Tips For Saving Money When Flipping a House

Useful Tips For Saving Money When Flipping A House

When margins are compressed as a result of greater competition, a lack of inventory, and higher mortgage rates, it is becoming increasingly difficult to profit from house flips. To get around this, you must learn to be more wise about where you spend and save your money. 

The good news is that with a little information, you can find many strategies to reduce budget risks, cut expenses, and stretch your budget beyond what might initially seem feasible. 

Let’s look at some of the top house flipping strategies to help you save money every time and increase the profit you generate from each flip.

Purchase, Sale & Holding Phase

You make money on real estate when you buy, not necessarily when you sell. Try to purchase the property at 70% of the ARV or better. 

Negotiate Rehab Bids with Multiple Contractors – At least 5 or more

In order to get the best pricing on your rehab cost you need to get itemized bids from at least 5 contractors. Make sure you get bids on both materials and labor. It’s important to note, taking the cheapest is not always the best option as some times the cheapest option will not do the best work or go over your timeline. 

Negotiate Hard Money Rates and Fees

Hard money lenders are a little more competitive with each other than contractors are, therefore their rates will be closer to each other and more uniform amongst them. Given that fact, you should be able to get pretty similar rates from multiple lenders.

Yet, it still makes sense to compare rates because even a 1% increase might have a significant impact on the profitability of your transaction.

You should strive to have at least three flips and a credit score of 700 or higher, or collaborate with someone who does, because lenders will often lower their rates depending on experience and credit.

Upfront Dollars is one of the best hard money lenders when it comes to higher LTV’s, competitive rates, fees and faster closing times. 

Negotiate Commission with Realtors

Realtors typically charge 3% on both the buy side and the sell side. That’s a total of 6%. If you form an agreement with your realtor and promise to give them a certain number of ongoing business they will reduce their fees for the volume of buy/sell transactions. 

Negotiate the Fee With the Wholesaler

Wholesalers typically make $5000+ on each transaction. But often times they make so much more than this. So it’s important to negotiate with your wholesaler if you are sourcing your flip from a real estate wholesaler. 

Don’t over improve the property 

If you are planning to rehab a property it’s important you don’t over rehab the property. Look at the comparable properties that are similar to yours and do the same thing or slightly better.