When starting out, you want to maximize your profits at every chance you get but this may not be possible if you do not utilize the best possible strategies.
Truth be told; the most important thing when flipping houses is knowing how to control your rehab costs. Comparably, itâ€™s just as important, or even more important, than the price you pay in acquiring the property youâ€™re intending to flip.
To begin with, when youâ€™re just starting out, you may be find it necessary to do the bulk of the rehab work yourselfâ€”which, of course, is not a bad idea. But once you start doing bigger rehabs, youâ€™ll categorically need to get the services from professionals.
Thatâ€™s not to say that youâ€™ll be required to hire general contractors. As a matter of fact, there are a number of gains and drawbacks that comes either way: when hiring a general contractor, doing it yourself or using subcontractors. Itâ€™s however recommended that you use general contractors to do all the rehab work instead of trying to do it yourself.
For a start, all youâ€™ll need to do is to learn how to control the rehab costs. And once youâ€™ve fully grasped the concept, you can be rest assured you will maximize your profits.
The Rehab Checklist For Flipping Houses
There are several never-failing ways of controlling your rehab expenditure. That said, hereâ€™s the rehab checklist that will keep you on the safe side and enable you to maximize your profits as well:
To keep track of every repair or any other rehabilitation process, youâ€™ll need a master budget spread sheet. This spread sheet actually works as a Polaroid of getting your exact position in the rehab process.
Get A Number Of Estimates
Before you embark on any rehab process, itâ€™s advisable to get a number of estimates from several contractors: plumbers, electricians and painters among others. By doing so, youâ€™ll have a general clue of how much each rehab segment will actually cost.
Also, as you gain more experience, youâ€™ll be able to approximate the cost of each rehab process. Youâ€™ll develop a quick sense of how much it will cost to cover part of the job as long as prices remain standard.
Final Checks On The Cost Of Repairs
After receiving all estimates and finalizing on each subcontractorâ€™s scope of work, you can go ahead and put a timeline for completion. Here are a few tips to use when planning to put timelines in place:
Accountability: You must hold your subcontractors accountable for every repairing price they gave you at the beginning. Let them know that theyâ€™d be held liable for any under-budgeted repair that cripples your budget.
Go through your budget: Go through your budget with each subcontractor. Be sure to check if they have left out small details or conceivable cost overruns. More importantly, let them know that youâ€™re counting on them for the prices you have in your budget. And since youâ€™ll be doing more house flips, remind them that youâ€™ll be involving them even more in the future.
Unforeseen repairs: Your subcontractors should be able to warn you if thereâ€™s any unforeseen repair. To stay safe, ask them if thereâ€™s any potential overrun cost. If there is, get the price and have it factored into your margins.
After going through your budget and costs with your subcontractors, your next step should be to give the project a time frame. And regardless of whether youâ€™re a newbie in house flipping business or youâ€™ve been in the business for over 20 years, please note; the less time you spend between buying the house and selling, the higher amounts of profits you make.
General Guidelines To Follow When Giving The Project A Time Frame
Review the entire plan with your subcontractors: If possible, hold a meeting with all your subcontractors to review the entire plan of repairs. During the meeting, remember to discuss about the best order that all subcontractors can use to work together to ensure the project flows smoothly and ends within the allocated time frame.
Set The Schedule
After creating a logistical order, go ahead and prepare a schedule for each subcontractor. Go through the schedules and let them exchange phone numbers so that they can communicate among themselves for a smooth flow of activities. But more importantly, let them understand that they are not allowed to delay or make changes without your approval or full knowledge.
Start With The Exterior
Your main goal is to sell the house as fast as possible. That said, you can start by making the house appear more salable by first ensuring the exterior can attract potential buyers before completing the entire house. And once the exterior has been trimmed down and rehabbed as planned, you can place a sign at front with your telephone number, to start receiving calls from potential buyers as your contractors repair the interior.
Speed is crucial
Like already noted, speed is crucial when it comes to flipping houses. And even though shortcuts are not advisable, but getting the job done more quickly without sacrificing the quality will actually fetch you more profits in the long run. Actually, for those who have gotten their business money from other sources, the faster you turn the house around, the more profits you make by minimizing on the charged interests. Plus, youâ€™ll be reducing the maintenance fees, taxes, utilities and other time-dependent costs.
Supervising The Entire Process
If youâ€™re doing minor repairs like painting, appliance updating, carpet replacing and a little bit of landscape sprucing, then the entire house flipping process should only take you a few weeks. But if youâ€™re carrying out an in depth rehabâ€”like intensive plumbing and electrical work, foundation repairs, as well as insulation, the entire rehab process may approximately take you three to four months.
However, if youâ€™re just starting out, the entire process should not take you longer than two to three months. And once youâ€™ve successfully handled a number of flips, you can consider trying out the longer time-framed rehabs.
If you've come this far please leave a comment below. I'd love to know what your thoughts are on maximizing profits.