor who has seen Keller complete several projects. He says he doesn't know anyone who puts as much work into flipping homes as Keller.

Keller took a detour from fixing up houses in 1994, starting a restaurant with her husband, Pike's Old-Fashioned Soda Shop. They opened in east Charlotte, later relocating to Camden in the South End area. Keller developed the concept and recipes and managed the popular eatery.

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They sold the business in 2002.

She went back to buying, fixing up and selling houses, learning new skills with each flip. When she started in the 1980s, she mostly spruced up existing houses. But in recent years, she has built several houses on choice lots in existing neighborhoods.

She was the contractor on the latest house at 1521 Sterling Road, using a cadre of subcontractors who have worked for her over the years.

Keller bought the property in 2005 for $575,000, renting it out while she finished another project. It was a Cape Cod with a low-pitched roof and two bedrooms, two baths in an awkward floor plan. She decided to tear it down to the foundation.

In its place, she worked with an architect to design a spacious floor plan that included formal areas, a large kitchen and great room and master suite on the first floor, with four bedrooms and a rec room on the second. The light-filled great room opens onto a covered porch and patio with an outdoor fireplace and terraced landscape. The two-car garage includes a well-appointed guest house on top.

From the street, the house is a graceful Cape Cod with white-painted brick and blue shutters. It doesn't look like a "McMansion," an overly large house plopped down on a street of modest residences. Keller says she was determined to avoid that look and wanted neighbors to be happy.

She's gotten compliments from them, she says.

She planned the house in 2006 and built it mostly in 2007. Earlier this year, she began to decorate and furnish it, and it went on the market in September. It's gotten lots of attention so far, but no offers.

"Her taste is immaculate," says Dulin. "She has an artist's eye for color and texture, and she knows more about her market than any other builder/seller I have ever known."

Keller says that for each project, she designs with a specific kind of buyer in mind. For the Sterling Road house, she visualized parents with two children older than 10. The parents would enjoy the privacy of the first-floor master suite and the older children would have their own space upstairs with the rec room and bedrooms.

For her next house, she says, she envisions a narrow, one-room-deep townhouse that would suit empty nesters, more of a couple's retreat. But she'll wait until the economy improves.

Keller knows that in this economy, it's not the optimum time to sell a $1.95 million house. She accepts that it may take a while.

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"If it doesn't work, we're here and we're comfortable," she says. "This is what I love to do."

In a lagging economy, before you flip:

Todd Calamita, a personal financial planner with RBC Wealth Management in Charlotte, says house flipping is risky, especially in an uncertain economy. You should consider the following:

Are you able to pay cash or do you need to take a mortgage out on the house? If you pay cash, look at the potential opportunity cost of having your money tied up in an asset that can't be sold immediately. This is exactly what is happening in the market right now. There is too much supply.

If you did not pay cash, you are increasing the cost of your investment by paying mortgage interest on the house while you wait to sell it. This is an expense that is sometimes overlooked by investors.

Evaluate whether you could rent it if things get bad and you couldn't sell it. If you have a mortgage, you should consider whether you need the rent to cover the mortgage or whether you could afford to pay a portion.

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TIPS FOR A FLIP

From Elizabeth Keller:

It's all about the location. Don't buy a property just because it's cheap.

Decide whether an existing house is worth saving. Often it isn't.

Work with an architect to design a house with the right proportions for the street.

Bring in a landscape architect at the beginning to marry the house with the land and take care of drainage issues.

Even if you're doing the decorating, consult early with an interior designer for help with the overall look.

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© 2008, The Charlotte Observer (Charlotte, N.C.).