When you’re doing a flip where you do not live in the property while you renovate, you’re always working against a clock. Every day that you hold the property costs money and eats into your profits. For that reason, it is of vital importance that you create a schedule and follow it closely. Of course we can all make a schedule based on hopes and dreams. It would be nice to have cabinets all in and installed in one day, but realistically, that is very unlikely to be the case. Check with trades, and professionals along the way before you start your flip to make sure your estimates on time are reasonable. I usually tell people to go ahead and add 5% to their best estimate of how long they think it will take from possession to resale, just to make sure they are counting all the costs.
There are three main segments to a flip that you’ll need to budget time for: initial purchase, renos, and resale. It’s important that you are realistic in determining how many days you intend to devote to each before you jump into a full flip. Let take a moment and look at each phase.
Phase 1: Initial Purchase
It is critical that you are totally preapproved and ready to go before you think of anything else in this process. In this business, the best deals can be gone in hours, so it’s important to have a virtual credit card from your lender to purchase a home within a set price range. Having your financing ready at a moment’s notice is often the distinction between good flippers and excellent flippers. The seasoned flipper is ready to jump on a good deal just as fast as you are, so be prepared to beat them to the punch.
With this in mind, you need to have a very keen understanding of how much you can afford to pay for your property and still have enough left over to do a full renovation or lipstick application.
Phase 2: Renovation
Make sure that you have a full list of what needs to be done to the house before you make your offer. Not only is it critical for you to know how much it’s all going to cost, you need to know how much time it will take. What things can be done at the same time? What has to be done first? Do we want to put in the cabinets before we do flooring to make sure that we don’t have any floor damage from the renovation process? Can we have someone putting new carpet in the bedrooms while we also have someone retiling the bathrooms? A master schedule of what you can have going on every single day, will make your life light. Now your master schedule doesn’t have to be done before you make the offer, but you should have a good idea of how much time it will take plus 5% extra.
Phase 3: Resale
There are a lot of flippers who think that they don’t have to worry about this aspect until the house is completely finished, however the reality with successful flippers is that they are meeting with their real estate agent often and throughout the whole process. Not only is the agent crucial in helping decide what should be rehabbed and what can be left, they need to be involved up to the minute to make sure they can get photographers, professional measurement, home staging, and other professionals through the place so that it can be live on the MLS no later than 24 hours after it’s complete. Every day costs you money, and you’ll be relying on your agent to speed up this last phase for you. Your agent should have done a complete market analysis for you to make sure that you pick the right price. Pricing your home wrong leads to a hemorrhage of profits as your beautiful creation sits empty day after day, and your listing gets shopworn, undesirable and essentially wrecked on the public MLS. If you overprice, you will almost certainly end up having to accept less money in the end, than if you priced correctly in the first place. Perhaps more important than any other task your agent can do for you, is to keep your expectations realistic in terms of how much you can expect to get on resale.
For people who find scheduling, list-making and organizing to be among their natural gifts, flipping houses in this fine city of Calgary, may be just the profession for you. For those among you who struggle to even learn the calendar app on your iPhone, you may do well to reach out to someone who has the gift of scheduling and see if they’re willing to partner up. Failing that, if you pick a great agent, they’re usually able to be a great touchstone and a wealth of information to help fill in the gaps where your talent may not always be.
Make sure you read our entire series on How to Flip a House in Calgary. Let me know if you have questions - I'd love to know how your "flip" turned out.
The Vanderveen Team
Maxwell South Star Realty
Phone: 403.253.5678 Fax: 403.592.6736