Chapter 6 – The big makeover
When you are in the business of selling real estate for a profit you need to move fast, in order to get the money and then start over with the entire process. This means you have to have everything in place when you place the offer and start the fixing process as fast as possible.
When you place the offer and it is accepted you have about one more month until the closing takes place, so you need to focus on the repairs budget and the plan of action.
The budget is going to be revised at this moment and the calculations you've made before placing the offer are going to be sealed in place as you need to call the contractors and have them evaluate the work to be done. Based on what they say you can plan a budget and the entire outline of the work.
The outline will consist of the deadlines for each team and the moment they need to show up on the construction site. For example, you will have the plumbers in for the second week of the month, and then get in the painter in the third week of the month.
After this phase you need to be able to bring in the dumpster on the closing day, so you can start the work straight away to finish the rehab and list it for sale as soon as possible.
When you gather your contractors you need to make sure everyone does his job. There will be a lot of moments when something goes wrong and you need to address the problem and the contractor right away! If the electrician is not showing up in time, delaying everyone else, you have to talk to him and if he doesn't resonate and solves the problem, strict action needs to be taken as soon as possible! You need to be strict at time, if you want to be successful, and to get the things done on time. But you also need to be humane, so work on finding a balance between the two: understand when a contractor really has a problem to deal with, but be firm in your decisions.
You will become the general contractor for your new property and this comes with a lot of hassle and issues to deal with. By the way, if you hire someone to handle all these issues you won’t be able to learn the costs of each repair, so as a beginner you do want to hit all the walls, in order to learn the tips of the trade.
It is important to select the right contractors from multiple points of view, ranging from the price to the relationship between you and them.
Spending time working with someone you completely hate is not great and it impacts the productivity as well.
Back to selecting contractors, you need to research the materials cost and evaluate the time needed for a person to finish the work. For example, a painter can finish a room in 10 hours, so you can calculate how many hours are needed to finish a house and so on.
When you have the approximate values for each job you can evaluate offers from contractors. If you know the job takes about $2,000 and two days to complete and you get an offer of $4,500 and a week, you know there is something going on there and that you need to pick someone else.
When you pick up your contractors you want them to be experienced, so ask them for referrals and portfolio. If they are beginners, think if you can have them on board because your task is to finish the project as cheap as possible, in time and provide quality. A beginner can slow you down. Besides, you are already a beginner and one is enough!
However, don't look at the amount of money your contractors have; there are excellent professionals out there who barely have the money to cross the road, so, look out for such people.
What to fix?
This is the common question that often arises in various projects, but if you've done your job right, by this stage you already know what you need to fix in order to add value to the entire building. Because you are already tired of the old “kitchen and bathroom” phrase, here are some tips on what to fix according to some advanced criteria: First, focus on the details!
If you think your customers will not observe a microwave in a patio or the dirty floor of the garage, you are mistaken as they will notice. Always keep in mind that each of your projects talks about you and you don't want your flip to scream “messy” or “lack of details”. Go through the entire house with your contractors and evaluate their work. If you are not happy with what you see, be vocal about it.
Second tip of the day is calling in an expert to evaluate the house. A real estate agent or other person who is used to search for issues in a building can help you spot small things which can go a long way.
Another important tip is making the fix with your potential buyer in mind. Depending on what your exit plan is, you might want to sell the house to an investor, a homeowner or rent it. And when you sell to a homeowner, what type of owner – couple, family, elders or young people?
Depending on the answer to these questions you will know what items to place in each room, not just in the kitchen and the bathroom.
An investor is going to look for quality and attractiveness, something that can bring him a steady cash flow, so aim to have couple of amazing features in the house and make it stand out of the other properties.
Homeowners act on emotions and want to have a beautiful yet highly practical house, so you have multiple options and you can use many tactics to impress them. One of the biggest mistakes you can do when you fix up a house for a homeowner is designing it to your own taste.
This is a huge fault, because people have their own pride and tastes and they love to have options. In other words, a house with cream walls, which allows them to repaint in a bold color seems to be more attractive than a house with red or purple walls.
Renters usually look for comfort: a clean place, with lowest utilities expenses and an easy, short commute to their job. They might look for some relaxing features, like a patio or a nice garden, with a pool to spend time with their friends. If you are going to rent the property keep in mind that your furniture is going to be easily worn out, as well as other items in the house, so keep your desire to fix up the building at a high standard in balance with your expenses.
Inside-Outside
When you look at a house, there should be something about it that invites you to come in. You need to get that “WoW” factor when you look at the building for two main reasons: to change the way the building looks and make it visible that you've been working on it, and to attract people to come in.
The wrapper of a gift is not everything, but without it no one gets to see the gift, so pay attention to the exteriors as well as interiors of the house.
Mown the lawn, plant new bushes and cut the existing ones, clean the pool and make sure everything is tidy and the house looks WOW on the outside, just as it is on the inside.
With the house all fixed up, it's time to sell it!