A fix-and-flip is the ultimate strategy for quickly making money on a property. In order to make quick money, flips require fast and costly action. Unfortunately, because of the timeline investors give themselves, they sometimes resort to more expensive options in order to save time and get the property quickly renovated. Here are some tricks on how to optimize costs in order to truly make a flip a fast and lucrative investment.
1. Outlining Objectives and Costs Ahead of Time
The moment you’ve found a potential investment property to flip, take 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 for 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 any 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, lumber yards, 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.
You can find coupons on sites like RetailMeNot and Groupon. A lot of hardware stores have a home remodeling consultant that you can consult for free and will even provide you with designs.
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 cost 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 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.
The key to saving money is time management and planning. Fix-and-flips are a great strategy for quickly making money and gaining knowledge about investing. Taking the time to learn how to efficiently and economically use resources will maximize your profits and eventually become habits that make flipping easier.