Timing is everything when it comes to fix and flip investments - when a project is done right, an efficient timeline will both cut down on total costs and increase your bottom line.
For this reason, it’s in your best interest to be as efficient as possible with your work. In this post, we’ll outline some helpful tips for reducing your turnaround time, and talk about a couple of the things first-time flippers often neglect.
Why Worry About Timelines on Your Fix and Flip?
The simple answer is that building a fast and efficient timeline reduces costs for your fix and flip and increases your total profit. The more efficiently you’re able to get a project done, the faster you’re able to move onto the next fix and flip, and the more projects you’re able to do on an annual basis. In other words, the more efficient your are, the healthier your bottom line will be.
The flip side of this is that an efficient timeline will also reduce your costs. Many fix and flip financing options are tied to specific timelines for project completion - if you miss these dates, you might need to extend your loan, which will eat into your bottom line on the project. Luckily, this is a totally avoidable situation for flippers who are willing to do the homework ahead of time.
Promising Properties Sell Faster
If you want your fix and flip to be lucrative and timely, you can’t just pick any house and expect to turn a profit. To really set yourself up for success, you’ll need to identify a neighborhood that will be conducive to a profitable flip. Generally, a neighborhood might be right if it has:
- Amenities for buyers: This generally includes decent schools and a reasonable commute to the nearest working area
- A healthy and competitive market: Make sure that there have been a good number of home sales in the neighborhood in recent months, signalling that the area is of interest to home buyers
- A mix of new and old homes: This is usually a sign that an area is up-and-coming, because, while there is a demonstrated desire for newer homes, there’s still a stock of reasonably priced homes that are ready for an investment
If you can find a neighborhood that meets these three specifications, odds are your property will be vastly easier to sell.
A Good Contractor Can Save You Time (And Money)
Once you’ve picked a property for your fix and flip, you’ll need to pick a reliable, highly-rated contractor. Ideally, this is either someone that comes recommended from a colleague, has good reviews online, or whom you’ve successfully worked with in the past. Yelp!, Angie’s List, and Google are just a few of the places you can look online for contractors.
Once you have a few viable candidates, get a quote from each. Keep in mind that the cheapest option might not be the best: If one contractor is offering the same work for a slightly higher cost but a much faster turnaround time, this could save you money in the long run - you’ll reduce the overall project timeline and be able to move on to your next fix and flip much sooner.
A highly experienced contractor will also help you with important logistical items like acquiring the right permits and scheduling inspections. These seemingly small tasks can actually cause larger costs and headaches if done incorrectly, so working with a contractor who knows how to navigate this environment will almost always work in your favor. This process is especially important because many fix and flip financing options are delivered in installments, meaning you only receive payment for the next phase of construction once the prior phase is completed to the lender’s satisfaction - which can often be tied to passing inspections.
The Bottom Line
Building an efficient timeline is key to earning a profit on fix and flip investments, and the best way to do this is to work in a promising location with people you can trust and depend on. If you’d like to learn a little more about the financials behind flipping, feel free to check out our free ebook, Essential Math for the Fix and Flipper.