Construction experience needed to flip houses?

Question

Hey BP,

I'm new to real estate investing so I'm trying to learn as much as I can through podcasts, forums, books, etc.  I've been sifting through forums here on BP and it's been nice to see so many people providing personal insight to people's problems/questions. Now, this might be a dumb question but as I said, I'm trying to learn as much as I can! Is construction experience needed if you're wanting to flip houses as an investor? Or do most people hire this work out to contractors once they've found a deal they'd like to invest in?  I have no experience in construction but would someday like to flip houses. What do most investors do who don't possess construction experience?

Katarzyna Lach · Answer

@Abigail Hansen I think the general construction knowledge most definitely help, but many flip investors (I would actually go as far as saying that majority) don't do the work themselves. It is more important to understand what needs to be done in the house and how to take the first stab at estimating the cost and SOW, before getting a contractor in there for a walkthrough. I believe that more properties you see more of a feel you get for that. I think there are some great resources to study some of the books I would recommend are: starting with BP books "The Book on Flipping Houses" and "The Book on Estimating Rehab Costs" both by J Scott (All Titles – BiggerPockets Bookstore) as well as "The Complete Guide To Home Inspection" by Michael Litchfield (The Complete Guide to Home Inspection: Litchfield, Michael, Robinson, Roger C.: 9781627104807: Amazon.com: Books). Also, there are some really cool tools out there that attempt to make your life easier by helping to estimate rehab costs. One recent one I have been checking out and taking advantage of free trail is Flipper Force | House Flipping Software for Flippers & Rehabbers . It is really neat!

Rafael Perez · Answer

@Abigail Hansen hey Abigail that's awesome that you are getting into real estate continue educating yourself! To answer your question about construction experience - yes and no. I am no expert in construction but my family consists of great contractors so I ask them lots of questions constantly. So by just knowing the basics, like how much to budget for cosmetic repairs that should be enough. I suggest either get in contact and build a relationship with a local contractor so you can pick their brain, or find a great trustworthy general contractor in the are you want to invest in to run your rehabs.

Jim Kalish · Answer

Being  able to actually do the work isn't an absolute must.  For that matter not being able to do it can be a plus.  You aren't tempted to try to do the work yourself.  I know we did all the work ourselves on our first few homes.  It took a lot longer than it should have and on a couple we went back a few years later with subs to fix what we thought we had done right.  But its a must to either know what it costs or have a partner or at least a GC you can bring in when looking at places to figure out what a rehab will cost.  Rules of thumbs are great when you deciding which properties you want to take a closer look at.  You can even make offers with that info. But if you get the deal use your due diligence period to sharpen your pencil.  That's your last chance to really pin down the costs.  The old saying you make your money when you buy is more true today than ever.  You can't buy a house thinking you can change your plans once underway to save money.  That's a recipe for disaster.  Make a plan and then follow it.  BPs has some great calculators for analyzing deals.  Try them out.

Best of luck on your investing!

Account Closed · Answer

@Abigail Hansen this really depends on your budget.  Most people can’t break into the space!  It’s hard to get off the ground if you’re coming from the ground up!  If your budget is tight, you could always buy a run down foreclosure and try to do whatever upgrades you can within your budget.  The difficulty is, whether you hire a GC or do it yourself, there’s a rough learning curve starting out flipping.  I’m very experienced in construction, however, on my first flips, I underestimated greatly how long it would take and how much it would cost.  This can happen whether you do it yourself or hire it out.  It’s a risky business.  You either need a bunch of money to get houses that aren’t that bad off, and then base your success on surface repairs and beautification, which is a way better advantage.  If you start small, it’s very difficult to squeeze money out of a run down house because it’s much harder to do full remodel than new construction.  Things to consider and show you it’s not yes or no, but a bunch of considerations tailored to your specific financial position, market and available time etc.

Alecia Loveless · Answer

@Abigail Hansen Hi! Welcome aboard! I’m just getting started too but have bought some properties. I know some about construction and understand what I am being told when my contractor explains things to me but am not “handy” myself.

My contractor is actually my handyman who is moving up in the world as he grows his business and his knowledge. He can do many things himself. However he also has great relationships with other contractors such as electricians, plumbers, HVAC guys, general laborers, concrete workers, etc. These people do so much work through my contractor they work his jobs at preferred rates. Which helps my bottom line.

For instance I just rewired a 1400 square foot house for $2500 including materials.

Once you figure out where you will be investing, your home town or another location, you can build your team of workers. From contractors to real estate agents to lawyers to accountants to whoever you think you need to help you. Then once you select your property you can get an idea of the cost for renovations and if you want to flip it or hold if long term and rent it in your portfolio.

The book on BiggerPockets on estimating renovations is helpful for sure. However, once you get started don’t be afraid to ask questions and be onsite if that is a possibility some of the time to observe and learn in your own property.

Zee Abbas · Answer

There’s only so much you can learn by reading books/forums and watching videos. I suggest tackling a smaller project at first but be very hands on in the process aka you be the GC. Try doing some of the work yourself. Visit the lumber yard, electrical/plumbing/HVAC supply stores, etc. Bring in at-least 3-5 contractors to give you prices on very specific jobs ie. flooring, bathroom, painting, etc. This approach will take longer to get your house to market but it was be much more rewarding and you will learn the ins and outs compared to simply hiring a GC you write out checks to.

Bill Krayer · Answer

You'll learn what you need to with time. It's good to have a general contractor to look over your prospects and advise you the potential costs beyond your purchase price for any deficiencies requiring attention. Whatever you buy will have costs to do repairs that should not exceed it's ARV. There are often hidden problems so you'll have to be comfortable with the GCs opinions and optimistic they can keep costs within line.Don't try to learn without a competent GC or two in your corner. Do learn with every flip so you will become comfortable with your own assessments that can be bantered with your GC. Relying on one contractor with a specific skill set is going to lead you into more uncertainty and hidden costs.

Andrew Syrios · Answer

It's certainly helpful but by no means necessary. In one way, it can be a detriment as there is the temptation to do it yourself when great flippers know it's important to delegate. As someone with extremely mediocre handyman skills, it has been beneficial for me to not have this temptation. I've seen really handy people fall for it again and again.

Jonathan Greene · Answer

You don't need construction experience, but you do need to know costs, values, etc. and what it takes to get it done or else you will pay 2x more for everything, if not more. The best way to learn is to hop on or into a lot of local investor groups and befriend a local flipper who might let you swing by their projects so you can start to learn x costs 5 and y costs 7 before you start going in yourself. People who know nothing about the costs stay too detached from the project and usually spend more than they should.

Construction experience needed to flip houses?

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