I suck at Flipping, but I gotta keep going

Jason Rivera · 2018-08-12T12:51:12-07:00

I'm in the last week of my 2nd flip. I stand to make a good profit as I did in my first flip but like my first flip, we spent way too much time on it. The first took somewhere between 7-9 months while this one is going on 10 months. Despite that, I will continue doing it because my wife and I recently had a child and we would like to move into a home w/ more rooms around the time that our kid turns 1 year old. So this flip was again plagued with bad contractors. The guy who started the project was 4 months into the project and still wasn't done the framing. The 2nd guy took over and we knew he was going to be slow. He was the same guy that I used in the 1st project so I knew his 3 week estimate was going to be far more, and I accepted that, but I didn't think it would be 6 months. He's good at what he does but is bad at managing his time and money, so I knew I was taking a risk. So what's next? Well, my plan was always to flip 6 properties. 5 would go toward a new home and the 6th flip was meant to jump start my entry into rental properties. I looked at a few multi-family properties to buy and live in but haven't pulled the trigger. I recently started considering moving into an apartment with additional bedrooms which would solve our space problem within our timeline and I considered converting my home into a rental. I'd essentially break even except for months with vacancies but I would have a rental property without needing a down payment. I can then continue flipping and can take my time if I continue to strike out w/ contractors. On the plus side, I've flipped 2 properties of different sizes so I understand what my costs will be. I've met other investors and contractors in the area, so I know how much investors are paying and what contractors are charging. So the math will be manageable, it's just a matter of finding good contractors.

J ScottPro Member

Moderator

Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes

8y

Originally posted by @Jason Rivera:

The guy who started the project was 4 months into the project and still wasn't done the framing.

...

The 2nd guy took over and we knew he was going to be slow. He was the same guy that I used in the 1st project so I knew his 3 week estimate was going to be far more, and I accepted that, but I didn't think it would be 6 months.

So, you waited 4 months to fire the first contractor, even though you knew he wasn't getting the job done. And then you waited 6 months for the second contractor to finish that work, after that same contractor did the same thing the first time around?

The problem here isn't bad contractors -- the problem is that once you realized the contractors weren't holding up their end of the bargain, you refused to take control of the problem and solve it.

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Jason Rivera

OP

Investor · Philadelphia, PA · Member since 2015 · 43 posts · 10 votes

8y

Yep. The first guy was a recommendation from my father-in-law so I gave him the benefit of the doubt. After I saw that he wasn't progressing fast enough, I explained what I expected and when it didn't change, I fired him. I turned to our original contractor at that point. I knew he wasn't going to be fast but I felt that I could trust him because I've worked with him before and he does a lot of work for a relative. I was concerned about the budget so I went with the familiar contractor vs taking a chance on another unknown. I do need to learn how to manage those situations better and I need to find a good contractor.

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Marcia Maynard

Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes

8y

@Jason Rivera Don't beat yourself up too much, but do learn from your mistakes. I'm not a rehabber, but I do own and manage rental property and use the services of contractors. The skill set required for flipping is different than the skill set needed to buy and hold. But both require knowledge about building rehab, improvement, and maintenance.

The new reality is that there are fewer people going into the trades and the good old timers are starting to retire. Supply and demand is working against us. Labor costs are rising and materials are significantly more expensive than even a few years ago.

If you are flipping full-time, you certainly can do better on the time-line. If you are flipping on the side, it may take you longer. Are you doing this full-time or part-time? How is your focus, discipline and follow-through? How good are you at working with people? Good contractors look for a win-win, value mutual respect, take pride in their service and product, and are interested in establishing relationships with customers that will lead to more work.

My suggestion? Begin with the end in mind, plan your project well, and create a clear scope of work. Seek a mentor in your area that can lead you to good contractors. Don't rely on referrals from friends and family, but check out their leads. Also, go to the building supply centers in your area and ask for referrals from them. Go a step further and ask them why they are referring a particular contractor, and the contractor's strengths and weaknesses. Verify that the contractors have a good track record and are licensed, bonded, and insured. Clear communication from the start is paramount, as well as a solid contract. Have the finesse and moxie to enforce the terms of your contract.

Good luck!

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Jason Rivera

OP

Investor · Philadelphia, PA · Member since 2015 · 43 posts · 10 votes

8y

Thanks @Marcia Maynard, I do keep a "lessons learned" list for each project so this project went better in terms of making sure that I didn't repeat some of the mistakes I made in the first house. So things like not picking certain materials early, making sure that certain jobs didn't happen too early (like painting) and mapping out layouts so that we don't have to reconfigure a space because the refrigerator was too big.

I'm not flipping full-time and I think not knowing construction leads me to not know when it's time to start pushing harder. For example, I do know that framing isn't a long project so I knew that he wasn't performing there but he would give me reasons for certain things not being done and explaining why it would take longer and I wasn't sure if they were valid or not. It wasn't until I brought the 2nd guy in that I found out that the roof wasn't done properly, the framing wasn't done properly, and some other things that caused some rework. I think in time, I'll learn to spot some of that or I'll bring others in to inspect those tasks for me. I think my focus is ok (not bad, but not great). I feel like I communication well with my contractors. I write up what I need and approximately by when. I made milestone based payments so I was ok for the obvious but there were things that I paid for that I was told were done and turned out not to be. Luckily, the 2nd contractor picked up where the 1st left off for the balance of the work and I was able to wrangle in the budget. I did go over budget but it wasn't too bad. I have a partner who's communication skills could use some work. He has a tendency to argue w/ contractors about stuff, then ask them to come back to fix things. I think that contributed to some of the slowed progress near the very end.

Thanks a lot for the suggestions. I have been refining my statement of work to have a clearer picture of the end and I'm sure in time, it'll get better (my 2 flips were very similar in terms of scope). I'll remember your suggestions when it's time to find the next crew. I did recently get a referral from one of the supply stores that I use, another from a 2nd supply store, and there's a 3rd contractor who I didn't reach out to because I lost his number but luckily, I bumped into him at a supply store. I've seen his work and he was working on 3 projects near my first flip. I watched him come in after I started and finish before us.

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I suck at Flipping, but I gotta keep going

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