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REAL ESTATE Flip Lessons Learned / Tips

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ProfessorSpeed

Contributor
Read Millionaire Fastlane
Sep 20, 2007
44
23
63
Tulsa, OK
I thought I'd start this thread for everyone to post their lessons learned when house flipping. I hope you will find these useful...please add you own!
  • What’s involved with Asbestos siding removal on exterior walls?
~1000ft2 house as quoted at $3,250
Debris placed into min 6mil trash bags and duct tape tied
Water misting wands are used to keep all dust down
Enviro suits and breathing apparatus required
Cover ground with plastic
Hang warning signs and perimeter tape​
  • Ensure to budget for trash container (demo debris), all utility bills and deposits, carrying costs of loan, permits, closing costs, rental equipment, etc.
  • Make sure all material is on site before installing (i.e. all boxes of tile for the job)
  • Must have license for operation of heavy equipment (backhoe)
  • Mix paint batches before applying (Exterior of house, merge all 5 gal buckets)
  • When inspector cites you for not having proper permits, he will pull the electric meter (no power on the job site)
  • Rule of thumb 25-60 BTU/ft2 to cool a home
  • “Tape and Bedding†= finishing the drywall joints
  • Dura-rock behind shower tile walls, green sheetrock in bathroom
  • As much as $125/hr for experienced plumber
  • Do not pay unknown contractors up front
  • Bathroom lighting rule of thumb: 8 watts/ft2
  • Test older popcorn ceilings for asbestos before removing
  • Don’t keep materials / tools on worksite – at least secure worksite
  • 30-35cents/ft2 for sod
  • Curb appeal 5%-10% increase in value of house
  • Install a key box with code- all players know the code (saves time)
  • Order doors, windows, cabinets, granite early!
  • Order 7%-10% additional flooring material to account for trim/waste
  • Heat house during winter to prevent pipe freeze
 

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Russ H

Gold Contributor
Read Millionaire Fastlane
Speedway Pass
Jul 25, 2007
6,557
1,334
381
59
Napa Valley, CA
Great stuff. Rep speed for you. :)

Just a few things that come to mind:

-Buy a landscape trailer (16' x 7') w/a metal ramp and 30" steel sides. Build up the sides by bolting 2x12s to it. You now OWN your own debris container, and can take it to the dump whenever you want. Cost: Less than $2K. Savings: About $2-3K per job, based on our local debris box rates (which are scary).

-Pull permits for full electrical and plumbing, and mechanicals R&R on every job, even if you don't plan on it. This allows you to keep anything that's in good condition, and prevents you from getting red tagged if the building inspector doesn't like work done by previous owners.

-In the same vein, for your scope of work when pulling permits-- mention that you will reframe anything that needs to be removed or replaced due to dry rot or pest damage. This gives you a LOT of leeway in moving doors, etc-- provided your as built jives with where you want the final doors to go!!!

-Get 3 good guys that will work their butts off for $12-17/hr. Keep them fully employed, and teach them how to paint, drywall, and tile. Have them also do demo work and take things to the dump. You have just cut your costs of drywall and painting in half, and your tile costs by 70%. AND-- they are always there, ready for the next job. You don't lose time waiting for the next contractor to make it out there.

-Hire a great finish contractor 70-80% of his regular rate to do all of the interior framing. This saves you money in the long run since everything he does will be true/level/square. And he gets twice as much work.

-Only hire guys that work their butts off. Measure this by work accomplished, NOT by how busy they look!

-Always treat the building inspector with respect. He's got a helluva job. It's your job to do things right, never cut corners, and make his life easier (so he's not trying to "catch" you doing something wrong). He'll appreciate your efforts-- and respect you for it. And you'll get finals a lot faster, after a few jobs.

*******

Just a few of the things that have allowed us to finish projects at 30-40% of the cost of contracting the work out (translated: 60-70% less $$ and much faster finishes).

I wonder if Jason_MI still visits these forums . . . I'd love to see a few of his tips!

-Russ H.
 

Ausable

New Contributor
Nov 12, 2007
18
3
10
Des Moines
I've learned a couple of lessons trying to flip:

-If you are going to do demo within a house, I figure about 10 cubic yards for each room that I will demo to the studs. Because I always end up throwing out more then expected (Previous owners possessions, appliances, furniture, yard waste), and its better to over estimate then under estimate on the dumpster size.

-Along the demo line, learn when to "just say no". Because when the excitement of swinging that hammer gets into you, it can great out of control. And all of a sudden you are ripping out stuff that should be left alone.

-If there are materials that are still in good shape (kitchen cabinets, toilet, sink, tub, doors, radiators, etc), don't throw them in the dump. Just take them to Habitat for Humanity. They will put it to good use, plus you get a tax deduction.

-I have a list of everyone I need to call to get the ball rolling an hour after closing. Some of the numbers on my list are for the roll up dumpster company, power and gas company, water co, and a couple of city departments.

