Musings from a first time flipper

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In the midst of my first flip- a modest block home in a great rental area. 1200SF, sunroom, 3/1. The home was built in the 50's, never updated, same owners for the last 50 years. 

SOW: new roof, retrofit central air, add a full bath (slab foundation), new kitchen, floors, remove & reinstall ceiling, upgrade electrical. I'm acting as GC, managing the major subs (roofer, plumber, sheetrocker, painter)

Some of my observations that I didn't foresee in all my reading and research leading up to this:

- Handymen NEVER call back. 

- Small jobs are more frustrating than the bigger jobs.  Ex: getting an attic access reframed, adding a GFCI circuit, Demo existing cabinets, etc. All these are so small, it really doesn't make sense to get a specialist - actually easier to just do it myself...unless I could ever get a handyman to call back...   Even then, the multi step process of site visits, bid acceptance, and actual work is so lengthy...I just do it myself. 

- Deciding on the limits of demo is an iterative process, but it shouldn't be. Clearly experience will tell a seasoned investor how much to demo...but its hard to trust yourself as a newbie, so it therefore becomes iterative. 

- Doing anything part of the project is tool-intensive. I am fortunate enough to have acquired a ton of tools over the years, but I remark at how much I've used for the general small tasks I've taken on (framing, demo, electrical, tile removal)

- Cutting corners ALWAYS burns you. I tried to short-change the HVAC closet dimensions...had to reframe and wasted my HVAC installers time. Lesson learned.  

- Know the code. Toilets have a minimum offset from side walls...who knew?!  I did after I had to pay the plumber to rework the toilet rough in (after I already concreted his work)

So...what are some of the lessons you've learned the hard way?

I have gotten to know the "handyman don't call back" one when I was looking for those type of contractors.  What happens is that they will answer the phone when they are looking for work, then they get some work, and they ignore everything else until they need work again.  It's like they don't think ahead to the future and get jobs lined up; they just go from job to job.  The good ones do schedule things out and that's how they stay in business. But they are harder to find!

Dawn Anastasi, Core Properties, LLC | http://www.coreprop.biz | Podcast Guest on Show #29

Yes. A lot of contractors, not just handymen, are very good at what they do, but VERY VERY bad at running a business.

I'd say the biggest lessons I've learned all revolve around the initial purchase. I always tell people who ask this question never to be overly optimistic when deciding if the house is a good rehab. I used to come up with a rehab estimate, and if after negotiations with seller, if I couldn't make the numbers work I would start negotiating with myself on my rehab estimates to make the numbers work. "I don't REALLY need to do this" or "I can just do some of this stuff myself" or "I can probably find someone cheaper to do it". Usually whatever issues I see during my initial walk through are as bad, if not worse, than I planned on them being. Now, my rehab numbers are what they are and if the deal doesn't work, I walk away.

For all the little stuff in a flip that needs to be done, there are usually a few of my subs that don't have a lot going on in their schedule. For me, I always end up using my roofers for all demo work and little odd jobs. Eventually you will find a reliable person for things like this and it will make your life much easier

I think an entrepreneurial spirit would make money hand over fist if they would corral these contractors into one company and advertise it as "we call you back, we get it done right." Finding the good ones is difficult, but once you find them, they are worth their weight in gold.

Yeah, usually Youtube teaches me how to do whatever it is I am trying to hire out. 

@Timothy Gleason  when do you plan to complete the rehab? Its exiting to see someone doing this locally here on BP, also will you be at the PIG meeting Tuesday?

@Kyle Samuel    I totally get the "negotiating with yourself" comment. Very tempting to do so. I've caught myself doing it a bit on this project...fortunately I bought it right, so I have some wriggle room...but I've definitely cut scope for cost along the way. 

@Dawn Anastasi  I'm sure I'll get some calls when the handymen get hungry. For now, I'll just keep on trucking solo. 

@Caleb Mclamb    Target completion date is mid December. It'll be a rental, so my deadline is post-holiday season. I'm in for all cash, so nobody's gonna break my knees over a loan payment if my schedule slips. Planning on attending PIG on Tues. 

@William Allen  

Great question. So here's another tidbit I've learned:  always have a "get out of town with your hair on fire" exit strategy to go with the standard multiple exits. 

I got a call the week of Thanksgiving to take a Navy job on short notice in Fort Worth starting Dec 1st. I'm typing this from TX in fact.  I'll be here for 6 months or so (TAD)

I've got electrical, Sheetrock, and trim lined up. But distance managing a flip involves a bit more patience...and I'm much more at the mercy of the contractors I was already working with. (Hard to bring in a new guy when you can't even be on site to define SOW). 

I'm guessing this move is going to cost me at least 6 weeks in lost time (efficiency loss), but won't be a net loss in $$$ as I was doing the whole flip in cash. (Lost rent is offset by extra Navy pay while in TX)

Sounds like you must be out at the Joint Reserve Base.  We live just a few miles from there.  I love being in the flight path for the base.  We get to see some of our country's great hardware and pilots on approach on pretty much a daily basis, and it never gets old.  A couple of times a year I normally get to see some awesome flyovers from my front yard.  Very cool, especially when it's the Blue Angles buzzing my house.

@Timothy Gleason   , sorry for the delay in responding but I'm still not getting email notifications. That sounds like a serious challenge! We have scheduled our move down to Pensacola and will be moving April 1st. From the sounds of it, we will be back there before you. I look forward to getting together and sharing some stories, we are looking for a personal residence now for us to live in when we get there. Let me know if I can do anything to help out when I get there.

-Bill

Medium blackjack real estate squareWilliam Allen, Blackjack Real Estate, LLC | [email protected] | 850‑483‑1761 | http://www.blackjackre.com/blog | Podcast Guest on Show #163

@Timothy Gleason  how are things going on the long distance flip?  I went down to Pensacola for two days last week to have a look around Pace and Milton.  Was able to take a helicopter down there and justify it for work.  We will be back at the end of Feb to look some more.  Forgot how much I like it down there!

Medium blackjack real estate squareWilliam Allen, Blackjack Real Estate, LLC | [email protected] | 850‑483‑1761 | http://www.blackjackre.com/blog | Podcast Guest on Show #163