When you fix and flip a house, there are many ways to go. Depending on a number of factors, you will have to budget accordingly. In particular, time is a key factor, as there is a big difference between fixing and flipping a house that you plan to live in during the fixing part, and a fix and flip that happens over the course of only a few months, where you act as the project manager and/or contractor.
If you don’t mind living in a construction zone, it could be beneficial to fix the house while you are living in it. This is a particularly attractive option for those who have other jobs and are doing the rehab work on the side, while they maintain full time employment. When you are able to take this long-term approach, you can balance money with time, and shave off a fair bit of the budget by being more flexible and creative when fixing up the investment property.
If you are looking to fix and flip a house within a matter of months, you should budget accordingly. You’ll likely need to be much more organized in terms of the contractors that you hire, the order in which things are accomplished, and the amount of leeway you will have between jobs. This will usually mean a higher price tag. Also, the longer you take to get the house back on the market and sold, the longer it will take to recoup costs and turn a profit.
Furthermore, everything that you can do yourself, without hiring contractors, will save you money… if you know what you are doing and do it properly!
The best way to develop a realistic budget is through experience. Many people who fix and flip start small, and live in the house that they are planning to fix and flip. By doing this, they learn how much certain rehab projects cost, how long they take, and whether or not they are comfortable and capable of doing those projects themselves.
Once you’ve done it one time, it’s always easier the second time around. However, you will find that even with the most thought-through timeline and budget, you will need to account for an additional 10-20% time and budget margin, known as contingency.
Overall, starting small, reducing risk, and budgeting appropriately are essential components to the realization of a successful project.
If you are ready to take on a new rehab challenge, and need funding, Center Street Lending can make it happen. We lend in CA, AZ, CO, UT, TX, FL & NC, up to 80% of the property purchase price as well as 80% of your anticipated rehab costs. Give us a call today at 949.244.1090, or request a no-obligation quote online. We use a simple, streamlined process, and can fund your project in as little as 24-hours!
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