So, you’ve been telling everyone that you buy houses, and you’ve finally found someone who needs to sell their property quickly. After you inspect the house, you realize it needs work. But there could be a good profit if you fix it up and sell it. You get the seller to the kitchen table and structure the deal of the century. The seller accepts, and you close the deal.
Now what? The real work begins.
I like to think of flips as controlled chaos — especially in the first weeks. Depending on the size of the rehab, things can get pretty chaotic. Let me give you a snapshot of our rehab method and then tell you about a project we started this week.
We have a tried-and-true procedure for approaching our rehabs. First, we go over to the project and do a detailed scope-of-work while we’re waiting to close on the purchase. This detailed report gives specific instructions for how we design the rehab. Basically, we go room by room with a clipboard and make notes on everything we want to get done… at least on what we can see. More on that later.
If our rehab is a shave-and-a-haircut type project, the detailed scope of work is simple. We measure the square footage of each room, noting what kinds of flooring we will use and what kinds of lights we need. We measure countertop dimensions and make a tally of any other fixtures we plan to update.
After that, we do the same thing outside. We start at the front of the house, noting anything we see that needs to be fixed on the siding and the decks. We plan the landscaping and make another tally for outside lights. We go around the house, always moving to the right. This movement allows us to stay fluid and focused in our notes.
By the time we get through, we have made an in-depth materials list and have a very specific plan of action.
Next, we go back to the office and type all that information up, separating the details into categories based on contractors.
Flooring, for instance looks like this: install 550 square feet of laminate in the living room, hallway and dining room; install 25 feet of vinyl in the kitchen and bathrooms; install 40 feet of carpet in three bedrooms.
We then hand this list to our flooring contractor so he knows exactly what to bid. We do the same with the other contractors and line them up to start their respective projects the day after we close, using the estimated time to complete the job listed on their bid to schedule them appropriately.
We can do this very effectively with the easy rehabs. The larger rehabs… well, let me tell you about the one we just started.
This new house needs a roof and a new install on the air conditioning. We plan to move the laundry room out of the dining area, move the water heater inside and rewire as needed.
In other words, this ain’t your basic rehab.
On day one, we had contractors doing everything from trash out to demo and landscaping to electrical — all while the dumpster man was trying to move in and out of the property.
And here’s the kicker: they were all looking at me to tell them what to do. You see, this house had too many unknowns to do the detailed scope of work before the demo, so I had to do things on site and off the cuff. And as we demoed, more and more things showed up.
Try not to do that. Having a detailed scope of work makes things go smoothly. And if you start doing more than one off the cuff project, well, you find out quickly that things can get crazy as flip.
Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com or call Joe at 678-986-6813.