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Flipping properties quickly means more profit. There are two reasons for this. First, you get to flip more properties each year if you finish them faster. After all, even if you hire out every bit of the work, you can only concentrate on so many properties at a time. Finish one sooner, and your mind and efforts (and money) are freed up sooner for the next one.
The second reason that flipping properties quickly is important is that it costs money to own real estate. How much may vary depending on the size of the project and how much cash you have to invest, but in any case there are always holding costs. These include interest on loans, property taxes, insurance, utilities, and even lawn care. Every extra day costs something and that means less profit.
You should know what those holding costs are. It helps with decision-making. For example, suppose you need a driveway and will then be ready to sell. One company can start tomorrow. The second bid is $400 less, but that company can't do it for two weeks. Who should you hire? If you know your holding costs are $450 per week, the decision is easy. The first company would cost you $900 more in holding costs, so it's better to pay $400 more to get the job done now.
You need to know what your holding costs are. You need to make your repairs and improvements fast. Then you need to have the house sold fast. With that in mind, here are some tips for flipping properties quickly.
- Don't wait until closing to start the project. Have contractors lined up, get quotes, look at appliances, carpets and other materials. Once you have a firm closing date, have any demolition and cleaning people ready to be there the day of closing.
- Make a list of everyone you will be calling or might be calling, and keep it with you. This should include other contractors in case the chosen ones don't show.
- Start the most time-consuming parts of the project as soon as possible. Some things like planting flowers or replacing a mailbox, can be done at almost any time, and don't take long. Others, like custom-made cupboards, might take weeks to have done, so they need to be started soon.
- Identify connected projects that most limit the speed of the whole flip. For example, to have bathroom fixtures put in you need walls painted, which means the drywall has to be up, but to have drywall up you need the plumbing done, which means you need the old walls torn out. These five steps, from tearing out walls to plumbing, dry walling, painting and then putting up the fixtures might take longer than any other series of connected projects, so start the first step as soon as possible and schedule the other steps.
- To sell fast, have your marketing plan in place before the property is ready. If you are using a real estate agent, as soon as you can see when you'll be done, have the listing out there the day before. If you are selling on your own, have you running the day you finish. Buy signs before hand, talk to possible buyers or agents who have possible buyers, and have sales flyers ready.
Steve
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