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-ben voldman for the boston globe/Globe Freelance

WHEN GIOVANNI “JAY” TESTA bought a small Cape in Woburn for $110,000 last summer, he knew it needed a ton of work. After all, it had been advertised as “a total rehab or tear-down.” No problem. Fixing houses, that’s what he does. On one of his first visits, Testa realized it was occupied — by spiders, cockroaches, silverfish, you name it. Termites, too. “It was disgusting,’’ he says, recalling the massive welts on his arms when he left the place. He ended up replacing just about everything but the home’s foundation, spending $115,000, which was $30,000 more than expected. When he put the house back on the market in November, the ad read: “Come see this beautifully renovated custom cape that shows like new construction.” It now had a “luxurious” first-floor master suite with a marble walk-in shower in the bath and a kitchen with granite counters and stainless-steel appliances. He accepted an offer within a month and, six months after buying the house, sold it for $355,000, pocketing a tidy $130,000 profit.

Though it may be hard to believe, the downturn in Greater Boston’s housing market that has been so bad for so many has been good for professional redevelopers like Testa. They have been able to secure deals on homes, often run-down, and, in most cases, find buyers for their spiffed-up properties quite quickly. According to the foreclosure listing firm RealtyTrac, while 2011 and 2012 were “active” for flipping, the amount has been fairly stable. In Massachusetts, flipping increased 2.58 percent from 2011 to 2012, while nationally, the bump was 0.33 percent. “It’s been good for flippers because with FHA types of loans, you can’t have peeling paint, a broken septic system, mold,’’ says MaryBeth Muldowney, a broker and owner of TradeWinds Realty Group in Norwell and Plymouth. “A normal mortgage lender might not invest in these, but a flipper with cash could buy them.”


But things are changing. Real estate agents say the spring market is the strongest they’ve seen in years. Not many houses are for sale, the ones that are move fast, and prices are creeping up.

A few weeks ago, Muldowney accompanied a flipper to a bank auction of a ranch in Kingston. Previously, an investor could have reasonably expected to pick it up for $135,000, but the bank’s opening bid was $190,000. The dozen or so attendees walked out without bidding, she says. Still, guys like Peter Souhleris and Dave Seymour, the impossible-not-to-like stars of A&E’s reality show Flipping Boston, say they’re not worried. “Inventory is low, but the conditions are good,’’ says Souhleris, a Boxford resident. “Good for us. It’s certainly a market where, if we flip something, we can make some money.” Testa, a partner in North Atlantic Realty Group, agrees: “It was much easier to find a deal in ’08 than it is now. On the other hand, it’s much easier to sell now. You’re not going to see a market where it’s easy to acquire property and easy to sell it.”


What could happen, though, is that the casual flippers who came out of the woodwork at the height of the market but were scared back to their day jobs in recent years could be lured into the game again.

ben voldman for the boston globe/Globe Freelance


CONSIDER THE $130,000 PROFIT that Testa and his partner, Dennis Kerkado, made on the Woburn Cape. Sounds tempting. “There was still plenty of money in the deal, but we spent $30,000 more than we expected,’’ says Testa.


That unanticipated $30,000 makes flipping a risky proposition for amateurs. Elizabeth Davis-Edwards, a strategic marketing consultant, flipped a house in Medford back in August 2005, just before everything crashed. “Things were going south very quickly,” recalls Davis-Edwards, who now lives in Bolton. “I was just grateful I was able to get out and sell before everything got really horrible.” Had it not been for a broker friend who had a network of contractors who agreed to work quickly, she says, her project would have been doomed. (Testa likes to be done with renovations and repairs in six to eight weeks, in part to avoid “soft costs” like home insurance, taxes, and utilities.) Davis-Edwards made about $40,000 on the flip, “which was less than I had hoped.”

Though she felt her project had the ideal ingredients — a beautiful property, a good neighborhood, the right people on her team — there were larger forces she couldn’t control. “It was just a great lesson for me about the power of macroeconomics,’’ Davis-Edwards says. “It really doesn’t matter if you have the right house in the right place if people aren’t buying.” She, for one, would not attempt it again. “I am an amateur,’’ she says. “It’s kind of like people who think they can manage their own investments. In the end, you’re competing against people who have access to more data a lot quicker than you do.”


However, Flipping Boston’s Seymour, who with Souhleris runs seminars on the topic, insists that with the right level of commitment, just about anyone can do it. “Guess what? It’s fifth-grade mathematics,” says Seymour. “It really is.”

