Flipping Houses Quickly
Any time you are flipping houses it is less risky if you can complete the project more quickly. This is especially true now (2009) when prices may fall even further as you wait to sell the home. But a...
Any time you are flipping houses it is less risky if you can complete the project more quickly. This is especially true now (2009) when prices may fall even further as you wait to sell the home. But at any time there are good reasons to move fast. One obvious one is that the faster you complete a project the sooner you can start the next.
Perhaps the biggest reason to move fast is that real estate always has holding costs. In fact, you might be paying out as much as $1,000 per month for interest, taxes, insurance and utilities while you are working on that home. This means a sale three months earlier for the same price nets you $3,000 more profit - the amount you didn't have to spend to wait.
To flip that house quickly then, start with a good plan in place before you close on the property. Line up those contractors, look at appliances if the house needs them, and have a list prepared of everyone you will need to call during the project. You should even try to get bids before closing, if possible. At the very least, be ready to start working on the home the day after closing.
Be sure to consider those closing costs when making decisions about repairs and improvements. In busy times you may have to wait to months for the painters to get to your house. If everything else will be done in a month that means paying holding costs for an extra month. It might make more sense in that case to pay a few hundred dollars more for a painter than can start sooner.
Another key to flipping houses quickly is to not try to do all the work yourself. If a crew can be doing the landscaping at the same time that another contractor is doing the interior repairs and roofers are replacing shingles, you might be finished two months earlier than if you try to do all the work yourself. That saves you a lot of holding costs - something to consider if you think it is too expensive to hire help.
Try to identify the projects that most limit the completion time of the whole process. Consider the following example: To install bathroom fixtures you might need walls painted, and to do that you might need new drywall installed, and to have the drywall up you need the plumbing done, which means you need the old walls removed. There are five inter-connected steps: tearing out walls, plumbing, dry walling, painting and then putting up the fixtures. This might take more time than other series of connected projects, so you may need to start here as soon as possible to have the earliest completion date.
Have your marketing plan ready before the property is finished. As soon as you can see when you'll be done, have the listing out there the day before (assuming you're using a real estate agent). When selling on your own, have the advertising running the day you complete the project. Talk to possible buyers or agents who have possible buyers, and have sales flyers ready prior to completion.
Finally, flipping houses quickly is easier if you price them right from the start. Unless it is a hot market this means pricing the property slightly below what similar homes are selling for. And remember that it doesn't necessarily cost you anything to sell for a couple thousand less if it means saving the expense of holding the house for a few months extra. Rolling that money into the next project sooner can also mean doing flipping an extra house for the year, which should more than make up for a bit lower sales price.
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ABOUT THE AUTHOR
Copyright Steve Gillman. To see a photo of the house we bought for $17,500, and to learn more about Flipping Fixer Uppers, and to get a free real estate investing course, visit: http://www.HousesUnderFiftyThousand.com/fixer-uppers.html