Can you Pls check my House Flip Flow Chart with Exit Strategy?

Question

Any veteran house flippers that see this can you pls double check my House Flip Flow chart and let me know any red flags? Thank you so much.

My Flow chart:

1) I got 50 nice "we buy houses signs" & Phone script ready hoping for Distressed Seller Calls.

2) Got my Hard money lender options... Like 12%, 2 points, 60% LTV... Also a Bridgewell option... 13%, 4 pts, 20% down ARV 75%... I'm still trying to understand this part...  little hazy.

3) Once I find a property from distressed seller with a potential to buy it at 60-70% below market value... i find out all rehab expenses upfront, plug in my numbers with my house flipping spread sheet software to get my Maximum purchase price... (following Rule of 70)

4) I make an offer on the property that works with my calculations to yield a 15% profit that I'm okay with , seller gives me property.  :)

5) Now I use my list of contractors to rehab property within in 2 months

6) List property for sale no later then start of 2 months from my original purchase date.

7) Hit my Goal of house flip between 2-5 months

Exit strategies if home doesn't sell:

A) Reduce price by start of month 3.

B) Reduce price again by start month 4.

C) if I cannot flip within 5 months, try and refinance my hard money loan and rent 12 months to at least break even or make $100/month.

--That's all i got.----

Any red flags in my flow chart?

What else am i missing here?

With whom should i re-fi my hard money house flip loan?

What does a good re-fi loan look like on this?

Thank you so much for replies from any veteran house flippers that read this and respond.

Yinan Q. · Answer

Between 3 and 4 you would want your title company to do a title search.

Domingo Santana · Answer

Scott A. I think that @Valerie  is painting the worst scenario .

Scott A. · Answer

Excellent advice Michael... much appreciated. thanks... "who's who of mental health" ...lol.  plus u gave me idea on time  frame about working full days. It might be a good idea for me to offer to pay subcontractors a little more than expected as a bonus or negotiate upfront to get my full days out of them and avoid schedule headaches and keep my schedule how I want.   everybody has a price.  I see in the house flipping shows that their subs will work through the night,  if I offer extra$$$ cash I  bet I could  get some of them to work through the night for me too.    I will negotiate this up front with any subcontractor I hire.  I want full days.

Michael Key · Answer

About 15yrs of experience in family remodeling business. Just a few thoughts about rehab timeframe.

Depending on the house, I think two months if your workers are putting in full days, and depending on the work is a reasonable estimate. But I would adjust your plan to include at least 30 days of overrun for rehab. Just as a safety. It's not a matter of yelling at contractors, so much as contractors who aren't meeting their obligations and you end up having no choice but to replace them. That causes setbacks, and it's realistic to plan for it. Six months for rehabs might be a bit much, if you research your deal properly, which it sounds like you intend on doing.

You should stick with your goals, aim to get the work done in 2 months. If the rehab over-runs your allotted, you'll be prepared for it.

You're usually always dealing with the who's who of mental health. I say that jokingly, but hire some painters and you'll get the joke.

Subbing it all out will cost you more upfront, figure out what's cost effective for you and cut out any fat. It might not be worth paying two guys to paint when you and a buddy could knock it out in an evening or two.

But the level of what's worth it to you, is basically up to you. We're all different in those regards.

I would just take steps 6 and 7 and add another layer of scenerios. One where everything is on time. And one where everything is adjusted for a 30 day delay.Otherwise your plan looks solid. And as someone else said, do calculate rent costs upfront if they are a backup exit strategy.

Scott A. · Answer

Sorry you had a bad experience, I don't want the same experience so I will be cautious.  My hope is to maximize my margins and weed out those desperate Sellers from my We Buy Houses  Fast Cash signs. I'm looking for that one no Brainer type of a deal.  m I'm sure it is going to require every ounce of my persuasion skills to get them to give me their property at 70% below market value. But if they're calling my silly little sign on road then chances are they're out of options and might be desperate enough to take me up on my offer.

Scott A. · Answer

Jiminy crispis... u r taking the wind from my sail for sure. 6 months to rehab?  F$%k that.  Profit attracts me first.... Next is rehabbing and Flipping by outsourcing only.  I will hustle to make deals... not fix things myself. Hmmm, thanx for your reply but as u said u r not an experienced investor.  I understand the risk.  There is no big reward without calculated risk.  If contractors play games I am not timid...I got no issues yelling at people to get things done, making a fuss... playing the game. But Cant imagine 6 months is the norm to rehab... once I find a good potential property I will put in my flowchart Expected time to rehab based upon my actual repairs seen before I buy AND if the repairs look to exceed my 2 month rehab schedule I kill that deal before it starts.  I can't imagine 6 months on a rehab.  I would burn the place to the ground.. no f%&$k#ng way. This vent was not personally directed at u.  Putting my sail backup now... Easterly wind is coming back.

Valerie Hiscoe · Answer

I'm not a very experienced investor but I'd say your plan looks great. It looks great because it's everybody's plan. The problem that I see is that your only 'plan B' scenario deals with not being able to sell your property for the price you want after the allotted time. Although there a bunch of problems that could come up after the time you get to your exit strategy (you should absolutely know the rental price before starting if renting is a fall-back option, etc), what I worry about is the number of things that must be done and can go wrong before you get there.

Rehabbing a house is not easy. Even if you're your own contractor and you know the price of absolutely everything, the plumber might not be available when needed. Without the plumber, you can't close up the walls or maybe the floors. You can't lay tile and you can't install cabinetry and by the time the plumber comes, you've lost all your other subcontractors. The electrician finds that although there's a 200amp panel, it only has a 100amp feed. And you find that if you pull a permit for something, the whole house has to meet a minimum safety code and now you find out upgrades must be made to your gas and HVAC. And this is if you ARE the contractor or have enough experience to know when you are or aren't being ripped off. I wish I was exaggerating but I've had this and worse happen. There are day in day out decisions that need to be made and in some cases you will absolutely make the wrong ones and have to back track. It's all a lot more exciting than your flow chart reflects! But if you start with a paint, flooring and cut the lawn type of rehab, it might be hard to find a property that will get you the return for which you aim.

Two months is a very short time for a rehab, even for someone with all the experience and connections to bank on. That's the first thing I'd tweak in your flow chart. Maybe map it for two months and then give yourself 6. Check progress daily if possible and keep a firm hand on the purse strings.

You're spreading your energy a bit thin maybe too. Wholesaling, rehabbing, flipping, rental.... that's a lot of specialized areas. It's a lot of pressure to put on yourself for your first go-round. Apart from the profit, which area really attracts you the most?

P.S. I don't mean to discourage you. It certainly won't stop me.

Scott A. · Answer

Thanks Yinan. I appreciate that!

Can you Pls check my House Flip Flow Chart with Exit Strategy?

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