Remember back in season one of Flip or Flop when Christina and I put our whole lifesavings (and some of my mom’s equity line of credit, too) into a $500,000 “Flip With a View”? At the time, that flip made us really nervous! As we’ve continued flipping houses and gained more experience in real estate investing, though, we’ve grown our business.
Now we don’t even blink when we find a good deal on a high-end flip. In the first episode of this season, I wasn’t even a little bit worried about a house we put over $555,000 into. We did take a hit on our profits on that one when my sister wanted a deal, but family is family. And when you grow your business, you can afford to give your family a $20,000 discount sometimes.
Of course, you have to get there first, and that means rehabbing and selling your first flip . . . and your second. A lot of first-time flippers get a little bit overwhelmed when they write the check and buy their first investment property. Fortunately, Christina and I have been there, and I can give you some great advice for getting through that feeling so that you can make some money and move on to bigger and better flips.
Call Your Contractor
I really recommend having contact information for one or more really great contractors before you close. Remember, once you close on the house, it’s yours, and you can start working immediately. The sooner you get to work, the sooner you can get done and get your house on the market, and the sooner you’ll make a profit.
Flipping houses is all about getting good work done fast, so you don’t want to waste time looking for a contractor while your house is just sitting there. If you already have contractors that you can call before you make your purchase, your first step is clear: call them and get them over to the property so you can get some estimates on the work that needs to be done.
Make a List
If you were able to get into the house and inspect it before you closed, you should already have at least a sketchy list of what needs to be done to rehab it. Once you’ve bought it, you need to make your final list so that you can direct the work on the house and get everything done as quickly as possible.
Call your contractor and/or inspector and walk through the entire property together, listing everything that needs to be done to repair damages and bring it up to market value. Make sure that your list is really thorough, including updates you want to make to the kitchen, walls you want to knock out, and anything else you plan on doing to the house to get a better price on it.
Manage the Rehab—But Don’t Be a Micromanager
Once you’ve accepted your contractor’s bid, it’s time to let them get to work. You don’t want to be completely absent from the property, but you also don’t want to be a micromanager. Your contractors know a lot more about their jobs than you do, so don’t stand over them every minute of the day.
Instead, make sure that you have everything organized as far as the financials on the house go. At this point you should be managing the utility bills, purchasing materials, and helping out where you can. If you do these things, the job will go smoothly, and your house will be ready to go on the market in almost no time at all.
If you want a good idea of how not to hover, check out some of the latest episodes of Flip or Flop. Watch Christina and I get into the demolition when we’re flipping houses but step back when the professionals need to do their work. Real estate investing is as much about managing your time and money and knowing when to delegate as it is about knowing the market and getting good deals. Follow these steps, and you’ll be flipping big deals in no time!