The term “flipping houses” is relatively new and not everyone understands what it means. Simply put, it means getting a house under contract, doing the repairs, and reselling it to a new owner as quickly as possible—for a profit. That means you can’t afford to waste time thinking about the design options too much or debating which kind of countertops to have installed. Time is money—your money. Which is why selecting the right contractors to work with is critical.
From plumbing to roofing and floors to ceilings, if you stay in this business as long as Tarek and I have, you’re going to run into properties that need expert attention. You just can’t expect to do all the repairs yourself—even if you’re extremely handy. It’s essential that you start looking for and building a rehab crew—a team of tradespeople who do good quality work, can work fast, and are happy to offer you “wholesale rates” in return for regular work.
However, there are some projects that you can do yourself to save money and increase your profit—especially when you’re starting out. The key is to know your limitations and have a good crew to rely on. I swear by these three tips for all of our properties.
1. Know What You Can’t Do
When you’re starting out, you can expect to do at least some of the work yourself. Things like cleaning out junk in the yard and inside the house—unless we’re talking about an extreme situation, like if the former owners were hoarders—is one of those things you can do without calling the pros.
On the other hand, you’ll find that it’s definitely worth every penny to pay the experts for jobs like putting on a new roof or dealing with structural damage. Those are the kinds of jobs that—even if you have the ability to fix them—will take you weeks or months to complete. Meanwhile, the pros can have them done in an afternoon or a week at the most, and you’ll be ready to move onto your next deal.
So, when you’re flipping houses, know your limits. Make a list of the things you can and can’t do for each house and be realistic about how much time it will take for you to do a project versus how much it will cost for a home improvement contractor to do it. Remember, if you take on too much yourself, it can take a lot longer for the house to be put up for sale. That will likely cost you a lot more money than it would have getting some expert help at the outset.
2. Have a Good General Contractor On Call
In the fix-and-flip business, your general contractor is your best friend, especially if you don’t have a lot of firsthand experience with home improvements. They’ll have the knowledge and/or staff to fix most of the issues with almost any flip house, and if they can’t do it themselves, they’ll know who to call.
I recommend looking for a general contractor who has experience working with real estate investors and who works with his or her own crew. You’ll find some general contractors who don’t have their own crews but who manage independent crews for different jobs. These guys aren’t bad, but they do tend to charge more, and you’re not really going to see a difference in value or workmanship.
When choosing a general contractor, don’t just automatically go with the big names. You’ll often get a better deal from a smaller, local company and they’ll likely work harder to keep your business. To find one of these guys, check out review sites like Angie’s List or Craigslist, or drive around neighborhoods and look for in-progress rehabs. Look for their signs on the lawn or just stop and ask them for a card.
3. Stay In Touch With Your Contractors
It’s important you keep in regular contact with your contractors, especially between deals. Otherwise, they’ll think you’ve just disappeared off the face of the planet. Let them know you’re working hard to get them the next deal, and also let them know what kinds of houses you’re looking for. They can be your “bird dogs,” helping you find deals. Just be sure to give them a stack of your business cards that they can hand out. And don’t forget to refer them business too! They will appreciate it and appreciate you too. Remember, you want to build a long-term relationship with them—one that’s mutually beneficial! Once you find a good general contractor to work with, they are pure gold for your flipping business. Treat them well and they will be instrumental in helping you succeed in real estate!