There are very few, if any, proponents of a sound rehabbing education than myself. Nothing trumps a fix and flip investor with the educational fortitude to run a successful rehab. Those prepared for everything thrown their way are more inclined to handle adversity in a way that is beneficial to their own success. It’s also safe to assume that the right education can mitigate risk and maximize opportunity. What more could you ask for?
It’s worth noting that the education you receive can, and often does, extend far beyond the books you read and the people you talk to. In fact, you could argue that the foundation of a great eduction is none other than experience.
But what about those that don’t have the luxury of experience? What could those that have just one deal under their belt learn from having boots on the ground? The answer is simple: a lot. More often than not, the average fix and flip investor can learn more from their first deal than all of their initial preparations combined.
There’s always something to take away from the experience you gain in the field. And if there were three things the first time fix and flip investor can’t afford not to learn, it’s the following principles:
1. Not All Improvements Are Created Equal
Any good fix and flip investor will tell you they take pride in the work they do, and for good reason: a properly rehabbed home can boarder on the edge of a small miracle. However, the best rehabbers are more than aware of the dangers that coincide with exercising too much pride. The success of a rehab has nothing to do with how you envision a respective property, and few buyers are likely to care about the drastic changes you made; all they care about is the final product. Having said that, you have to be able to differentiate between the upgrades with the highest return on investment (ROI) and those you simply like. Refrain from wearing your heart on your sleeve and listen to what the numbers are telling you.
Far too many fix and flip investors assume that the best rehabs have become synonymous with the best improvements. And while they may not be entirely wrong, it’s time that people learned the truth: not all improvements are created equal. You can’t make an improvement simply because you want to. No; the numbers must make sense for you to even consider implementing certain changes.
There is a time and a place for each improvement, and it’s up to you to determine the most appropriate upgrades. And to do that, you must familiarize yourself with the other homes in your neighborhood. What amenities do they provide? At what price point are they offering said amenities? The idea is to get a feel for what all of your competition, otherwise known as comparables, offers prospective buyers. And once you are confident you have done enough research, proceed to make the appropriate improvements, with one caveat: every upgrade you make should be done with the intention of slightly outdoing the competition. Every decision you make should be based on what nearby comparables already have in place; no more, no less.
The idea is to create a home that is slightly better than every other one around it, but at a similar price point. That way, buyers can’t help but take notice of the property that stands out from the rest, but still represents a value. Provided you have done your job, improvements aren’t necessary to add value (which they do), but it’s more important that they create demand. If enough people are interested in your home, there is no reason the competition couldn’t drive up the initial asking price.
Remember this the next time you want nothing but the best for your rehab: more expensive upgrades don’t always translate into more money when it comes time to sell. You could just as easily price yourself out of the market if you let pride take over and make too many improvements.
2. There’s Never A Dull Moment
As a new fix and flip investor, it’s safe to assume your first project will consume a great deal of your time. The process of rehabbing a home, from beginning to end, is time consuming. From the moment you market your services in an attempt to land a deal to selling the finished product to an end buyer, the majority of your time will be dedicated to seeing the project through to completion. It’s worth noting, however, that even when you’re not busy, you should be. And while free time could very well represent efficiency at its finest, it could just as easily translate into the bane of an inexperienced fix and flip investor’s existence.
While it’s acceptable to catch your breath every now and then, free time is a slippery slope. That said, I maintain free time should serve a purpose, and is therefore no more free than the time you spend rehabbing your current project. Those that use their down time to plan ahead will surely be rewarded accordingly.
I could very easily argue that you are doing something wrong if you find yourself with too much down time. It’s not that every waking moment of your life should be dedicated to your fix and flip craft (there are more important things like friends and family that deserve your attention), but you should find yourself busy more often than not within the parameters of a regular work week; that’s just the nature of the beast.
And in the event you have a spare moment, it’s in your best interest — and the best interest of your company — to exercise a little foresight and implement a forward thinking strategy. While you may not have any projects relating to your current property, don’t hesitate to start getting things in order for your next deal. There is never nothing to do as a fix and flip investor.
So while you may occasionally find yourself resting on your laurels, don’t make a habit out of it. The free time you have should be dedicated to your future as a fix and flip investor. Concentrate on finding and closing more deals so that you may move on to the next project without a down period.
3. Who You Know Is Just As Important As What You Know
We’ve all heard it before: real estate is a people business. The connections you are able to forge as a fix and flip investor are second to none, and can increase your potential exponentially. However, only those that are actively participating in the industry can fully appreciate the benefits that have become synonymous with knowing the right people. And while I won’t go as far as saying the people you align your interest with are more important than your eduction, I will certainly stand by the fact that they are equally important. You would be wise to remember one thing: who you know is just as important as what you know. Those who can masterfully combine a sound education with an extensive network of trusted, likeminded individuals will certainly have an edge.
If for nothing else, the people you meet along your fix and flip endeavors are more of a compliment to your education than anything else, not a replacement. Nonetheless, you can’t have one without the other and still expect to make a name for yourself as a fix and flip investor.
Be sure to place an emphasis on both the education you receive and the relationships you build over the course of your first rehab; trust me, there will be plenty of time for both. It’s up to you, however, to see to it that the moments don’t pass you by. Do your best to learn everything you can from your first rehab, and the rest of your career will be better off because of it. At the same time, forge relationships with those you are working with. If you are pleased with the work your contractor has done and the price is reasonable, there is no reason to think they can’t help you on your next project.
As a fix and flip investor, few things compare to the experience you will gain from your first rehab. Those that can commit their learning experiences to memory, as to better serve them on their next deal, will find the second time around to be a lot easier.