Seymour, originally from Britain and a recent retiree from the Lynn Fire Department, got into flipping after he almost had to short-sell his own home (meaning getting the bank to allow him to sell for less than he owed) and attended a seminar on real estate investing. Soon after, he was looking for opportunities on Craigslist when an ad Souhleris had posted, looking for an investor, caught his eye. “I had little to no money to invest,’’ Seymour says, and zero experience flipping, but he was willing to trade his time for knowledge.

“Wait a second. You just answered an ad for an investor and you don’t have any money to invest?’’ Souhleris says, recalling that first conversation. “But something kept me on the phone.”

“You liked me,” Seymour interjects.

“I liked him,’’ Souhleris says. “No. He was interesting.”

“’Interesting!’” Seymour says with a laugh.

Elizabeth Davis-Edwards is shown in 2005 discussing repairs with friend Steve Allen in a Medford home she was flipping; she now says she’d never attempt it again.
Elizabeth Davis-Edwards is shown in 2005 discussing repairs with friend Steve Allen in a Medford home she was flipping; she now says she’d never attempt it again. Jodi Hilton/Globe file/Globe Freelance

Souhleris, who had previous flipping experience, and Seymour did a few deals, though they weren’t officially in business together. That didn’t stop Seymour from responding, without Souhleris’s knowledge, to a notice by Departure Films, a New York production company seeking flippers for a new show. “Knowing marketing, I laced it with profanities,’’ says Seymour of his proposal. “I says, ‘Get on a you-know-what plane and come to Boston, where Rescue Me meets Flip This House.’


The dynamic between the two, and the drama inherent in almost any home improvement project, has earned the show a third season. They created a Peabody company, CityLight Homes, and are now flipping 15 to 20 homes a year. Their ideal project is a three-bedroom, 1,500- to 1,800-square-foot home, with 1½ baths and a small yard.

“The typical houses I like to buy are for first-time home buyers,” says Testa. “There’s a lot less risk. In Plymouth, that means a $200,000 or $250,000 house [after renovations], while in Westwood, it’s more like $550,000.” He aims to spend no more than 70 percent of “after-repair value.” If a home, for instance, is expected to fetch $100,000 after improvements, he would take 70 percent of that ($70,000) and deduct the estimated required repairs (say $20,000), arriving at the price he’s willing to pay the sellers (in this hypothetical case, $50,000).

Many of his purchases have been foreclosures, which in the past six months have been at a standstill while banks and other players adjust to new consumer protection rules. According to RealtyTrac, foreclosures in Massachusetts were down 20.59 percent from February to March this year, and down 57.37 percent from a year ago. It’s also taking longer to complete a foreclosure in Massachusetts.

Peter Souhleris (left) and Dave Seymour, stars of the A&E show “Flipping Boston,” are hooked on this real estate game.
Peter Souhleris (left) and Dave Seymour, stars of the A&E show “Flipping Boston,” are hooked on this real estate game.Departure Films

Testa believes the slowdown is temporary. Daren Blomquist, vice president of RealtyTrac, thinks he could be right, saying the new law has created a backlog. “In the short term, that means lower foreclosure numbers like we saw in March and the first quarter, but based on the pattern in some other states that passed similar legislation back in late 2011,’’ Blomquist writes in an e-mail, “we will eventually see a rebound in foreclosure activity in Massachusetts as lenders adjust to the new ground rules for foreclosing.”


FLIPPERS HAVE OTHER WAYS of spotting properties, some surprising. They look at public probate records that point them to forced sales in divorces or estate liquidation. And they do direct-mail marketing. Testa might target a town he’s interested in, or maybe a whole county.

And then there are the bird dogs, as Seymour calls them. “Your eyes and ears in the community — your mailman, your cable guy.”

As Muldowney, the broker, says: “The flippers and the investors, if they’re really successful, they have it down to a science. They know more about the market than anybody.”

Which is why Testa isn’t worried about the future. “There’s always going to be people who need to sell, there’s always going to be property that’s run-down, there’s always going to be estate sales. So there’s also going to be work for someone like myself who can bring the property back to life.”

And that, ultimately, is one of the real pleasures of flipping. “I love — love — taking an ugly duckling and making it look good,’’ says Souhleris.

Vanessa Parks writes the Globe Magazine’s weekly On the Block column. Send comments to magazine@globe.com.