House Flipping // Rehabbing Challenges

[Cameron Fowler]

When looking into getting my first flip or rehab house there are all kinds of work that I am curious of and other people's experience. I would love to hear some stories or areas that were challenges for those who rehab or flip houses. I am in Indianapolis and there is a lot of great opportunities for flips but I want to know what challenges to be on the look out for. 

[Kerry Noble Jr]

Definitely open to connecting

[Ko Kashiwagi]

The two biggest challenges I hear are not realizing the condition of the property (for example, finding out the property is in a worse condition than it is) and working with contractors (not finishing the job, taking too long, etc).

[Alan F.]

Quote from @Cameron Fowler:

When looking into getting my first flip or rehab house there are all kinds of work that I am curious of and other people's experience. I would love to hear some stories or areas that were challenges for those who rehab or flip houses. I am in Indianapolis and there is a lot of great opportunities for flips but I want to know what challenges to be on the look out for. 

The challenges are too numerous to outline here, a person could literally write a book. I'd start by reading J.Scotts book on flipping, then seek out more. A couple of gotchas to look out for, liens, encumbrances and encroachments. Run your underwriting conservatively i.e. tight comps, awareness of school districts, busy surface streets, HV powe lines etc that invalidate your comps. Pay attention to DOM as well as ARV. Make your value add plays effecient and effective. Theres lots more, hopefully some of this helps

[Evan Polaski]

@Cameron Fowler, as Alan notes, where to begin.

Contractors not doing a good job.  Or as my wife likes to call it: "man-sitting"

Contractors unwilling to execute on what you hired them for (I.e. current flip, cabinet installers were supposed to put up fill and crown.  Design called for this to be installed on same plane as the doors. Admittedly, this is not standard, and when installers arrived they said they can't and won't do it)

Supplies not arriving on time and impacting scheduling.  

Arranging schedule of various trades and balancing the good ones with the ones that are available.

Permitting and inspection issues (should be a non-issue, but last house we had a new inspector that seemed like he had something to prove and nitpicked what I view as non-issues).

Market swings impacting ARVs, or in the current market: are we going into a recession before the house can be completed?

Overall condition, as noted.  When you start opening walls, a lot of issues that, based on the visible condition of the house, were assumed to not be present, are.

Bids coming in over budget

[John Seybert]

When you are fixing and flipping a house is the garage door something that usually gets changed to a brand new garage door? 

[Bob Stevens]

Quote from @Cameron Fowler:

When looking into getting my first flip or rehab house there are all kinds of work that I am curious of and other people's experience. I would love to hear some stories or areas that were challenges for those who rehab or flip houses. I am in Indianapolis and there is a lot of great opportunities for flips but I want to know what challenges to be on the look out for. 

 Do not overcomplicate it, so many do. RE is just math, just know your numbers. You an only you need to know ALL of the costs.  

[Curtis Delaurie]

Quote from @John Seybert:

When you are fixing and flipping a house is the garage door something that usually gets changed to a brand new garage door? 

You need to look at comps of what's selling at the price point of the ARV of the project you're looking at. If most of your comps are being sold with new garage doors then you may want to replace it. If most are selling with older garage doors you will get a good idea that buyers aren't being put off by it.

[Alan F.]

Quote from @Curtis Delaurie:

Quote from @John Seybert:

When you are fixing and flipping a house is the garage door something that usually gets changed to a brand new garage door? 

You need to look at comps of what's selling at the price point of the ARV of the project you're looking at. If most of your comps are being sold with new garage doors then you may want to replace it. If most are selling with older garage doors you will get a good idea that buyers aren't being put off by it.

 Look at the other threads, hes selling garage doors lol.

[Alan Asriants]

Make sure you have enough room. Always be conservative with your pricing and budget.

Budget high for rehab costs 

Budget low for sale price

[Will Barnard]

Quote from @Cameron Fowler:

When looking into getting my first flip or rehab house there are all kinds of work that I am curious of and other people's experience. I would love to hear some stories or areas that were challenges for those who rehab or flip houses. I am in Indianapolis and there is a lot of great opportunities for flips but I want to know what challenges to be on the look out for. 

 Aside from some answers below, location is key. Avoid properties on main streets (traffic noise, avoid homes near freeways (smog/traffic noise), avoid homes without garages if most other homes have garages, avoid being in airport flight paths, avoid over building or over rehabbing for the area comps, know how to properly and accurately estimate ARv and rehab costs, and have money lined up in advance. Some will say find the deal and the money will follow. I disagree. Having lenders or partners upfront places you in a better and more confident negotiating position and in the event you find a deal and can't find the money, now you lost the deal and have to back out damaging your reputation as a closer.