In the last four years, we fixed and flipped 150+ projects in two states.  And while we had many more successes than failures, it was the failures that taught us the most valuable lessons. It opened our eyes to the undeniable truths of this business.  We’re here to help you avoid making the same mistakes we made.  As Will Rogers said, “Good judgment comes from experience and a lot of that comes from bad judgment”. These are our lessons learned fixing and flipping.

Create A Plan BEFORE You Start

We all get caught up in the excitement of a new venture and quite frankly, it happens to me every time! I love being energized by a new opportunity and you should too.  But don’t start until you have a solid plan in place. Yes, there will always be unknowns, but they are much easier to overcome when you have already handled the “knowns”.

  • Have a solid process to determine After Repair Values of your properties. More on that later.
  • Interview a couple general contractors (GC) and make sure the GC has availability to start on your timeline. Don’t commit to any GC before you know what you got!
  • Decide who is paying the bills and how they are being tracked?
  • Determine how and who is creating the Scope of Work for your property. (Part 2)
  • Make sure you have solid financing with a cushion for unforeseen circumstances. (Part 2)
  • Put in place a monitoring system to track the remodel progress of your property so you can be on time and on budget! (Part 2)

Determine Your After Repair Value (ARV)

The projected sale price of your fix and flip after the renovation is one of the most important decisions you will make. Calculating an ARV is not a science and there is no single method to use that will work for you all of the time. Trust me, we’ve missed our fair share and you will too.  But the longer we do this, the better we get and this is where we can help you!

  • There is NO substitute for eyeballs on a property to be able to calculate an accurate ARV unless the property is part of a large subdivision with many other exact models and a lot of sales to justify the price.
  • NEVER trust an initial ARV from someone who does not have consequences if it is wrong! A wholesaler or a bank only benefits from your purchase, not your sale.
  • Don’t factor in future appreciation when calculating your ARV. This is tempting in hot markets but no one can predict the future.

Choose Your Sweet Spot and Stick To It

Our most challenging and least rewarding projects have always been those that deviated from our business model which we affectionately refer to as our “sweet spot”.  Picking your “spot” drives all of your decision making and is different for everyone based on the structure of the business.  So, do the analysis required to determine where you want to be and then stick to it!

General Contractor and Trade Relationships Blow Hot and Cold

Our GCs and trades are critical to our business and thus our success.  Just realize, however, that these relationships can ebb and flow over time for a lot of reasons and you need to have this in mind when managing the relationship.  Sometimes a GC will take on too much work and their quality suffers until they can get everything back in balance.

Another issue we run into we refer to as “The Shiny Penny Problem”. This occurs when a GC has an army of trades and subcontractors on a project through the first 70% or so. Then as the project nears completion, the focus changes to the next “Shiny Penny Project”, which of course is not ours! This is natural as there is a certain amount of job fatigue that sets in on a project after being there two months straight. There are a lot of other reasons relationships blow hot and cold. In the end, don’t fight the last war and close off the relationship forever. We’ve had many instances where a GC has come back and the work has been even better than before.

Be sure to check out ‘Lessons Learned After 150 Fix and Flips: Part 2’ and be sure to sign up for your Free 7-Day Trial, no credit card required!

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