I complete 10-15 fix and flips a year, and my biggest challenge is getting homes fixed up and sold quickly. On the surface it would seem that you could fix and flip a home in 3 months. Buy the property, fix up the property, list the home and sell it. However, it usually takes me at least twice that long to fix and flip a home. It takes time to find contractors, get them scheduled for a job, complete repairs, make sure all the repairs are done correctly, list the home and sell the home. One of my goals, is to decrease the time it takes me to fix and flip a home so I can buy more properties and make more money. Not only do I want to discuss why it takes so long to fix and flip a home, but also how to decrease the time is takes to complete a fix and flip. For more information on my fix and flips, rental properties and strategies, check out my complete guide to investing.
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How can you buy a fix and flip?
The first step to fix and flipping is finding a property that has enough profit potential to make money. I specialize in buying properties below market value, because that allows me to make money fix and flipping and get great cash flow on my rental properties. It is not easy to find properties cheap enough to fix and flip, but it is possible. I buy most of my properties off of the MLS, and being a real estate agent gives me a huge advantage at buying off the MLS. I used to buy many fix and flips from the trustee sale where foreclosures are sold, but the prices have increased so much at those sales that I can buy cheaper houses elsewhere. I also use direct marketing and auctions to buy flips.
What is the most difficult and time-consuming part of fix and flipping?
My biggest challenge when flipping is finding contractors, getting them to complete work quickly and then making sure they did all their work correctly. I have used at least 10 different contractors to repair my rentals and fix and flips in the last five years. Contractors constantly turn over, because their prices rise, quality of work declines or they get busy with other jobs. I think I have a few great contractors working with me now, which I need, because I have over ten flips at a time.
Why does it take so long to repair a fix and flip?
If I had only one or two fix and flips going at one time, I could reduce the time it takes to repair a home greatly. But I have to wait for my contractors to finish one job before they can start another. No matter how often my contractors say they can handle multiple jobs at once, they always have problems when I give them multiple jobs. I usually spend $15,000 to $25,000 in repairs on my fix and flips, and it usually takes my contractors 6 to 12 weeks to complete the job. The reason it takes so long for them to complete a job is there are many tasks involved in getting a home repaired.
- I have to meet with the contractor and decide what to get repaired on the fix and flip.
- I have to wait for the contractor to get a bid put together (always get a bid!).
- I have to decide if the bid is reasonable and if we need to make any changes.
- Once the job is approved I have to wait for the contractor to clear his schedule to get the job done.
- Once the job is started, something unexpected always comes up that adds time to the job.
- Once the job is done, I have to make sure nothing needs to be corrected or we didn’t forget anything.
- Once the job is done we have to get the house cleaned and ready to list.
I wish I could count on 4 week turn times to fix my fix and flips, but it doesn’t happen. One of my goals is to greatly reduce the amount of time it takes to get our properties repaired.
How long does it take to list a fix and flip after it is repaired?
Once a house is repaired and ready to list, the fun begins. I am a real estate agent so listing the home is relatively easy for me. I do not have to wait for another agent to list the home or take time finding a real estate agent. Here is a great article on how much money it costs to sell a house. It also takes time deciding how much you need to list the home for. You don’t want to list it too high or you will scare away buyers. List the home too low and you are leaving money on the table, this is why it is so important to use a real estate agent if you are not one. I can get my fix and flips listed in a couple of days and then I have to wait for an offer to come in. For investors who are not agents, it can take weeks to get a home listed if they are not ready.
How long does it take to sell a fix and flip after it is listed?
Once a home is listed, you have to wait for an offer, negotiate the offer and then wait for the closing process. The closing process includes the buyers performing an inspection, appraisal and getting a loan. In my experience if I list a home for the right price, I will get a good offer about three weeks after I list the home. Once a contract is in place, it can take from 4 to 6 weeks to close on the home. Hopefully there are no problems with appraisals, inspections or the buyer’s loan, because the process could start all over again.
What is the total time it takes to complete a fix and flip?
If you add up all the time it takes to complete a fix and flip, you quickly arrive to a time frame that most people do not expect or plan for.
- Repairs: 10 weeks
- List house: 1 week
- Get an offer: 3 weeks
- Close on the house: 6 weeks
Total time: 20 weeks (4 to 5 months)
This time frame assumes I met the contractors immediately after I bought the home, I priced the home right, and there were no delays when I tried to sell the house. Unfortunately sometimes contracts fall through, which could add another 8 weeks to the process. There might be delays if the contractor needs to fix items they missed.
If there are delays it can cost the investor thousands of dollars. Everyday, the investor is paying carrying costs and finance costs on a flip. If you plan on a flip taking 3 months and it takes six months, that could mean a $10,000 difference in profit, especially if using hard money.
For more information on how to fix and flips homes including how to find properties, how to finance them, how to repair them and how to make the most money fix and flipping, check out my new book Fix and Flip Your Way to Financial Freedom. The book is $7.99 and available at Amazon as a 171 page eBook here. You can also buy a PDF version of the book in the Invest Four More store here.
How can you save time on a fix and flip?
There are a few ways to save time when fix and flipping which I am working on now!
- Meet with your contractors at the house before you close on it. Have them scheduled to start as soon as the house is yours.
- Meet with your real estate agent before the repairs are complete so you have a price and are ready to list.
- Price the home right to begin with and do not get greedy!
- Lower the price if you do not get an acceptable offer in the first month.
It takes a lot of experience and hard work to fix and flip a home. The time it takes to complete a flip catches many people off guard and it must be accounted for in the holding costs. There are ways to decrease the time it takes to flip a home, but many things that cannot be controlled can greatly increase that time. Do your best to fix and flip a home quickly, but be ready if you have to hold the property.