5 Things First Time Flippers Should Know
I can still remember buying my first fix and flip and all the anxiety on whether I was making the right decision or not. I looked at comps, ran rehab numbers, looked at other properties for sale, and still wasn’t sure. That was about 15 years ago, and since then, I have flipped over 800 homes. Following are the top 5 tips I have for all the first-time flippers out there.
1. To Get Started, First, You Need to Start
It is essential to gather as much information as you can and educate yourself fully, but you need to jump in the pool and get wet at the end of the day. That first flip 15 years ago, I ultimately had to dive right in, even though there were many unknowns.
2. You are Only as Good as the Team You Build
Take care in building your team—real estate agents, contractors, financing, title company, and so on. Check references, get referrals, and make sure your team of people is aligned with you and the way you do business. When you surround yourself with good people, you will have fun and be successful.
3. Move Fast
Once you’ve bought a fix and flip, your rehab shouldn’t take more than 90 days. I’ve built several homes from the ground up in 6 months, so if your fix and flip is going to take 6 to 12 months, it’s probably too big of a project for you. Time is important. The longer a project takes, historically, the less money you make. I get that might not be the case for the last 12 months, but it’s been that way for the previous 100 years, with a few minor exceptions. The longer a project takes the more, insurance costs, utility costs, taxes, maintenance (Yard and Snow), finance costs, and so on. Not to mention the market can go down.
4. Sweat the Small Stuff
Paying attention to every detail of your fix and flip is how you increase your profitability. You make money a dollar at a time, not a thousand dollars at a time. So ensure you aren’t wasting money on sloppy work, days when nothing is getting done, or extra materials that aren’t needed or thrown away. We all do it but watch your dollars, or no one else will.
5. Your First Offer is Usually Your Best
When selling a property, don’t have an emotional attachment to it. It’s a house, not your home. The goal is to sell as quickly as possible for as much as possible. Just because someone writes a higher offer doesn’t mean it’s going to close. Be sure to look at the price, inspection period, EMD, loan requirements, and buyer’s agent. You want to be sure your buyer is invested in owning this home and is doing all the things required to get it to close. A PA is worthless unless and till it closes.
With these tips, your first few fix and flips should go smoothly. Once you have some experience, you will begin to find your rhythm, and each project will be a bit easier. If you are building your team and searching for an asset-based lender, please give me a call or go to our website and get pre-approved. I would be honored to assist.