House flipping is a business, just like any other. Those of us who engage in this activity want to be successful. But so many fail, thinking that they have a great idea, and that they can do it better than the next guy. They certainly think they can do it better than the people they see on T.V.! But what separates the successful from the ones that fail? There are many factors, including judgment, financing, and perhaps most importantly the miscalculations of time involved.
Many of the pitfalls of house flipping can be avoided by taking the time to plan professionally. If you want to succeed in this business, you need to plan like a professional business person. Successful business people don’t leave expenses and timing to chance, they plan before they set foot on the premises to begin any project.
Many flippers proceed on their own terms, not realizing the time it will take to do each task, the number of people that need to be involved, or the expenses incurred. Without a plan, you are doomed to failure, time-wise and money-wise. Estimates are okay, especially for the experienced professional, but new flippers and others need to consider some advice before they begin.
Would it be worth it to you to sit down for about four hours to plan your flip, if it meant a substantial improvement to the chances of success of the project? If you could save 3 weeks of time, would four hours be worth it? If you could improve your estimates by thousands of dollars, would it be worth it? You bet it would! So take a few minutes now to hopefully gain some insight on the steps you can take to improve your chances of success.
Step Number 1: Draw up a Master List. Start out by listing all of the major changes the property will require. Just make a complete list, does not matter the order you list them in during this initial phase.
Step Number 2: Arrange the list in the order the projects need to be completed – from the first task, to the final task. This is very important. For instance, you will want to install flooring AFTER you finish the ceiling and the wall finishes, so put the flooring at the bottom of the list.
Step Number 3: Draw a timeline on a wall chart, mark sections on the timeline representing weeks or days. Starting at the far right, list your FINAL task and work your way to the left. Determine how long it will take and how much money it will cost. For each week fill in that many sections of the timeline. Write the cost and number of labor hours at the bottom of the chart. Note: the weeks listed need to consider the labor hours and the number of people you will have involved in that task. For instances, if you list 120 hours but only fill in 1 week of time on the timeline, you will need 3 laborers (120 divided by 40 hour weeks = 3 people to complete).
Step Number 4: Next, extending from the flooring task, continue working your way to the left with the task(s) that can be performed immediately prior to the flooring task, again filling in the appropriate number of weeks/days it will take complete that task. Say this was “painting the walls.” Since you want to paint your walls prior to completing your floors, you may want to mark off 2 weeks for this task. Feel free to break down the tasks into as many detailed tasks that you would like, that’s up to you. Record the cost and labor hours at the bottom.
Step Number 5: Repeat step number 4 and list tasks as they need to be completed before moving on to the next task. Repeat this process until all tasks are listed, labor hours and costs determined. Some tasks can be completed concurrently, at the same time as other tasks, so draw these tasks on your timeline side by side with the task(s) they can be performed at the same time with. Don’t forget to add your labor and costs at the bottom.
After you complete your wall-size timeline chart you can now take a step back and look at the big picture. Starting at one end count the numbers of weeks consumed by your project – you now know approximately how long your project will take. To be safe you may want to add maybe 2 to 4 weeks of buffer time in anticipation of those things that will inevitably go wrong!
Next, add up your total labor requirements and costs. This will be your anticipated budget, and you can plan your finances accordingly. No more guessing at how much you will spend, this should be closer to reality. Again, you may want to add an expense and labor buffer as well to cover unforeseen problems with the project.
Another word about cost estimates. It pays to get advice from local contractors and stores for these estimates. Don’t try to guess as this will only insure you overrun your budget. This is again another reason to take a little more time up front to insure your estimates are as accurate as they can be.
Once you complete this planning process, you can feel more confident that you understand how long your project will take to complete and how much it will cost! Now all that is left to do is have fun completing your flip!