Saving Money or Cutting Corners: Flipping A House

[Braden Downs]

When it comes to rehabbing, what are ways they save money? The reasoning behind this being you want to make a nice profit and sell a reputable home. Or, on the buyers side, you don't want to get screwed. I'm thinking along the terms of: using less thick countertops, using smaller trim in the bedrooms, not painting the garage, cheaper cabinets, less thick carpet, lower end vanity's, etc? I'm curious where people make/don't make cuts?

[J Scott]

The rehab decisions you make should be in line with the ARV you are expecting. If you can hit your ARV using thinner countertops, go for it. If not, don't skimp on countertops (or decide that you're willing to accept a lower ARV). There's no free lunch with rehabbing -- you can choose any finishes, design decisions or level of quality you want, but the ARV will reflect those decisions.

As for where to cut?  Cut you purchase price.

[Matthew G.]

@Braden Downs It largely depends on your market. If you have a $100k property, spending $40k on rehab may be a lot, but if you had a $1M property spending $40k may not be enough. The best option is to look at properties around your area that have sold above market and quickly. You could see what materials they used and try to match them. If you try to save money and the property sells below market or takes longer to sell, you will just be spending that savings on holding costs.

[Brian Pulaski]

My take is this...

Never skimp on the quality of the things like structure or MEPs. Do things correctly, don't cut corners here.

When it comes to finishes, stick with what the comps and ARV dictate. With that said I sometimes like to add some things above typical comps. Things like granite in a house where the competition doesn't have it, fancy trim, extra recessed lights, tile shower surround when others have fiberglass etc. This isn't to drive the cost of your flip up, but to have it stand out and sell faster.

I'm a fan of finding deals too. Coupons, discounts, Black Friday sales etc... you never know when you can snag a good deal on something.