This article is about how to maximize your profit when it comes to fix and flip investing. It is not about find the properties to begin with. We cover that in other areas. But, this article is so important because I think people get misguided watching all these house flipping shows that have become so popular. Do me a favor and remember one thing about these shows. Without drama or a mistake on behalf of the investor doing the flip the show wouldn’t be entertaining. Right?

So the reality is fix and flips are very simple. You don’t have to be the investor who messes everything up and ends up losing money. In fact, if you do your research properly this is a rather easy and fun form of real estate investing. So how do you do it right?

This is the question and the answer is simple. Due Diligence. I am assuming here you have found a property and made an offer and determined what the home will resell for once its fixed up. A quick point on the resell number. Figure you will sell for 10% below market. Its better to sell fast than be greedy! If someone offers you 10% under asking price and they are a good buyer, take it and move on. Now, back to your due diligence. You have the property under contract and now you have your inspection period. DON"T do the inspections yourself. Hire a quality inspector whom you know and have done plenty of business with in the past. If your new then hire 3 inspectors. Yes this will cost you more now but far less if your in this business for the long haul. After the first time you will know the good one is you can trust. 

Next, if the inspector notes any serious areas of concern, have those issues further inspected by a licensed contractor. Again, get multiple quotes for each of these issues. How do you know what are areas of concern. Simple the inspector is going to tell you. If you don’t understand something they have identified ask then about it. Find out their thoughts on what it might be. This will help you know what is and what is not major!

Contractors you need to have relationships with are the following. You need quality people for roofing, electrical, plumbing, pools, glass/window coverings, cabinets/ counter tops, flooring, painting, landscaper, and most important a handyman. If you have not build a relationship with these people yet follow the getting quotes initially from 3 in each field and narrow your preferred vendor from there. This does not mean picking the cheapest. It means getting references and checking out the dependability of their services. At first you might pick someone who is not very good. But if you have back-ups your OK. Don’t be afraid to fire the contractor that doesn’t show or give you bad quality. Get rid of them and get the next one in ASAP. 

It has never taken me longer than 2 weeks to complete the rehab on a home and we are not talking about simple repairs. Let me give you an example. I had one home that a gang member had been living in and he had tagged or painted graffiti though out the inside of the home. The pool was empty, needing new plaster, a new roof, all new windows, new flooring a new water heater, paint (obviously) and a list from about the floor to the ceiling of other things. Regardless of all the major work that had to be done, we finished it all in 12 days! 

What I am telling you is that it is all about knowing what is wrong, how much it will cost to fix the problems, and scheduling contractors to fix them. You need to be at the property everyday. This is the only way you will know if the work is being done or not. If it isn’t move on to the next contractor. Time is money and you can only use people who get the job done. 

Now for a few numbers you need to keep in mind. First, add 10% to all the repairs cost to cover unexpected issues that arise. They will happen but if you do your due diligence up front then those surprises should never be more than another 10% to the repair cost. Also, be smart and plan to have to pay debt service on the home for 3 months longer than the current market time for homes to sell in the neighborhood. Hopefully this will not be the issue but better safe than sorry. Last and this one is the most important. Once you know what your costs will be, go back to the seller and ask for a reduction in price to account for the unexpected costs. This should amount to the profit you anticipate and if they agree complete the purchase and move on to your new project! 

Their is one more point to cover. You handyman should become you quasi foreman! This is why it is so vital to get a good one. They are worth their weight in gold. When you get your inspection report from the inspector and your punch list of what needs to be fixed. The first person to take that list to is your handyman. Let him tell you what they can fix and will handle then move on to the other issues with the contractors. My handyman will do most of my plumbing and electrical issue as well saving me a fortune with those contractors. This person can also be your eyes and ears when your not their. More that likely they will be at the house doing work through out the job so they are a great resource. Treat them well.

Follow these guidelines and flipping homes becomes easy and very profitable!

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