Construction experience needed to flip houses?

13 Replies

Hey BP, 

I'm new to real estate investing so I'm trying to learn as much as I can through podcasts, forums, books, etc.  I've been sifting through forums here on BP and it's been nice to see so many people providing personal insight to people's problems/questions. Now, this might be a dumb question but as I said, I'm trying to learn as much as I can! Is construction experience needed if you're wanting to flip houses as an investor? Or do most people hire this work out to contractors once they've found a deal they'd like to invest in?  I have no experience in construction but would someday like to flip houses. What do most investors do who don't possess construction experience?

@Abigail Hansen hey Abigail that's awesome that you are getting into real estate continue educating yourself! To answer your question about construction experience - yes and no. I am no expert in construction but my family consists of great contractors so I ask them lots of questions constantly. So by just knowing the basics, like how much to budget for cosmetic repairs that should be enough. I suggest either get in contact and build a relationship with a local contractor so you can pick their brain, or find a great trustworthy general contractor in the are you want to invest in to run your rehabs.

@Abigail Hansen I think the general construction knowledge most definitely help, but many flip investors (I would actually go as far as saying that majority) don't do the work themselves. It is more important to understand what needs to be done in the house and how to take the first stab at estimating the cost and SOW, before getting a contractor in there for a walkthrough. I believe that more properties you see more of a feel you get for that. I think there are some great resources to study some of the books I would recommend are: starting with BP books "The Book on Flipping Houses" and "The Book on Estimating Rehab Costs" both by J Scott (All Titles – BiggerPockets Bookstore) as well as "The Complete Guide To Home Inspection" by Michael Litchfield (The Complete Guide to Home Inspection: Litchfield, Michael, Robinson, Roger C.: 9781627104807: Amazon.com: Books). Also, there are some really cool tools out there that attempt to make your life easier by helping to estimate rehab costs. One recent one I have been checking out and taking advantage of free trail is Flipper Force | House Flipping Software for Flippers & Rehabbers . It is really neat!







Originally posted by @Katarzyna Lach :

@Abigail Hansen I think the general construction knowledge most definitely help, but many flip investors (I would actually go as far as saying that majority) don't do the work themselves. It is more important to understand what needs to be done in the house and how to take the first stab at estimating the cost and SOW, before getting a contractor in there for a walkthrough. I believe that more properties you see more of a feel you get for that. I think there are some great resources to study some of the books I would recommend are: starting with BP books "The Book on Flipping Houses" and "The Book on Estimating Rehab Costs" both by J Scott (All Titles – BiggerPockets Bookstore) as well as "The Complete Guide To Home Inspection" by Michael Litchfield (The Complete Guide to Home Inspection: Litchfield, Michael, Robinson, Roger C.: 9781627104807: Amazon.com: Books). Also, there are some really cool tools out there that attempt to make your life easier by helping to estimate rehab costs. One recent one I have been checking out and taking advantage of free trail is Flipper Force | House Flipping Software for Flippers & Rehabbers . It is really neat!

Thank you, Katarzyna! This was very helpful. I knew some investors did their rehabs but I assumed most did not. I just wanted a little more clairty on the subject. I'll be sure to check out the BP library, I'm sure I'll be able to find a lot of answers to the million questions I have!



 

General Construction knowledge is very good to have for evaluation of a property. As a Home Inspector myself, I will say though, that we dig deeper than just general construction knowledge......we are constantly undergoing education to learn as much as podssible about all of the systems of a structure......another good thing about utilizing a home inspector is that we just see messed up stuff all the time........I would suggest finding an inspector in your area and maybe networking with them, find one that that may work out a deal with you for inspecting your properties...

You don't need construction experience, but you do need to know costs, values, etc. and what it takes to get it done or else you will pay 2x more for everything, if not more. The best way to learn is to hop on or into a lot of local investor groups and befriend a local flipper who might let you swing by their projects so you can start to learn x costs 5 and y costs 7 before you start going in yourself. People who know nothing about the costs stay too detached from the project and usually spend more than they should.

Being  able to actually do the work isn't an absolute must.  For that matter not being able to do it can be a plus.  You aren't tempted to try to do the work yourself.  I know we did all the work ourselves on our first few homes.  It took a lot longer than it should have and on a couple we went back a few years later with subs to fix what we thought we had done right.  But its a must to either know what it costs or have a partner or at least a GC you can bring in when looking at places to figure out what a rehab will cost.  Rules of thumbs are great when you deciding which properties you want to take a closer look at.  You can even make offers with that info. But if you get the deal use your due diligence period to sharpen your pencil.  That's your last chance to really pin down the costs.  The old saying you make your money when you buy is more true today than ever.  You can't buy a house thinking you can change your plans once underway to save money.  That's a recipe for disaster.  Make a plan and then follow it.  BPs has some great calculators for analyzing deals.  Try them out. 

