The most important factor when flipping houses is time. The more time you take, the more expensive the investment gets. So here are five ways to save money when flipping:
1. Outlining Objectives and Costs Ahead of Time
The moment you’ve found a potential investment property to flip, hire an inspector and a contractor to understand what type of work needs to be done. The inspection will uncover anything that needs to be assessed in the house, and a contractor can outline the budget, materials and procedure that need to be carried out. Doing this will help prevent underrating the costs and timeline of the renovation.
2. Stock up on Good-Finds
If you’re a regular flipper, you’re probably used to shopping for materials. If you find random deals, it’s good to buy ahead of time and save the materials for later. Even if something is not on your shopping list, adding little touches to an income property can go a long way for the tenants in terms of the resale value.
If you’re used to having a contractor shop for you, start shopping yourself to save money on labor and delivery. Consult experienced investors and contractors on what and where to buy materials on online forums if you don’t know anyone personally.
3. Explore All Shopping Options
If you want to save money on materials, that’s where starting ahead of time comes in handy and gives you extra time to dig deep for deals. Go to yard sales, lumberyards, distributors, and even shop online. When shopping at hardware stores like Lowe’s or Home Depot, find out what kind of deals they offer through memberships or online.
It takes extra time to find bargains but it’s worth it! Keep in mind, a good bargain doesn’t mean finding something of poor-quality that will require replacing later on.
4. Cheaper Labor
A subcontractor is someone who undertakes a contract from another contractor. These can be self-employed individuals or employees of a large organization. Hiring subcontractors costs less than hiring a contractor.
Hire qualified, reliable people who will not cost you more time and money in the long run. You should be able to warrant their license and insurance.
Be sure to write up an agreement that will protect both parties’ interests. Hiring friends who are construction workers can also save money but be sure to keep everything in writing to avoid conflicts.
Another way to save money on labor is by doing the work yourself. Even if you’re not a contractor, there are some tasks that you can take care of yourself like painting or demolishing a wall. Just practice caution and make sure you do enough research.
5. The Right Type of Loan
Finally, getting money! There are different ways to finance a flip, but the type of strategy makes all the difference. Depending on your credit score, budget and experience, there are different loan options for acquiring and renovating a property. Most investors use hard money lenders or traditional financing for flips. Yet private money lenders could be a better option if they offer lower interest rate and more flexibility in their lending.
Experienced flippers who need quick money should also consider real estate crowdfunding because it’s faster to acquire than private or hard money loans. If you choose to get traditional financing, make sure to get approved ahead of time to avoid delays in the flip.
Once you’re ready to sell, focus on the right niche market and make sure you know its true value post renovations.