We all know that saving money on the quality of your materials or the qualifications of your contractor is a bad idea, ultimately costing you more in the long run. The end result may be that you will have to totally rehab the home before you can break even, let alone make a profit. Skimping on materials isn’t going to help move buyers.
Instead, try these three ways to save when flipping your next property.
#1: Ways to Save on Materials
Rather than rehab a house using cheap, low-grade materials, be smart about how you shop for your materials. That way you can use high quality materials at bargain prices, increasing your savings and your bottom line.
One way to save on materials is to buy them yourself. Many times, flippers leave all of the legwork for finding and buying materials to the contractor. The problem is that the contractor may not buy the materials you would prefer and they may overspend on materials, eating into your profits.
By doing the shopping yourself, you can decide where you want to save and where you want to splurge. You’ll be surprised at how many deals you can find for home rehabs online or even at your local hardware store. When you buy in bulk, you can save even more.
When you need wood, it may be worth it to travel several miles to the nearest lumberyard. When you need tile, why not stop by a local manufacturer to see if you can purchase it in bulk? If you plan on doing multiple flips, this is a great way to save.
#2: Ways to Save on Repair Costs
If you’ve ever watched some of the fix and flip TV shows, you may have noticed that they often bring the homeowners in to help knock down walls, paint and toss trash. Even if you aren’t a contractor, you can save money on repair costs by doing some of the unskilled repair work yourself.
Half of the money real estate investors spend on rehabbing a property is to pay for skilled contractors. If you or your business partner are skilled contractors, you can slash repair costs in half.
#3: Ways to Save Money on Financing
Lastly, there are more ways than ever to save on financing a flip. Traditionally, flipping homes was a cash transaction. Most flippers didn’t go out and get bank loans in order to buy a house to flip.
Lately financial institutions have been more willing to support flippers with some percentage of the financing. Perhaps this is changing due to the rapid growth of alternative financing and real estate crowdfunding organizations like Patch of Land.
Find Your Funding
At Patch of Land, we work with real estate entrepreneurs to help them find funding for their projects while giving savvy investors opportunities to participate with great returns. Learn more about our programs today!