-Make sure to check the tax records for the property. If there are any past due water liens on the house, make sure to call the water company so that they don't have any liens left that haven't been sent to collection. Because before closing, they all get paid by the seller in order to transfer the deed. After closing, anything not filed before the closing date becomes your problem. (I learned this the hard way with old water liens from the previous deadbeat owner, when I got the place as an REO.)

-After spending a lot a time at Lowe's and Menards, you will start to notice more items on clearance then if you just casually go every once in a while. Lowe's has clearance stuff all the time. They will either be end of model or returns. I've gotten great deals at Lowe's on appliances (Fisher & Paykel dryer for $200), plumbing fixtures, light fixtures, etc. You just have to keep you eyes peeled.

-Don't do drywall yourself. Hire it out. They will do it cheaper and quicker.

-Always check for sabotage, especially on the gas and electric lines. Because if you bought the house as an REO, it will have been sabotaged by the previous owner, Guaranteed.

-Don’t over improve a property compared to the neighborhood. You’ll just be taking profit out of your pocket.

-Make sure you’ve got a sharp pencil when running the numbers, and leave yourself some wide margins. Because on the first couple of flips, you will under estimate your costs.
 

Bilgefisher

Bronze Contributor
Read Millionaire Fastlane
Aug 29, 2007
1,849
293
73
Aurora, Co
I only have a few from my first flip:

-when turning on the water after the house has been winterized, ensure all lines are shut.
-check the style of faucet on the outside of the house. Poor contracting will result in glue clogging certain models. The faucet may just need to be taken apart, not fully replaced.
-make sure you know HOA requirements on lawn care, snow shoveling, paint schemes etc. before you start, otherwise you may be fined.
-when calculating total square footage for the master bedroom, include closet and master bathroom space.

-When having an open house, bring a book, or movie to pass the dead time.
-Turn on all the lights when showing the house and when taking interior photographs.
-Kneeling in a corner when photographing will also make the room appear bigger.
-Turn the temperature to 70-75 degrees when showing but keep it around 65 when not showing. (winter months)

just a general tip: be as friendly as possible to the neighbors. It will help you out in the long run.
 

Charmed Angel

Contributor
Sep 27, 2007
112
20
23
Tucson & Pittsburgh
There is some great stuff here!!

-Get bids from your workers and contractors before you purchase the property. This will give you a better idea of what you will be in for.

-Plan on selling your property between 75% - 85% of market value. This will help you sell faster and compensate for a decline in market value.

-For low income areas look for used cabinets that you can paint white and look like new.

-Spend the extra money on the accessories. This will give it a Wow effect.

-When I do a property I have a spreadsheet with my budget and actual costs so I can compare and see where I'm coming in high or low.

-If your going to upgrade the appliances save the old ones if they are in good shape. You may be able to use them on another rehab or rental.
 

Ausable

New Contributor
Nov 12, 2007
18
3
10
Des Moines
I learned about sabotage on my first flip. The house was an REO, and before the bank kicked out the previous owner he had uncapped all the gas lines. And done some creative work with the electrical wiring. It was a dangerous situation to say the least.
 

hakrjak

Bronze Contributor
Read Millionaire Fastlane
Sep 15, 2007
1,978
142
88
Colorado Springs
Mine are:

- Find the local labor pool. In my area it's a company called "Labor Ready"... I've found many skilled craftsmen there that are between jobs who are working for $12.75/hr from labor ready. I've even found guys who know tile for this rate.

- Always round your budget up -- Especialy your first few flips, you will underestimate.

- Do your own landscaping. I got 3 bids on my last landscaping job in the $6-8000 range. I hired my own guys from the labor pool, and bought my own sod & materials, and we landscaped the property for under $2000

- Get a home inspection, and have the person you are buying the house from pay for your new roof if needed at the time of your purchase. If you can't get a new roof from them, watch for hail storms and call your insurance company after the most recent one. They'll send out an adjustor, who will 9 times out of 10 let you know that you've got hail damage, and your home owners insurance will pay for the new roof 100%.

- Carpet can be really cheap, and prices can vary widely depending on where you shop. Don't buy Carpet at Home Depot or any of the big box stores -- but instead look for a local guy who imports it directly from the deep south where they manufacture it. Your costs will be about 1/2 to 1/3 of what Home Depot charges

- Same thing goes for tile. Shop local tile for less type stores for great tile savings.

- Air Conditioning doesn't have to cost an arm or leg either. Find a moonlighting guy from a local heating/cooling company to install a unit for $500 labor, and you find your own unit on craigs list. You can buy new or used, and usually get a unit for under $1000. I paid $400 for my last AC Unit, and $500 to install it.

- Spend your money in the kitchen and the bathrooms. Don't be afraid to invest in good appliances -- Cheapos will not help you sell the house. Do not be afraid to replace cabinets if needed in the kitchen, and ditch cabinets in the bathroom to replace with pedistal sinks. Always put in a new toilet.

- For marketing, try putting some of your own stuff out. I use a banner on the front of the house that says "Custom Home by" my company, and our URL for people who are driving by, so they can go to our web site and see 100's of pictures of the property.
- Hakrjak
 

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