I’ve flipped a considerable amount of houses over the years. Exactly how many, I currently don’t remember. Yet, it was enough to make a decent living. And have two full-time five men crews under my employ – for a decade. Of all the houses I’ve refurbished, the first was the most memorable. Well, and the last – since I’m still living in that one.
I have always been disciplined. I draft a plan for everything. I’ve even developed a blueprint on how to generate a successful strategic outlook. So, in other words, I have developed a plan on how to develop a successful plan. And no, I don’t find that weird. But, it’s okay if you do.
There are five critical do’s and don’ts to successfully flipping a house. I’m going to try and illustrate those points to the best of my ability. However, please keep in mind that this is not a blueprint to effectively repair investment properties. It takes more than a simple outline to do that. It takes money, time, patience, discipline, skill, hard work – wait, did I list money already. Yes, sorry. Well it’s worth mentioning twice since you’re going to require more than you realize. Finally, you must have a great eye – for spotting the best deal.
My list of five factors in no way suggests it’s a complete list. And the investor’s success will vary based on their age, knowledge base, skill set, eagerness, initial investment and their limitations. I realize that each of my variables could use additional clarity. Unfortunately, there just isn’t enough room on the page to discuss everything in more detail.
Now, in no specific order, one: you may have guessed, you need to develop a plan and under no circumstances can you ignore principal elements of your own plan. For example: your goal is to make a one hundred percent profit. Profit in this case meaning – the financial gain, or the difference between the buying and selling costs and the amount spent on repairing the property and the final selling price.
And no, eighty percent is not good enough – when your goal was one hundred percent. However, in the event you believe an eighty percent profit is great. Let me ask you two questions. One, if you were to receive eighty percent of your pay for a month’s work – is that great? Or if you were to buy a car and they gave you everything you asked for – but the two rear tires – is that acceptable? If you settle for less once, you will always settle – guaranteed.
Two: make sure your budget has an additional expenditure of two hundred dollars a day. So if your plan shows you completing the work on a property in thirty days, you need an additional $6,000 baked into your budget – $200 times 30 days. Take it from someone who flipped houses for ten years. Unforeseen expenses will always materialize.
Years ago I purchased a two bedrooms and one bath cottage. The repairs required were minimal and I flipped the house in two weeks. I moved a few rooms around and replaced the laundry room with a second bath. A stackable washer dryer combo was added in the kitchen by reducing the pantry. I experienced zero additional daily cost on that project. However, during the buyer’s home inspection, a leaking sewer line was discovered. And just like that, the daily additional expenditures I had saved were consumed in one repair.
Three: Remember, you are not remodeling this property to live in. Nor are you making the minimum repairs to become an effective slumlord. Neither of those two approaches ever works. The first approach will have you commit more money than necessary reducing your profit margin. The other will cost you more in personal time, legal fees and repeated repairs which could have been avoided from the beginning.
Make sure you buy high quality material at basement prices. Target overstocked items, appliances returned with handling dings and/or clearance items. Find a place to store excess material because if you find solid wood oak flooring on sale for 80% off, you need to buy it, even if you’re not going to use in on your current job. The same goes for appliances, paint, marble tile, windows and doors. A ten by twenty storage unit cost me one hundred and twenty-five dollars a month. On my second job, I saved almost five thousand dollars on twelve hundred feet of solid wood flooring. Just half of the savings of that one purchase paid for my storage unit for two years.
Four: Make sure you complete critical tasks on time. For example: If you schedule painters to come in on week three of a particular project. Having the drywall hung, mudded and sanded is a critical task to have completed prior to painting the interior of the house. Having all the wiring installed is a critical task to complete before installing drywall. So list your critical tasks and complete them on time. If you don’t know how to identify critical tasks, then ask yourself the, “Can I,” question. For example: can I install bathroom fixtures in this room without plumbing? If your answer’s no, then the installation of plumbing is a critical task.
And finally: Skill. It’s hard to make a hundred percent profit if you have to pay contractors to do the work required. It’s going to take a while before you find the big five you can trust – concrete and brick layers, plumbers, carpenters, electricians and roofers. So the more skills you personally possess, the more money you’ll save and hence, the more money you’ll make. I started off with a multitude of skills when I began flipping houses. I had purchased maybe ten houses prior to flipping them. All of which required maintenance and repair work over time. But that experience only made me apprehensive. Luckily, I was a quick learner.
The best way to acquire knowledge is to pay for it. So, in other words, start by hiring a master carpenter. Most are hardworking and have their own tools. They’re a wealth of information and are willing to share it with you for twenty dollars an hour.
And as a side note: regardless of what happens, it’s never okay to not pay your employees. So, plan ahead and be honest with those working for you. If you believe your first project will be your last – for whatever reason, then inform your employee(s). They are there to make you money and feed their family. It’s the least you can do.
By the way, if you don’t love what you’re doing, you won’t flip houses for long. Statistics show that less than twenty percent of those who try flipping houses ever make any real money and less than half ever flip more than two.
So can you flip a house without using your own money? Or without having experience or any skill sets – and still make money? Sure, anything is possible. It’s just improbable. I don’t want to seem discouraging, but it’s more likely that you can plant grapevines and generate a quality wine from your house then flipping a house successfully with no money, experience or skills.
Alberto Perez wrote his first book titled, ‘The Second Coming: The Arrival’ almost two years ago. The book illustrates an account of the Rapture. The 4th edition is now available for sale. His second novel titled, ‘The Second Coming: The Gathering’, will be available for purchase through Amazon this summer. You can learn more about him at www.albertoperez.co or join him on Twitter @albertoperezmba. You may also read the Kirkus review of his first book at https://www.kirkusreviews.com/book-reviews/alberto-perez/the-second-coming-the-arrival/ or email him at firstname.lastname@example.org.