I gave a lot of thought to how to write this article. One of the biggest challenges I have had in my house flipping journey is finding the right people, especially early on. Many times the only way to move forward is to take people at their word and know that even when you choose to work with someone you still need to remain involved, especially early on. We cannot let that fear keep us from moving forward so I decided to write this article as one of caution…not fear. If knowledge is power than knowing that not everyone is an expert in the way you may need them to be frees you up to find the right people to work with.
There are a few different types of people who are in the construction and real estate industry who may be successful in their areas of specialty but who may not have the experience in house flipping that you are looking for. Those people are:
Let’s start with realtors. For the majority of realtors, their revenue is generate through buyer and seller leads. If they are not working with those clients then they are not making any income. Since most investors only do a handful of fix and flips a year it is likely that an agent would need several investors as clients to make this work for their business. If they are not truly familiar with resale market analysis for a fix and flip or the true costs of construction then their numbers may be inaccurate for you to use in your analysis.
When it comes to contractors, few have the experience of renovating an entire house. More often, they may have done a kitchen or a basement, but rarely a top to bottom job. Even though they may have great references, they may still need some additional project management. That is where you need to make sure things are in writing and that there are clear responsibilities outlined. You can also include progress benchmarks as a way to divide payments and create check ins in case you need to bring in someone else if the current contractor is not meeting their obligation.
I love the idea of working with a wholesaler. The thought that someone can find off market properties and motivated sellers is a dream. The reality is that I am still waiting for that day. With the majority of the deals I am seeing from wholesalers their cost of repair estimates are significantly lower than what I have seen in my experience. Just be aware that wholesalers make their money when they assign that contract. Perform your own due diligence to see if the numbers work for you. Once you buy that house, it is all you.
Knowing how each of these roles works does not mean that you should go at your house flip alone. It is just a matter of understanding the details behind each and how asking the right questions and checking in with others they have worked with can get you the best outcome.
So you’ve purchased a house to flip. Now what?
Want to buy a property and renovate it?
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