Greetings, denizens of the real estate flipping and renovation world. Good news over the weekend: Although it is never over until the check has been cashed and is in the bank, State Street went under contract this weekend.
Two quick object lessons here for your consideration:
First, we screwed around too much in doing what we should have done all along... fixing the floors. And, if collective wisdom says that sloping floors are charming and that people expect them in older homes, and your little voice or voices say, "Um... well... how could...," that is the voice of reason trying to break through collective reasoning and your willingness to go along with such tripe because it is easier and cheaper to do so. Trust your gut. Or guts. Big or small, they probably know what is right even if everyone else is saying something different. Our messing around with this stuff ended up costings us thousands of dollars in carrying costs including, but not limited to, insurance, taxes, theft and maintenance.
Second, the end game objective here is to put out a great product in the shortest amount of time. If your contractor, realtor, lawn-care person, you name it, is not up to snuff, deep-six them and move on. Your endeavors are not for charity or for social speculation and folly. You are jumping into this because you want to make money. Never forget that Money and Time are married. One without the other is like visiting divorced parents. It is not an ideal situation. Your company is not here to pay for the education of others. Your company is here to pay your way through the world. It sucks being merciless, and we are not advocating 100% no-mercy. The n0-mercy stance will result in you or your company overpaying for everything because no one will want to work with you. However, we are advocating that you outline goals and objectives, nail down the time frame with all involved, and explain the consequences of not meeting those time and objective goals to all involved. That's fair.
A little side note here for one and all. We recently watched the first season and first episode of Flip or Flop on TV. One observation is that the young couple in the show was four houses into their flipping careers before they landed their show. Good for them and being able to pitch and land the show. But four houses? We bet that they know a whole lot more about house flipping now then they did then. Agreed? Same here. After renovating and flipping quite a few homes, we can say with out reservation that the schedule should rule the day, and that quality should be a close second.
Here's a couple of examples for your consideration:
If the contractor is way behind on the project, you need to stop and ask yourself three questions:
First, are there extenuating circumstances? Did the roof cave in? Was asbestos discovered? Something like that will set any schedule back.
Second, if no life changing events took place with the project, why is the contractor behind schedule? Did they lose a love one? Have to go to court? Are they incompetent? Do they know what they are doing? Did they lose a limb? Are they temporarily blind from some mysterious event involving a carpet cleaner and malfunctioning steam cleaner? Did their dog die? Unless they have a great reason for being behind, you may want to consider your acceptance of their excuses.
Third, if they can't hold the schedule now, will they be any better later on? If not, it may be time to fire them and get someone else.
If the house isn't selling, you need to stop and ask yourself two questions:
One, is there something wrong with the house, and if so what will you do about it? Are you going to fix it? Are you going to drop the price? Are you going to rent it?
Two, is there something wrong with the marketing or the way the realtor set it up? If so, how long is your contract?
In both cases, we suggest that you set up a schedule with the contractor, and limit the contract with the realtor. Don't sign long contracts. This way, you can reassess with them about what you want to do and how you are doing it. Make sure that there is a clause that gives you the right to fire anyone you work with if they aren't performing the way you think they should be, or if you are not hitting your end goals in a reasonable amount of time. Emphasis here on the word, reasonable. Extreme Home Makeover re-runs notwithstanding, it is pretty ridiculous to do a total renovation in a week or two.
Also, have a clear picture of average DOM (days on market) for your city and even the neighborhood that you are in. Your realtor is a professional and should be able to give you that information. If it is your first rodeo with that realtor, verify the information with another source. Either way, keep an eye on what is going on here until you build up a track record with anyone including the contractor, realtor, lawn person, graphic designer, service provider, etc. As you move from your first to your fourth, and from your fourth to your ___________ project, you will know who, how, when and where. But for now, limit your exposure to anyone by defining and communicating realistic expectations, and by giving yourself the escape clause you need to move out of those arenas that prove to be caustic to your wallet.
If your realtor, contractor, lawn person, service provider is professional at all, and you communicate clearly, they will respect your approach. However, and we cannot stress this point enough, you have to be able to communicate clearly. At the end of the day you will be accountable and responsible for turning a profit. No one else. Everyone else on the job will be taking care of themselves. You need to take care of you.
Finally, keep your worst case scenario in mind at the beginning. You should be able to answer that question that we will answer in another post:
What if you can't sell a house for enough money and need to take a loss?
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