Making Money Flipping Houses Using SOW and CORE

Making money flipping houses means attention to all the little details as well as the big details...here's how to do it.

When I walked into my new house flip in Carver, I was not happy.

We only had hours before we officially put it on the market and there were so many things wrong.

And although I didn't quite look like this guy here on the left...I was pissed...

Small things being left out at the eleventh hour really irritate me. And on this "final walk-through", we were anything but final. In fact, there were TONS of little things that were missed and needed fixing.

I don’t know whose fault it was – but at this point in the project it didn’t matter. All we needed to do was get it fixed.

The Carver Property Flip...Looking Good Overall

As you can see from these before and after pictures, the Carver property came out pretty nicely:

Carver Exterior

Before

After

Carver Living Room

Before

In Progress

After

Carver Basement

Before

In Progress

Finished

Carver Entryway

Before

In Progress

After

We were proud of the work we had done...but the final details were now getting in the way of a quick sale!

Making Money Flipping Houses = Fast AND Efficient

As I’ve said many times before, if you are serious about making money house flipping – you gotta work fast.

Time is of the essence.

And excess time costs you money in house flipping.

The longer you hold onto your flip, the less money you make. When you use the 70% Rule, you factor in your financing costs in that equation. But when you hold onto the house too long you will not be making money flipping houses, I can assure you of that.

So what steps can you take to avoid losing money and start making money flipping houses instead?

Things Go Wrong In House Flipping

Nothing ever goes perfect – especially in real estate investing. It’s just part of the business.

However, whatever you can do to minimize mistakes and errors and oversights, the better.

We have gotten pretty good at it, but we are not perfect…yet.

For example in this house in Carver, there were multiple issues we had to deal with on the last day before it went to market:

• Jambs on the front door needed a second coat of paint

• The utility closet had cobwebs in it

• The front foundation has hydro-seed sprayed on it

• The overall cleanliness left a lot to be desired

• The flower beds were messy and needed cleaning up

• Some of the baseboards had not been properly caulked

Major problems? No.

Would they affect the speed of the sale? Yes, they would.

So we needed to fix them all fast.

Although all of these items are fixable, but I really shouldn’t have to tend to those details – because these details were all in the scope of work.

But what can you do to minimize these kinds of oversights, errors and lack of follow-up?

It all comes back to two things: the CORE and the SOW

How to Nail The Cost of Repairs Estimate

Otherwise known as the Cost Of Repairs Estimate, CORE is always working hard at making money flipping houses for me.:-)

My project manager Bill is actually the project manager on this project so he does the managing of the project. On this house flip, he hired the subs and he managed the rehab of the project.

He also managed the cost of repairs estimate as well as the scope of work. We don’t always do it this way - and especially now because he's so busy acquiring properties, I can’t have him managing rehabs for us any more. there's many other areas we need him more.

But on this project, he was the one responsible for the scope of work and making sure everyone got everything done correctly and on time.

When we started this house flip, we went through the entire property and determining what we needed to fix. In this case, I used estimates from subcontractors to tell us and helps determine the CORE.

Here we go through how to do a Cost of Repairs Estimate – the same exactly one we used on the Carver property. Check it out:

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How to Use a Scope of Work and Anchor It to Accountability

What is a “scope of work” you may ask?

A scope of work is a super detailed scope of work which is a detailed document we use on all projects to make sure that everything is done on time and tended to in a timely manner.

To make sure we keep a super detailed tab on what is going on and we now don’t leave anything to chance. Because when you’re rehabbing and flipping three properties at once, you must have systems and accountability to make sure the project is done right and done on time.

Although many things were missed on this property we vowed to take it to the next level at the next project.

I am going to conduct a  general meeting with all the subcontractors and make sure everyone knows exactly what they need to do and what is expected. I will hand out the detailed Scope of Work and on each item – the subcontractor’s name will be assigned right to it. Talk about peer pressure….Nobody wants to miss their work schedule and get blamed for holding up the project!

I'll tell you all about inside HFS.

But what we did to make sure we had a super tight handle on the rehab costs, you gotta have a rock solid Scope of Work and it all comes from your Cost of Estimated Repairs Worksheet.

In fact, I used this Scope of Work here to outline exactly what we had to do for repairs:

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Stay tuned for more updates on the Carver, Massachusetts house flip coming soon as we are finalzing our offers right now. I hope to have some more good news to share with you soon!

Take care and see you at the top,

Mike

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