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Remodel Time-line and Tips

Estimating repairs, staying on budget and working with contractors is perhaps the most mysterious and difficult aspect of the business of flipping houses.  As any good investor will tell you, you make your money when you buy.  But all too many investors LOSE all the profit in the remodeling or rehabbing process.  Here are the three most common mistakes made by novice fix and flip real estate investors:

• Under-estimating repair costs
• Over-improving properties
• Under-improving properties

General Contractor Guidelines:

• Begin interviewing contractors before you find a project
• Determine cost plus or complete bid procedure
• Pay contractors timely, but don’t let them get ahead of you on payments
• Obtain lien releases with every check you write

Before You Begin Repairs and Remodeling:

• Switch over utilities the day you close!
  • The title company may offer to help, but don’t trust that they will do so timely.
  • Contractors will not be able to start repairs without the utilities.
  • Avoid delays by contacting the utility companies before you close about any special procedures if the house has been vacant for a long time.
• Change locks, change lock box code, secure property by boarding up any broken windows and doors.
• If you are replacing windows, measure and order them right away.  It can take up to two weeks for delivery, the timing will be perfect if you order them first.
• If you are replacing the roof, pull a permit right away and put it in the window prior to beginning demolition work.

Specific Order of Fix and Flip Repairs:  

1. Clean-Out Crew: Many distressed properties will have been occupied by very messy people!  Be sure to budget $250 for each dumpster as well as labor to clean-out the property.  In some cases the full scope of the project will not be known until after the clean-out is complete.
2. Demolition Crew: At this point you will have a full scope of the project planned.  The demo crew should remove EVERYTHING that you plan to remodel.  Cabinets, vanities, tile, carpet, old plumbing, old HVAC, any drywall where new electrical or plumbing needs to be run.  Many investors make the mistake of trying to save and work around certain items in the house.  Ask your contractor:  it is often less expensive to start fresh with than try to save costs by reusing items.  Doors are a prime example.  Strive to have a “clean slate” and work environment after the demo is complete.
3. Roofing Contractor. Always fix the roof first! There is nothing worse than having fresh new drywall ruined during a rainstorm by a leaky roof that you planned to fix later.  Pull a roofing permit and put it in the window on day one (before the demolition).
4. Foundation and Structural, including Framing. Make repairs to foundation, beams, supports, joists, concrete etc.  When the structure is solid you may begin framing new walls and the rest of the project.
5. Windows Installation. The timing of the windows installation is often tricky because they likely need to be ordered and delivery times are a few days to a few weeks.  The interior framing, rough plumbing and mechanical work can be in process, but windows should be installed before the interior drywall work is completed.  You should also plan window installation to not interfere with exterior paint schedule.
6. Gutters / Soffits / Exterior Paint. Correctly perform any brick, framing, or siding repairs or your paint job will not last.  Exterior paint is usually a 3 day process.  Day 1, scrape, day 2 prime, day 3 paint.
7. Rough HVAC. Install furnace, ducting and accessories for A/C if part of scope (condenser can be later).
8. Rough Plumbing. Copper or PEX plastic tubing is becoming popular.  It is less prone to theft and easier and faster to work with.  Check your local building codes.  Have the lines snaked at this time.  Install tubs.
9. Rough Electrical. Many codes have changed recently and inspectors are very keen to improper electrical repairs.  Make sure you install panels, GFI outlets and wiring correctly, to code, with a permit.  Or you will regret it later.
10. Drywall / Texture. Another 2-3 day process for drying times, budget accordingly and keep everyone out of the way of the drywall crews.
11. Cabinets / Trim Carpentry. Install doors and trim.  If there are thresholds or trim that must wait until after tile or vinyl flooring, be sure to schedule a follow-up visit from carpenter for final touches.
12. Interior Paint. Yes, use bland colors even if it hurts your sense of style.  Pick your sheens correctly, semi-gloss for kitchen and bath ceilings, eggshell for walls.  After completion, schedule a touch-up session with the painting contractor to coincide with day before carpet install.  Mark and save extra paint!
13. Counter-tops in kitchen and baths. If you are using Formica you can have it installed by the carpenters.  If you are using tile granite, use the tile team, and if you are using slab granite order immediately after cabinet installation and have it installed by the fabricator.
14. Tile / Flooring (not carpet). Install all bathroom, kitchen and tile flooring.  Make sure to keep tub drains covered to keep mud out.  Finish or install hardwood flooring.
15. Finish Plumbing and Electrical. Install all trim kits, fixtures, faucets, outlets, lighting, switches, ceiling fans, vent covers.  If you did not replace tubs, have them re-glazed at this time.
16. Install appliances, final touch-ups.  Painting / trim, order landscaping, measure and order blinds if applicable.
17. Full Construction Clean. Vacuum ducts if not replaced, clean-out ALL debris, scrub bathrooms, kitchen, broom clean garage.  Wash the windows (yes, wash the windows!)  Make it SPOTLESS!
18. Install carpet. Again, this is the very LAST thing you do inside the house (except staging).  Change the lock box code at this time.
19. Final Exterior. Landscape mulch, rocks, address numbers, mailbox, welcome mat and flowers on front porch. (this can be done earlier in the process if you would like to get the “street appeal” set for the house while it is being remodeled.

Finish Schedule Tips

• Know your market. For example, you may not need to use slab granite in the neighborhood where tile granite sells just fine.
• Budget more than you think you need to for street appeal.  I see so many novice investors spend too much money inside the house, but not enough on landscaping and exterior appeal.  Buyers may not even get out of the car if you don’t have street appeal!
• Colors are critical, but not in the way you may think.  The old Realtor creed is correct, buyers should not notice the colors, they should notice the house.
• Light staging is better than heavy staging.  Use rugs to define spaces rather than large pieces of furniture.  A few pictures and well placed mirrors on walls, a Chinese screen, lots of plants and accessories in the kitchen make the biggest difference for the lease cost.

Architectural Types and House Product Tips:

• Buy houses with good floor plans.  A house with some sort of functional obsolescence will be difficult to sell even with great finishes.
• Purchase homes that are 50-70% of your city’s median value for the largest buyer audience and least risk.
• Do NOT purchase homes that have significantly different architecture than the neighborhood homes (odd-balls)
• Ranch style houses with 3 or more bedrooms and 2 or more bathrooms have the widest audience for sales.
• Victorian houses and early 20th century houses (old houses!) are the most difficult to remodel and have the most cost over-runs

Yes, the Remodeling and Rehabbing Videos are Coming! Be sure you leave your Contact Information to be informed of the our complete video shoot of each stage of a fix and flip project in Denver.