Best of luck on your investing!

It's certainly helpful but by no means necessary. In one way, it can be a detriment as there is the temptation to do it yourself when great flippers know it's important to delegate. As someone with extremely mediocre handyman skills, it has been beneficial for me to not have this temptation. I've seen really handy people fall for it again and again.

You'll learn what you need to with time. It's good to have a general contractor to look over your prospects and advise you the potential costs beyond your purchase price for any deficiencies requiring attention. Whatever you buy will have costs to do repairs that should not exceed it's ARV. There are often hidden problems so you'll have to be comfortable with the GCs opinions and optimistic they can keep costs within line.

Don't try to learn without a competent GC or two in your corner. Do learn with every flip so you will become comfortable with your own assessments that can be bantered with your GC. Relying on one contractor with a specific skill set is going to lead you into more uncertainty and hidden costs.


@Abigail Hansen this really depends on your budget. Most people can’t break into the space! It’s hard to get off the ground if you’re coming from the ground up! If your budget is tight, you could always buy a run down foreclosure and try to do whatever upgrades you can within your budget. The difficulty is, whether you hire a GC or do it yourself, there’s a rough learning curve starting out flipping. I’m very experienced in construction, however, on my first flips, I underestimated greatly how long it would take and how much it would cost. This can happen whether you do it yourself or hire it out. It’s a risky business. You either need a bunch of money to get houses that aren’t that bad off, and then base your success on surface repairs and beautification, which is a way better advantage. If you start small, it’s very difficult to squeeze money out of a run down house because it’s much harder to do full remodel than new construction. Things to consider and show you it’s not yes or no, but a bunch of considerations tailored to your specific financial position, market and available time etc.

You're in a great market for flips - I've had my eye on Lincoln for a while now. You can still find distressed properties and the ARV supports it. That said, it isn't a requirement that you have construction experience...but it sure as heck helps. You may not be doing the work yourself, but you're going to be overseeing the contractors who produce your end product. While there are good ones out there, there are also a lot of sketchy ones who will cheat you. You need some idea of what things should cost and what workmanship is and is not acceptable. You also need to speak their language. I would highly recommend you find someone who is doing a flip to partner with before you go all in with your own $. If you don't have money to contribute, offer your services. Many flippers would be willing to let a new person help out to give them a bird's eye view of the process. Offer to help with demolition - it requires no experience (a lot of people do this part themselves and then hire subs for construction.) Offer to clean the house when it's finished - this is always an expense and it's often overlooked. You could help paint or haul supplies around like lumber of flooring. You could do the time consuming and painstaking tasks like filling in the holes left by finishing nails or sanding drywall between mud coats. None of these things require experience. All of this will give you exposure to the many, many tasks that are required and in exchange, your partner will hopefully let you see their budget, expenses and even refer you to some of their good subs (priceless!) Right now, with material costs being as out of control as they are and supply chain issues, I would be very hesitant to take on a flip if I didn't know what I was doing, had great connections and good systems in place. But that doesn't mean you can't learn along side someone else ; ) Best of luck to you!

@Abigail Hansen Hi! Welcome aboard! I’m just getting started too but have bought some properties. I know some about construction and understand what I am being told when my contractor explains things to me but am not “handy” myself.

My contractor is actually my handyman who is moving up in the world as he grows his business and his knowledge. He can do many things himself. However he also has great relationships with other contractors such as electricians, plumbers, HVAC guys, general laborers, concrete workers, etc. These people do so much work through my contractor they work his jobs at preferred rates. Which helps my bottom line.

For instance I just rewired a 1400 square foot house for $2500 including materials.

Once you figure out where you will be investing, your home town or another location, you can build your team of workers. From contractors to real estate agents to lawyers to accountants to whoever you think you need to help you. Then once you select your property you can get an idea of the cost for renovations and if you want to flip it or hold if long term and rent it in your portfolio.

The book on BiggerPockets on estimating renovations is helpful for sure. However, once you get started don’t be afraid to ask questions and be onsite if that is a possibility some of the time to observe and learn in your own property.

There’s only so much you can learn by reading books/forums and watching videos. I suggest tackling a smaller project at first but be very hands on in the process aka you be the GC. Try doing some of the work yourself. Visit the lumber yard, electrical/plumbing/HVAC supply stores, etc. Bring in at-least 3-5 contractors to give you prices on very specific jobs ie. flooring, bathroom, painting, etc. This approach will take longer to get your house to market but it was be much more rewarding and you will learn the ins and outs compared to simply hiring a GC you write out checks to.