Recently we announced our most important milestone yet, surpassing 1,000 properties acquired, renovated and sold. It took five years to reach this milestone and now we have reframed our focus with a new goal: 2,000 properties in the upcoming 24 months.
In the process of completing our first 1,000 properties, we gained a tremendous amount of knowledge. We’ve realized that many things can go wrong when completing a renovation and while it’s not possible to eliminate these issues, with proper planning, the effects can be greatly reduced.
The following are our top ten things we’ve learned from flipping 1,000 properties.
1. Resale value of the property can change by the time the property is ready.
Don’t get married to a value that could change by the time the rehab is completed months down the line. Comps can give you a great idea of where you should be but don’t take it as gospel. The market can move faster than you think.
2. You don’t always have to rehab the house, sometimes it only needs some paperwork and negotiations.
Sometimes you can get a property at a hefty discount because of a title or lien issue that might require a little homework to resolve. Some of these issues can take months (or even years!) to resolve so choose carefully and work with a title company you trust.
3. Don’t wait on Title and Escrow companies to finish their work, you need to consistently follow up.
Especially during the holiday season!
4. Add the second bathroom.
This always makes a big difference in the after repaired value.
5. Keep track of your progress.
Making meticulous notes of what went right and wrong will serve you well in the long run. It’s a good habit to start early so you can save time and money with future jobs.
6. Do the math, and make sure you have enough cash.
Running out of capital mid-rehab can add significant delays to your construction and into escrow. Make sure you have enough when you get started and give yourself a cushion in case there are unexpected hiccups.
7. Always look at worst case scenario.
This will ensure that even if you don’t hit your ideal numbers, you are making a profit if you prepare for any contingency. Make sure the deal is worth it even if you hit some delays and surprise repairs.
8. Credit terms and performances are more important than the price.
Making sure you can buy and sell the property with reliable financing will be more important in the long than going with a slightly higher offer that may not close on time, or ever.
9. Minimum whole dollar profit.
Set a limit for minimum profit that is acceptable to you. It’s probably not worth the deal if the percent returns look good but you’re only making a couple thousand when all is said and done.
10. Turn time.
Set rehab timeframes up front that are reasonable but keep a tight schedule. Turn times that run too long can kill a deal.