My husband and I just closed on our first property to flip and we are beyond excited! We're in a very competitive CT market and I am sure paid a bit too much but we are thrilled to get started and learn from every mistake on this one. Would love to hear any creative ideas in cutting back your renovation budget when numbers were tight on a deal. This will be a full cosmetic rehab along with roof, siding, and HVAC (SFR, ARV approx $240); Thank you SO much for any comments we are so appreciative to be part of such a knowledgeable group!
First thing first you shouldn't be overpaying and trying to force a deal that has tight numbers to begin with.
Hot markets don't mean you overpay to beat competition they mean you get more creative in sourcing deals.
What did you pay for the house? Rehab Costs? Did you pay cash or finance?
Tell us about the deal first so we can see just how tight you really are on this flip.
i haven't had a tight deal but a few things I do is I dnt replace kitchen cabinets, unless jacked up I just paint them, put some new fixtures on it and call it a day. Instead of buying granite from lowes etc I but sheets of granite and get cut. Many times I can use in bathrooms too. Bath tubs I would just paint over it or use a bath fitter. I buy paint with primer in it only have to do one coat. Harwood I sand it then put a gloss over it, instead of buying new sometimes. I use discount places to get materials, flooring decoy and lumber liquidators etc. I get tile etc from habitat for humanity. People have extra stuff and donate for tax reasons. They let go for basically nothing. This is a few things. Have a great day!
I wholeheartedly agree with @Brian Garrett , but what is done is done. However, yes, we would need some numbers to help you out. There are parts in a house where you can potentially cut corners, others where I never would. Keep in mind that the structure, the roof, the systems (water heater, HVAC, electrical...) have to be in very good condition to sell full value. An inspector would not cut you any slack on that (nor should the buyer). I would follow @John Webster 's advice, if you are in a first home buyers market and the market is tight. Go to the MLS and look what's on the market in the same price range right now. You have to get at par with it.
The best thing however is to NEVER buy too high! You buy too high for only two reasons: 1. you badly need a deal or 2. you bought into the seller's sad story. Reason 1: better no deal than stinky deal. I personally don't want to break even or, worse, loose money. Reason 2: as much as you can be compassionate, it is not our role to take on other people's problems and end up broke. Bad idea that I see too often and that is going to bite people in their rear end, eventually.
Good luck! Let us know how well you did!
Well you can cut costs on materials and everyone will know, or you can do the work yourself and maybe people won't notice. I suggest Youtube and making some friends at the Home Depot.
think of a couple of other exit strategies now instead of a straight sale on the MLS.
Maybe rent? sell to a tenant buyer to save on your realtor costs?
Or depending on the numbers and condition, you might be able to fix up the property a little to open up a new pool of buyers.
Some BPers call it Wholetailing
Sometimes the nice shiny end product is not always the most profitable way to exit a deal.
i only use lowes for my high end deals. Discount places same stuff as lowes but cheaper. Like clothing you can go to a outlet and get same stuff cheaper than mall. Lowes mark prices up. I get contractors to go to discount places. Lumber liquidators same exact flooring as lowes but alot cheaper. Why I make so much per deal profit wise. You see the people on TV they save money at all cost. Go to lowes only if they really have to. Friend made extra 20 extra grand listening to me. He wanted to replace everything thought was bad. I go to lowes for appliances and drywall. Like my new construction stuff I get pre configured they just drop on my site like a leggo set. Electrical etc already done. I save thousands per deal.
I’ve used Facebook Market place for certain material. I found someone selling 20 sheets of drywall they had left from a project. I shopped Home Depot in their clearance sections and a lot of online research for best prices. However, the best deals were from fb marketplace and habitat for humanity.
amazing! Thank you so much for your thoughtful and helpful advice! Love all of it!
Thank you, @Jimmy Dudley , very helpful advice, appreciate it very much!
Thank you SO much, @Colleen F. ! Wonderful ideas!
@Vanessa Grant , thank you!! Had visited Habitat for Humanity (awesome) and HD but did not think about fb marketplace, thank you!
Thank you, @Chris T. ! Appreciate your response!
Colleen most def agree dnt work all the time, but do most of time for me and others. I done alot of deals in various states I lost count. People make very little profits overspending for deals then when unexpected things come up they dnt have much to work with if any. Electrical you can't really cut corners I agree but you find right person you can get done cheaper. I was originally trained by property brothers. They even said dnt get big company with really nice trucks get a smaller company who big company probably will use.
@Cameron Snyder as others have said, don't stay married to a strategy that isn't going to pan out. I've been in a few situations where I planned to flip but either the house or market didn't cooperate & I ended up renting a few years then selling. Let the tenants pay off your overspend. Take a look at the tax difference from that approach, its been significant in my case.
Even if you go with the flip strategy and end up breaking even or loosing some $, getting the experience is well worth the investment. I have friends who have spent $20k on guru courses and coaching and they'll all tell you that they wish they would have put that money into real projects...even if they were done at a loss.
@Don Petrasek - thank you for your thoughtful response and encouragement! Your second point is a great way to look at the situation and I completely agree with you. We are learning volumes every day from this first experience! Thank you!
What is your budget? I did a few $240k ARV flips in CT, so I have a fairy good grasp on it. If you want to PM me the address, and your numbers I can offer some advice. I don't agree with keeping kitchen cabinets u less thet are nice and the layout is as good as it can be. Cabinets are cheap in the grand scheme of things, and leaving old ones will stick out on a well done flip.
I have scoured Craigslist and the FB market for materials, sometimes you can find vanities for a good deal, trim, tile etc. I also look for tile on clearance at the box stores. I found some 12x12 for $0.48/SF and some 18x18 for $0.49/SF. Just make sure to buy plenty of extras.
Thank you so much, @Brian Pulaski ! We have found another contractor and the numbers all make sense now. I very much appreciate your response and insight! So many great ideas from this group.
Definitely do as much of the work yourselves as possible, it will help you understand the costs and effort involved, as long as your holding costs are not putting the pressure on you to get it done as fast as possible. As far as contractors, make sure you get multiple bids. Pricing can vary significantly depending on how busy they are, and how much markup they feel like charging you. As far the bids, make sure they are itemized to the scope of work that you defined, so that you can compare the bids item by item.
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