Flipping Budget - Posted by John-CA


#1

Posted by Reid Evans on October 18, 2007 at 04:55:12:

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#2

Flipping Budget - Posted by John-CA

Posted by John-CA on September 14, 2007 at 23:15:36:

How do you make a budget when flipping a house? Is there a spreadsheet or software that lay’s it all out, and you just plug in the figures? I watch all those TV flip show’s and they all state their budget. So I was curious how they come up with it and keep track of it.


#3

Re: Flipping Budget - Posted by Natalie-VA

Posted by Natalie-VA on September 16, 2007 at 10:48:48:

In addition to repair costs, you’ll want to figure:

buying expenses (closing costs for you)
selling expenses (closing costs for you and your buyer)
agent commissions (even if you’ll try to sell on your own)
carrying costs (loan, taxes, insurance, utilities, lawn care)

–Natalie


#4

Re: Flipping Budget - Posted by Rich-CA

Posted by Rich-CA on September 15, 2007 at 08:55:47:

Get at least three bids in writing. I prefer bids to estimates because it mostly fixes the costs so you know it will cost you what’s on the paper. I am more wary of estimates because it means they are not certain what the job is going to cost.

When getting the bid, follow the contractor or handyman around and ask questions. Their answers should “make sense” and will tell you if the person is knowledgeable (you do have to know enough the be able to tell this). Eventually you will get a feel for the estimates yourself, but initially its better to get a good feel for the person who might do the work for you.

The estimates vary quite a bit. Larger companies tend to bid higher but if someone gets sick, they have replacement people to step in and keep things moving (that’s what you pay extra for). On a recent job I got two bids. One was $8k the other was $13k. Same job, different companies.


#5

Experience Required - Posted by Jimmy

Posted by Jimmy on September 15, 2007 at 05:52:19:

you need to have an experienced contractor bid the project. better, have 2 of them bid it independently. labor rates vary widely in the US. material costs do not.

over time, you will learn what certain routine jobs costs. but until you have 20 rehabs under your belt, you need to protect yourself with firm bids.


#6

Magdalena Martinez - Posted by Lara Petty

Posted by Lara Petty on October 20, 2007 at 10:18:05:

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#7

Amie Garza - Posted by Dee Cervantes

Posted by Dee Cervantes on October 18, 2007 at 01:38:04:

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#8

Tobin Wong - Posted by Lauren Wilkins

Posted by Lauren Wilkins on October 15, 2007 at 23:24:39:

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#9

Re: Experience Required - Posted by suzy

Posted by suzy on September 16, 2007 at 18:15:28:

When you rehab a property and you dont do it yourself… how do you pay your contractors? Do they usually charge one flat fee and you pay them at the end of the job or how?


#10

Re: Experience Required - Posted by dealmaker

Posted by dealmaker on September 15, 2007 at 06:55:39:

Jimmy hit it on the head, find an experienced “handyman” (firemen are great at this-lots of free days) and develop a strong relationship with him. Some stuff, Electrical, HVAC requires licensing and will generally cost more.

Go through your local building supply houses and HD/Lowes as a last resort to get an idea of the cost of common materials

From what I’ve seen from those flipping shows those guys generally don’t know jack about costs because they ALWAYS miss their $ estimates. Of course that’s because they generally pay someone big $$ to do the easy stuff and then try to do the hard stuff themselves-bassackwards IMO.

The other mistake they make is always going to the high dollar tile supply houses for expensive tile. Trust me, 90% of the tile you install can be “average” looking stuff fromt the cheapest place in town, once it’s down it SHOULDN’T BE NOTICED. Higher end houses and travertine are different.

Don’t scrimp on paint, get Sherwin Williams, it may cost a few $$ more per gallon but the coverage and finished looked is much better than the watered down crap from big boxes!

all cash


#11

Re: Experience Required - Posted by Brent_IL

Posted by Brent_IL on September 16, 2007 at 20:20:23:

Consider using a draw system to pay the bills. If youâ??re using firemen (that was an excellent suggestion) youâ??ll have to front the money for materials, but donâ??t buy too far ahead of whatâ??s being used. Pay for the labor in increments, e.g., pay for 15% when they are 20 percent finished; 60% when theyâ??re almost finished, etc. Never pay the last 10% until the job is 100% finished. Have everyone execute lien release documents.

Lots of info in the archives, but itâ??s a hassle digging it out year by year. Maybe, Googleâ?¢.

If you have a banking relationship ask the commercial loan officer how they do it at the bank.


#12

Re: Experience Required - Posted by Bill Jacobsen

Posted by Bill Jacobsen on September 15, 2007 at 10:10:12:

First, start out with a house that needs only paint and floor covering or things you can do. You may not make as much on that type of house but you will be learning.

Costs to include: cost to close, taxes and insurance during the holding time, utilities, cost of money during the holding time, cost to sell (closing costs plus realtor fees?)

I usually budget 1.5 months to sell house, 1 month to close on the sell plus time for rehab depending on the how extensive the rehab is.

While the estimate of cost to rehab is important, so are the holding costs mentioned above and the estimate of time which effects your holding costs. The most important number to know is the price you will be able to sell at. You can miss the cost to rehab by 10% and be OK. If you miss the price you can sell at by 10% you will have eaten away all your profit.

Bill


#13

Bobby Blackburn - Posted by Oliver Best

Posted by Oliver Best on October 20, 2007 at 12:59:45:

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