The Theme Amongst Many Failing Flippers

[Sebastian Hernandez]

Over time I have seen many people over-pay for properties they plan to flip, and then try to make it up by trying to work with the cheapest providers. Often times resulting in bigger headaches like bad jobs, massive delays, do-overs, and even losing money on the flip. On the other hand, successful investors understand that and they focus on purchasing at the right price and following their plan achieving a profitable investment. 

A and B players in the contracting space are not interested in being the lowest costs providers and in flipping having the right contractor will be key.

Just my two cents, welcome any thoughts/comments.

[Will Fraser]

So true, @Sebastian Hernandez!  I see the same thing in the Property Management space time and time again.  

Figuratively speaking, a Mercedes will get you further than a Kia or a Chevy, and makes a whole lot more practical sense than a Ferrari.

So it goes with service providers across many segements.

Be an A player at B+ pricing and we should be lifelong winners for our clients!

[Chris Seveney]

@Sebastian Hernandez

I agree- too many people try and “wing it” from estimating the costs to renovate to sales price versus running it through a model and evaluating the risk

As you mention they then try and cut corners which end up costing more over time…

[Eliott Elias]

The biggest downfall I see in flippers is they spend to much money, on themselves. No wealth created at all. I have talked to so many, and all of them wish they kept the properties they flipped 

[Bob Stevens]

Many simply have no idea what they are doing. It frustrates me to see posts, " I do not know the ARV, so how much should I pay. REALLY !!! If you do not know the basics you should not even be looking. or " I paid X and was expecting the reno to be 50k, its now 100k, what do I do " Again really!! How do you buy a property without know the reno budget.

Everyone needs to understand you make your money when you buy

All the best  

[Rob Beeman]

@Sebastian Hernandez Interestingly enough I recently published an article on this in our newsletter. As a former flipper that made a ton of mistakes I lose my patience with flippers that refuse to get aggressive on the purchase price as well as locating off-market deals so they can gain them with less bidding wars, and instead take the easy way out of buying from the MLS and over-paying. Then being forced to cut in other areas, where they should NOT be cutting.

As for the comment of knowing the ARV (Thanks!), I am a big believer in knowing the numbers of your business (every business has numbers), and if you do not know your numbers, then you do not know your business! The ARV, in my opinion is the STARTING point of the calculations for the project (as you have NO control over this figure) and the calculations should be worked backwards in order to secure the proper purchase price and target the profit (which I plugged in as a cost, that way I secured it on projects). When I flipped heavily there were no software programs to work deals, it was done old school on the fly with a hand calculator. Technology has hopefully positively impacted the business.

[Kevin Ivey]

As some one currently doing it.  (I flip houses while building working capital & purchase rentals out of state)

i fully agree with the contractor comments I have become my own general building a list solid honest subs that do good work & quickly on schedule.  I work hard to ensure they have everything they need clear SOW & other subs are not in the way.  They know they have access what ever time & daya they want so long as they stay on schedule and the check is always ready to go.  They work to squeeze me around other jobs they have as we don't have delays.  It's worth not paying bottom $$