Exit Strategies For When A Real Estate Deal Goes South
By Tarek El Moussa
As you’ve watched Flip or Flop, you’ve probably noticed that I’ve gotten more involved in the rehab side of our house flipping projects as the months and years have gone on. When we first started flipping houses, Christina and I were really completely new to construction and rehab. I’ll admit now that I knew almost nothing about what guys like our general contractors Dan, Israel, and Jesse do.
As we’ve become more experienced with house flipping, though, I’ve learned that it pays to get involved…sometimes. If you have an electrical project, don’t spend two weeks zapping yourself and doing a mediocre or poor job just to try to save some money. That’s a case when calling the professionals is absolutely essential.
In fact, you can bank on calling the pros on just about every house flip you do, but there are some times when you can save yourself both time and money by doing it yourself. How can you tell the difference? Here are a few rehab rules to help you determine the best way to go.
Rule 1: Don’t Do Anything You Haven’t Done Before
First, if this is a new project and feels at all like an experiment, stop! Do not pass go. Do not collect $500. Put the hammer and multimeter down and pick up your cell phone because it’s time to call your contractor. I know, every job your contractors do costs you money, but think about how much more it’s going to cost you if you mess it up and have to have the professionals do it over again after you wasted your time trying to do it yourself.
Let’s say that you want to give the driveway or concrete patio a more earthy look. You do some research on Google, and you find out that you can buy an acid concrete stain that can give it a patina of color with exactly the effect you’re going for. No matter how easy the article you read online makes it sound, don’t do it. Even the professionals can mess this up and have to do it over again (as we found out on a particularly expensive flip in Whittier, California). If you don’t have experience with it, leave it to the pros.
Rule 2: Time vs. Money
Speaking of wasting time, let’s talk about some simple math. Figure out, on average, how much money your time is worth. When you’re looking at listings, scouting properties, and talking with potential buyers and sellers, you’re moving projects forward and doing what you do best. If a project would take you two weeks but takes a contractor two days, chances are you’re going to lose a lot more money by wasting all of that time on the project yourself than you would by paying to have it done well and on time in the first place.
Rule 3: Know Your Strengths AND Your Weaknesses
Even if you’ve done jobs like the ones your flip needs on your own house, don’t assume that you can take them all on yourself. As I said a minute ago, you have to keep in mind what it’s going to cost you in lost time as well as in money paid to your contractors.
You also have to take into account the quality of the work you can do and how much you’re trying to sell your house for. You’ll notice that Christina and I tend to spend a little bit extra when we have to for quality materials and services on Flip or Flop because we want to sell our properties for as much as possible, and homebuyers know the difference when they’re looking at spending $350,000-700,000 on a home. I love getting involved with the rehab projects when we’re flipping houses, but sometimes it’s just better to get out of the way and let the pros do their jobs while I look for our next deal.
About the author
Tarek and Christina El Moussa have over a decade of professional real estate experience and have been featured in national print publications, online media outlets, and HGTV’s Flip or Flop. Tarek is known for his determination to get the job done and doing it right.
