7 Ways You Can Reduce Costs On Your Next Flip
Real estate investors like you know what it takes to flip a house profitably. You need a wealth of industry knowledge, a willingness to get down and dirty, and an eye for properties that can be fixed up and flipped with efficiency. The process of fixing up a house takes more than an understanding of the real estate market and a little expertise with a tool belt. The real ins and outs of success only come with experience. Even for the seasoned investor, the rush of the buy and the prospects of a future sale are invigorating, driving a need for property improvements that can reduce the cost of your next flip.
Making as much as possible out of as little as possible is a key element when it comes to flipping properties successfully. There’s no exact science when it comes to estimating repairs and negotiating purchase price, leaving investors with little more than their own knowledge and, most importantly, their experience.
In every property, however, there’s a way to save. Even pricey renovations, miscalculated purchases, and hired handymen have workarounds, and this knowledge is the divide between a good investment and a great one. With these seven simple tips, you can reduce costs on your next flip and maximize your profit.
Repair First, Replace Second
When faced with a house in need of substantial renovations, ripping out existing fixtures and starting from scratch is often the easiest, fastest alternative. However, this strategy could be costing you more than you realize.
In many cases, much of the structural integrity of a house is salvageable, including flooring, stairs, closets, and cabinets, giving you the chance to repair instead of replace. For example, sanding, painting, and replacing hardware is an easy way to create a brand-new look significantly less than the cost of entirely new cabinets. You can also replace cabinet doors without replacing the entire structure. With a little ingenuity, it’s possible to create the look you want without a sky-high price tag.
Build a Network
When you’re facing a remodeling project you can’t do alone, knowing who to call can be a big asset. Building a network of professionals can help save you both time and money, giving you a resource to rely upon as soon as something arises, even in emergency situations.
In addition, working with the same electricians, plumbers, woodworkers, and roofers on a regular basis can build loyalty, giving you price cuts not available to one-time customers.
Have a network of professionals will also allow you to work on multiple flips at once, which provides you the opportunity to increase your total profit.
Take Advantage of Sales
House improvements are just as legitimate when purchased for a bargain, so there’s no need to overspend when it comes to replacing appliances and furnishing. Many stores, especially those with large appliance departments, run regular sales on washers, dryers, refrigerators, and other household necessities, giving you an affordable way to step up the value of a house you’re preparing to flip. You can also look at year old models that can be bought for 30 to 40% less than the current year’s model.
Invest in Store Credit Cards
As an experienced house fixer and flipper, there’s a good chance you spend a lot of time in improvement stores. Staples like Home Depot and Lowe’s are an investor’s best friend.
As a way to reward regular shoppers, many such stores offer store credit cards and benefit programs, such as cash back for a percentage of all purchases with a store card, giving you an opportunity to save hundreds of dollars over the course of remodeling a property. When coupled with regular sales, it’s easy to reduce costs on home flipping essentials.
Know Where to Go
If you buy all of your light fixtures and flooring options in one place, branching out may be a savings solution you never considered. A quick cost benefit analysis can determine whether buying at one retailer for their rewards is worth the higher purchase price compared to another store without rewards. Many unusual places sell home furnishings and accessories, with rates far below traditional retailers. Even though investing in store credit cards can help you build up rewards, buying items at major discounts is worth the point loss
Instead of heading right to your old standbys, consider some of the more unusual stores, like Costco, Walmart, and Big Lots. While the inventories may not match the largest retailers, the prices will be unbeatable, providing the perfect way to tile a kitchen back splash, stage a living room, or remodel a bathroom. If you’re willing to put the energy into looking, there’s a good chance you can cut costs substantially.
Pick the Right Paint
Paint is an important part of every home upgrade. While stocking up on a few cheap gallons may seem like a simple solution, the true costs may be higher than the ticket prices imply.
In reality, cheap paint requires more coats to look natural, leaving you with streaky, see-through walls, especially if you’re painting over dark colors. Instead of cutting corners, invest in a few dozen gallons of a paint with primer in a neutral color. Appropriate for almost every room with a reduced number of coats, an investment in paint can decrease expenses in the long run.
When it comes to property sales, a livable style and welcoming warmth can be the barrier between an immediate offer and months on the market. Staging is frequently used as a final touch by real estate agents and professional decorators for this reason, bridging the gap between buyer imagination and the reality of what a house has in store.
By accessorizing properties with furniture, accessories, and decorative pieces, it’s possible to increase the value of a house up to 5%. There’s no need to invest heavily in the staging process, either; affordable furnishings can be found at stores like Ikea, second-hand and on Craigslist.
In the fast-paced flip and fix process, a little creativity means big savings and bigger returns. When making the biggest possible profit is your mission, reducing costs during renovations can be more influential than you realize. This doesn’t mean cutting corners; instead, it means finding intelligent ways to save while still providing a profitable, desirable end product. By combining multiple savings options that both minimize expenses while maximizing profits, like shopping holiday sales, employing staging, and repairing when possible, it’s possible make more on each house you sell.
Be sure to read our previous article on house flipping: 5 Things You Must Do to Be a Successful Flipper [https://westparkloans.com/real-estate-flipping/2016/07/14/5-things-you-must-do-to-be-a-successful-flipper/] These 5 tips will keep you on the right track on your next investment.
Scott Clift is a licensed real estate broker with Westpark Equity Group and the private lending division of Westpark Loans. He has been in the real estate industry since 1994. His team of seasoned professionals specializes in providing real estate loans for real estate investors and other self-employed individuals. When you are ready to invest in real estate, call Westpark Loans to secure your financing at (844) 574-LOAN or by visiting westparkloans.com.