If you’re a new investor and looking to do fix and flips there are specific things you should know before spending your money. As a real estate agent with a construction background, I would like to share a few tips that you should know when flipping a house:
1) ALWAYS have a budget and STICK to it! You have an inspection period when you purchase, USE IT WISELY! You can figure out a list of what needs fixing and get a LICENSED contractor to bid the project within your inspection period.
2) Always hire LICENSED contractors to do any work on the house for you. It may seem financially wise to hire the cheapest person, but you have no idea what liability you open yourself up to if you do not have a licensed contractor. Licensed people may charge more but that is simply because they are bonded and insured. Find a good one, keep him busy and negotiate pricing but whatever you do DO NOT cut corners and hire unlicensed people. You will end up paying more in the long run. When a buyer comes in and performs their property inspection you don’t want them to find any issues with the work that was performed.
3) NEVER pay your contractor by the hour, day, week, etc. He should be able to give you a quote based on the job itself. He is a professional and he will know about material costs and how much time it will take him. If you are not comfortable with what he says, find another one. There are plenty out there to choose from! Small tasks can be paid by the hour but better to bid by the job / project.
4) Spend your money in the right places by analyzing your market. Walk other investor flips that are active listings and check out your competition. Your REALTOR® should be able to help you find other comparable rehabs to view. Will your house sell with a $50 faucet instead of a $200 faucet? Do you need slab granite or will tile or formica work just as well? Use your resources….ask questions. Don’t cut corners but don’t waste money for unnecessary upgrades compared to other comps in the area.
5) Most important…time is money….have a construction schedule. Get that house closed, fixed and flipped as quick as possible. Remember that your comparables in the neighborhood are only as good as time allows. If your house sits for a long period of time in a declining market, you may end up losing money. Work smart, quick and ask questions when you’re unsure. I hope this helps!! Good luck and success to everyone!
Investor Tips for Fix and Flips