Property flipping is a time-sensitive proposition, so anything you can do to speed things up means money in your pocket. In this situation, time is truly money, and the longer you hold the property, the smaller your profits will be.
#1. Stay aware of holding costs
Some of the costs of flipping are fixed; you will pay within a certain range for your repairs and materials. But the longer you own the property, the more you’ll pay in holding costs –things like utilities, tax, and insurance. A longer holding period also increases the risk that you’ll run out of money. To eliminate as much of this expense as possible, streamline the renovation and reselling process.
#2. Buying property
When considering a deal, you can save yourself immeasurable grief by factoring in the anticipated cost for repairs. This will help you to decide whether the property will generate the ROI you need. Doing this work before you buy also has a very positive impact on your timeline once the deal has been made.
By exploring and assessing the potential costs for planned repairs and renovations ahead of the purchase, you can hit the ground running after closing.
#3. Managing renovations
Creating a detailed and realistic budget for the renovation is always the first step. This means getting the advice of a professional inspector so that you can avoid surprises as much as possible.
Remember that things like roofs, foundations, additions, and pools can take a lot of time. Consider the lead-time that will be needed for your chosen contractors. This can be significant. Be aware of permitting issues and requirements.
#4. Have contractors on standby
It’s advisable to take your contractors on a tour of the property before closing. This allows them to get a sense of what kinds of repairs the house will need. They may be able to make arrangements for needed materials and crews earlier this way. Get them scheduled, so work can start on day one.
#5. Pay attention to the sequence of tasks
There’s nothing worse than dead time on a project. Watch the order of events and make sure that the work can proceed smoothly, without costly wait time. For example, in most cases flooring should be done after painting, to make both processes go more smoothly.
#6. Motivate contractors
Set a completion date with your contractor, and build in a penalty if the work is not completed by the target date. By the same token, it can be wise to offer a bonus or reward for work completed significantly ahead of schedule.
#7. Get the house sold quickly
Meet with a realtor before the repairs are complete, and get the house listed as early as possible. Resist the temptation to price the property based on your investment of energy and time; go with comparables for the area for a reasonably, quick sell, ideally 8 weeks or less.
Success in a flip is all about preparation, awareness of the market, and good planning. Streamlining the process will absolutely improve your bottom line.
Whether you’re an experienced flipper looking to borrow funds for your next flip or an investor searching for the right project, be sure to explore your options on Patch of Land today. We’re always just an inquiry away and look forward to helping you make smart, sound investments. Connect today!
