Great Tips for Fixing and Flipping Properties
There are many ways of making a good profit in real estate business. You can opt to be a wholesaler, a person who buys property and quickly flips them over to other investors. On the other hand, you can be a retailer, a person who buys a property, fixes it up, and resells it on the retail level. In many cases, it is the retailer who makes the most profit. This is because the retailer takes more risks and puts in much work.
For aspiring real estate investors, the good news is that anyone can make it in the business of rehabbing. Though knowledge of construction is an advantage, you don’t have to be trained professionally to make profits in real estate rehabs. The following are some tips which will help you succeed.
Know your strengths
It is absolutely vital that you know your strengths as well as your limitations. Don’t waste your time engaging in manual labor if that is not your strength. Instead, find a partner who can do the dirty work or hire the services of a contractor. Besides, the time you would have spent on repairs can be better invested in finding and negotiating new deals.
Many people have made millions in real estate business even without much knowledge of construction. However, many others have lost money due to lack of experience or ignorance. Therefore, it is wise to learn something about home improvement. You could start by visiting your local home depot. Get to know the prices of different items that usually need to be repaired; toilets, dishwashers, molding, ceiling fans, paint, sinks etc. Some home improvement stores offer special classes on activities like replacing windows or tiling kitchen floors. By getting some basic understanding of home improvement costs and procedures, you will be in a better position to find a contractor or a partner.
Handle partnership wisely
There are many people out there who have solid home improvement knowledge, a good understanding of construction, and are willing to put in some hard work and get their hand dirty. However, as much as you need such people, they also need you. Maybe they can’t get into the business on their own due to poor credit. Or maybe they are not good at handling mortgage lenders, prospective buyers, real estate agents, and paperwork. If you are in a position to handle the ‘white collar’ aspects, you should be able to find a partner who has the necessary ‘blue collar’ skills and knowledge.
If you decide to partner with a handyman or a contractor, make sure they have some experience in doing fix-and-flips. Knowing how to fix up things is one thing, knowing what to fix is another thing. An inexperienced contractor might put too much money into repairs that are not profitable, as a result eating into your potential earnings.
Finally, if you decide to get into a partnership, make sure your partnership is legal and that everything is put in writing.
Hiring contractors
Partnership is a good idea for new investors who lack basic knowledge in home improvement and have little experience in repairs. However, a partner will demand a higher reward compared to an independent contractor. Therefore, once you get some experience in the business, you could hire labor instead of going into partnership. For small repair jobs, you could find help in the classified sections of your local newspaper. Unskilled labor can be hired for $20 per hour or less. Skilled contractors are usually paid twice as much. For more complicated jobs, you could get bids from several contractors. Ask the shortlisted contractors questions to establish if they are dishonest or incompetent.
Finally, as an investor, it would be wiser to work with small companies if possible. This is likely to develop loyalty and earn you discounts. With every rehab you handle, you will gain more knowledge.
Stephan is a freelance writer, who often writes about wholesale homes and wholesale property.
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