budget
Budgeting your finances while preparing for a flip is probably the most important factor in making money flipping. I’m just in awe of some of these people on the flip shows you see on TV, who have no idea what it’s going to cost them to renovate their home. Let’s say you have $10,000 set aside for improvements to any home. If you buy a house that needs $20,000 worth of work, you’re already overwhelmed. Where is the extra money going to come from? You have to be realistic when it comes to making a budget.
As you start looking for potential fixers (houses that need fixing), be very aware of what you’re looking for. Be prepared to take notes while viewing a home. What needs to be replaced or repaired. Will a coat of paint suffice or will the item need to be replaced? Write down EVERYTHING that could be a potential problem or cost. Include garden costs as well. Curb appeal is VERY important. You may have the most beautiful house you’ve ever seen on the inside, but if the outside isn’t so beautiful, you may not sell it.
Know your limitations as you compile your budget. Is the task something you can do and do well, or will you have to outsource the work? write it all down
Demolition is another factor you should include. How much will it cost to get everything off the property?
There are also costs for incidentals. Let’s say you need to replace some drywall. Not only do you need to budget for drywall, you’ll need screws, drywall tape, joint compound, texture, sandpaper, and the tools to apply it. See what I mean? If you’re replacing a toilet, you’ll also need a supply line, a wax ring, and possibly a flange that connects the toilet to the floor. You may not need a flange, but budget for it anyway. You won’t know if you need it until you remove the old toilet. Expect the unexpected.
If you’re going to need to babysit while you work on your flip, budget for that too. I’ve never been a fan of taking kids to a construction site, but we’ll cover that in a later chapter.
Budgeting can also be tricky if you choose items that are more expensive than you really need. This is NOT your home, and your personal tastes can get in the way of making the right decisions. Good taste is essential when reselling a home, but it doesn’t have to cost you a lot of money. The 3 places I won’t skimp on are the kitchen, bathrooms, and the master bedroom. These 3 bedrooms will make or break your home sale, so get them right.
Be specific when making your choices about the materials you will use in a house. If, for example, you want to change the carpet, be specific on the grade you want to install. I would not choose the least expensive because buyers will pick it up in a flash. I would choose a mid-grade rug instead, or even high-grade if it’s a high-end home.
After you have made your list, go to your home improvement store and price each item. Don’t assume you know what the prices are because you bought the same things a few months ago. Prices can change drastically in the blink of an eye. Copper shot up a while ago, as well as many other home improvement items. Protect yourself from being surprised. By the way, I would check 2-3 home improvement stores before buying anything to get the best price. Your savings may not be devastating, but every penny counts when you’re trying to make money on an investment. Both major housing centers have a 6-month interest-free plan if you spend more than $299. This is a great deal for the consumer. They also have savings coupons. If you don’t have a coupon, call them on the phone and ask for one. Don’t be shy, everyone else is getting them, so should you. There are also times when stores will have damaged items. This can save you a lot of money. Talk to the department head and ask for a discount. They may say no, but it never hurts to ask. I’ve paid as little as $20 for an over-the-range microwave that was a display model. All I did was ask the department head.
Few things are more stressful than being over budget and not having the resources to finish the job, so stick to a strict budget.
Relationships and somersaults
If I were to try to tell you not to bring your spouse to the workplace, you would most likely call me crazy. Let me ask you this. Do you, in the job you have now, take your spouse to work? I don’t believe it.
A long time ago, my wife and I decided that she would be the brains and I would be the force. She works fine for us. I have my experience, she has hers. I don’t want her job. I have seen it, and she is beyond my comprehension. It’s the same with her. She has seen me change outside a toilet. Can you believe that she really doesn’t want to know about any of it?
If you value your marriage or relationship, then I would say… no… I PRAY, that you do not cross paths while the renovation is taking place. I believe in discussing the project with your spouse before driving a nail in. Both of you will have ideas about what should happen. He will discuss the pros and cons of each action you will take. You will discuss the budget. You can even go shopping together and pick up things for the flip, but PLEASE don’t try to do the work together!
Men and women have different methods of doing things. They’re not bad, they’re just different. A woman might use a saw for everything, unlike a man, who will use a sledgehammer for demolition. Both will do the job, they are just different methods. By the way, I like the saw-everything method. It’s cleaner and you have less chance of destroying something you don’t want destroyed.
Men and women share a very important quality, pride. If you tell your spouse that he or she is doing something wrong… God help you! You’ve just hurt his pride, and you’d better find a rock to crawl under.
I strongly suggest, then, that spouses not work together on a renovation and that men not have a corner of the market. Women are quite capable of cartwheeling and doing it well. I have seen many in my career.
I also strongly recommend that you do not take children on a site until they are old enough to understand the dangers on a construction site. If necessary, add childcare to your budget. If you are taking care of your children, then you are not being productive. If you are being productive, you are not taking care of your children. If your son got hurt, I would never forgive him, so please hear me out on this one. I feel the same way about the animals on the site. I can’t think of any purpose where a pot-bellied pig would be a good addition to your workforce. Dogs are wonderful, but they must be left at home, where it is safe.