5 Smart Ways to Reduce Your Fix and Flip Expenses

by | BiggerPockets.com

Whether you’re a seasoned investor or are about to tackle your first fix and flip project, saving money throughout the process is directly correlated to your bottom line. Taking steps to reduce costs throughout the various stages of the project will give you a greater return on your investment when it comes time to sell. This is the basic premise of “fixing and flipping” for a profit.

We often work tirelessly to save money during the actual flip–on labor, materials, even carrying costs–but how can you reduce your expenses from start to finish to make sure you see a profitable flip?

If you take the time to do your research, plan our your method of attack and secure financing that best suits your goals, you can save quite a bit of money along the way. Here are a few tips to get you started:

How to Estimate Rehab Costs!

Estimating rehab costs accurately can make or break your real estate business, and it takes years of experience for even the best rehabbers to master the art. However, you can expose yourself to less risk and get more accurate with your projections by learning how the pros think when estimating construction costs.

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5 Smart Ways to Reduce Your Fix and Flip Expenses

Tip #1:  Find the Property That Fits Your Goals

Finding the right property is one of the first things you can do to save costs. Since it’s not guaranteed that you will sell the home immediately after you’ve completed renovations, make sure you’ve carefully considered any additional costs that may be associated with the home. Are there HOA transfer fees, monthly association dues or special utility needs like cleaning out a septic tank? Consider the fees or costs that will add up if the property doesn’t sell immediately

Related: 5 Questions to Ask Yourself Before Buying a Fixer-Upper Property

Along these same lines, it’s important to choose a property in a community where there is demand for quality housing. Demand for properties similar to the one you select will help limit the time to sell, which in turn will reduce your carrying costs.


Tip #2: Estimate Costs Accurately

Make sure you’ve done your research to estimate the amount of time and money it will take to complete the projects you’re about to tackle. If you’re planning on completing some of the work yourself, you can save a significant amount of money. However, some things should be left to the professionals.

A good practice is asking for multiple bids from various contractors, comparing those bids against their portfolio of work, and then selecting the contractor that best suits your individual needs.  You may also consider bringing all of your business to one contractor in order to ask for a reduced rate.

Tip #3: Consider a Joint Venture

Another great way to save money prior to starting your flip is to form a joint venture with other likeminded people. In this business agreement, all parties contribute equity and then share in the revenues, expenses and profits. If you’re cash-strapped, this can be a great way to find the funding that you need to get started–and you’ll have support throughout the fix and flip transaction.

Tip #4: Pay in Cash

There are a lot of carrying costs and fees associated with purchasing a flip property via a mortgage. When you can, pay cash. If you must finance, there are a number of things you can do to try to minimize the associated fees. First and foremost, shop around. You want to find a lender that can offer the best rates and terms. If you have a preferred lender but are getting better rates or programs from another, give your preferred lender the opportunity to earn your business. A little friendly competition never hurt anyone.

You’ll also want to review any closing costs associated with the purchase of the property. Real estate attorneys and escrow companies charge different fees, and shopping around in this department is a good practice, too. This can drastically impact the cash needed to close.

Rehab Project

Related: Flipping Houses: 101 Awesome Quick Tips for Success

Tip #5: Streamline Your Timeline

Purchasing the property and getting started on your flip quickly can also help reduce carrying costs and thus the cash needed to close. Before you get started, be sure you’ve been pre-approved for financing (or have cash in hand) and are ready to jump when you find the right property.

Another way to streamline your timeline is to have great relationships with your vendors so that when you’re ready to begin, they’re there for you. Lastly, consider the time of the year and how weather may play a role in your flip project. While not all flips can happen during beautiful spring and summer months, taking the seasons and weather into consideration can help keep your timeline on track.

Of course, this is just a short list of the ways you can reduce your fix and flip expenses. There’s a lot of money that can be made from fixing and flipping homes. If you have done your research, are knowledgeable about your local market, and have secured financing options that will help you get to the closing table as quickly as possible, you’ll find the path to success will come easier.

What tips would you add to this list?

Let us know your input with a comment!

About Author

Blake Scheifele

Blake Schiefele is Senior VP of Real Estate at AssetAvenue, a leading online lender for real estate investment properties. Prior to AssetAvenue, Blake was the co-founder of No Red Tape Mortgage with Metrocities Mortgage, now Prospect Mortgage, where he grew the company to more than 220 employees and funded over $6B in residential home loans.


  1. Not sure how 1-3 are relevant to the topic or how much flipping experience you actually have. Yes, paying cash will in theory reduce cost of a flip. However, everybody is paying cash these days. yes, streamlining the schedule will reduce carrying costs. However, carrying costs are small in comparison to the reno costs and the purchase costs. In my experience, the best way to save money is to tweak the design, make smart reno choices and decisions, use qualified contractors even if they are slightly more money than a low cost hack, understand your market and demographic, and most importantly do not overpay for the asset. I flip many houses and redevelop many multifamily properties that I hold in my portfolio. It is a business that I have learned and grew organically over the past 16 years. It is a hard business if you do not know what you are doing. The glamour that they portray on TV and the online blog posts that have no meat to them are potentially dangerous to eager newbies…

  2. Justin R.

    Take time to plan. On my first flip, I made the mistake of thinking: “I’ve got holding costs – I need to get this thing going NOW.” In retrospect, spending a week to plan, queuing materials, and allowing the contractor to get their preferred people on the job would have saved a heap of money.

  3. My husband and I have partnered up with another couple to buy and flip houses. We have formed an LLC and are buying out first house. My husband is pretty handy and will do most of the work. He has several friends that are in various trades (roofing, plumbing etc). I want to know if it is better to hire these friends to do some of the work and pay them a lower price under the table or pay a higher price and deduct it from expenses come tax time. Same question for my husbands work. It is better to take a salary of his work or not.

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