Saving Money on Your Flip
First I want to thank all of you who read, comment and enjoy this blog, I appreciate all the emails you have sent.
I’m going to tell you briefly about how you can save money on your next flip. I know, I know…. I had you all following my flip. Well it came to a screeching halt. I had a bad water meter in the house and need some plumbing completed before I can finish the job, plus come to find out the cities shut off valve at the street is broken, but anyway let me give you all this money saving info. It’s going to be short but sweet.
If you’re flipping houses it is HIGHLY important that you create a product price list, I do this in Excel. I make a list of the products I’ll use rehabbing the property from paint, drywall, carpet, supplies, cleaners and so on. I leave a space to put the price of each product.
Once I have a list of all the materials and supplies needed I can figure my cost for those products (I purchase all my materials and avoid contractor markups). Now, wherever you purchase your products; (Home Depot, Lowes) take the list and order all your supplies at once, asking them to submit it to the “Bid Floor” so you can get a nice discount as opposed to paying full retail. Doing it this way you can save about 15% to 20% off the retail price.
One nice little tip before I go. I’ll get my price, from lets say Lowes and then go to Home Depot with the list and explain to them I’d rather do business with them and if they can beat the price I have quoted then they will get my business. When you have competing stores in an area they will usually beat the price by 5% to 10%,.
So see you can save 20% to 30% on your material cost if you apply this correctly.
All I ask is that when you do this, come back and leave a comment telling how well you’ve done. You can thank me then and buy me a coffee later.
Nike said it best “Just Do It”
Comments (11)
Good post and information. I have asked for contractor discounts at Home Depot and was told they do not differientate prices, and that individual did not make me aware of the Bid Desk. Good to share on BP.
Ted Akers, over 14 years ago
Gary, no attitude on my part but like many blog posting when what you write is from a personal experience you need to have all the info to fully understand where a person is coming from. My explanation was an attempt to give you that understanding. I didn't make any personal attack towards you and i wont but I'll say this, I've listen to your opinion and value it. Believe me I've learned what I have from many, many people. All that I asked is that you don't make blanket assumptions about me, my views, or how I do business when you haven't taken the time out to ask or learn how I personally do things & why. The my two cents part was again no attitude, just what I put in there. If you understand, fine, if not fine and I wish you the best doing what you do.
John, over 14 years ago
I see where you're coming from and I can appreciate the reasoning, the bottom line is very important. It's not a personal attack as it appears you've taken it as. Apparently you're not interested in listening to anyones thoughts on a topic except your own, which is cool - totally limits your learning though. I have spent my career in the materials side of this industry, and have seen this approach countless times and can tell you from experience this is not a good long term strategy. Building partnerships is the key to the supply side, you may think you're getting the call when they have a deal but more than likely they consider you a bottom feeder and the good deals are going elsewhere. Just trying to pass on some advice based on actual knowledge, not get battered for contributing. The "My two cents" comeback at the bottom of your post pretty much tells me your attitude.
Gary Heft, over 14 years ago
Well put John, you had expressed my thought when reading Gary's article also, although we know he does have a right to his opinion, that's great. My personal beliefs are like any retail store their are numerous items that are marked up tremendously for impulse buying, we all know it we have all seen it, so having said that I feel you are doing nothing wrong with working the price angle as long as you feel the Value is their for the product or service.
Lionel Dube, over 14 years ago
I feel the need to address a few misunderstandings of Gary Heft. 1st- in your statement "Should be more than enough to get them to sharpen their pencil if they see it as good business and would like to be your supplier" you're using should & if, which means you are leaving it to chance or someones else choice. During my time investing it has been my experience when you do this you get burned, so i try to control certain aspects. 2nd- The bid is not confidential, they will do this for anyone who is making a purchasing over $2500, so it's not like I'm betraying their trust when they give me a price. 3rd- Due to the fact that I operate the way I do and have as many rehabs going on as I do they call me personally to let me know when things are going on sale, clearence, or scratch & dent. I haven't gotten an elevated bid due to the fact that I compare pricing each time on products being purchased. I have a product list i made up so I know the price of each item I use as it's priced on the shelf. Lastly, I must do what's best for my business seeing that It's privately owned. The few dollars 1 of the stores may miss because I go to a competitor is vastly offset by all the do-it-yourselfers who don't have the knowledge I have and pay sticker price for those products. By conducting business this way it allows me to keep my rehab cost down which leads to me being able to pass that savings along to my potential house buyer. I'm able to offer a totally rehabbed house 10K less than most homes in an area that are not newly updated. I'm not in the business to see Lowes or Depot profit skyrocket but they will make money off of me, but I want to have a dramatic impact on the neighborhoods I invest in plus sell a beautiful home to a buyer with equity, leaving them happy. My two cents
John, over 14 years ago
I'm not a fan of this approach at all, there are business ethics that need to be taken into consideration. I would go as far as providing a matrerials list, let the retailer know he is one of many that will be quoting the list and leave it at that. Should be more than enough to get them to sharpen their pencil if they see it as good business and would like to be your supplier. To take someones confidential bid to someone else and tell them if they can beat it they get the business is just not a good approach. They were trying to make more money off you from the start but you'll award them the business anyway? Sooner or later you will become more of a nuisance than a preferred customer. Bids will be elevated in anticipation of your future counter. Just my two cents, Lowes and Depot are my largest competitors and I like nothing more than to see margin taken out them but that approach isn't a good long term approach.
Gary Heft, over 14 years ago
John, this is exactly what's needed, someone who is not just self serving, but willing to help others. Muchos Gratias!
Lionel Dube, over 14 years ago
Absolutely! In my area, the bidding desk will go through your list of materials and basically have price breaks a different quanities. I have over purchased insulation, studs and decking materials and wire, knowing I'd use it sooner or later and this effects the total discount. But don't over due it, it's a simple economic ordering quanity assessment. Great information! Bill
Bill Gulley, over 14 years ago
Thanks John that is very timely information for me right now.
Ken Hughes, over 14 years ago
This is a fantastic tip for saving money on materials, John! Perhaps you get get into more detail in later posts. I'm sure many novice and experienced investors alike, don't know about the "bid floor." Thanks for sharing!
Joshua Dorkin, over 14 years ago
Thank you for the information. In my city, the Home Depot and Lowe's, are across the street from each other. Ray in Ct.
Raymond B., over 14 years ago