The lessons we learned from our first 50 philippines

#יםמהשבוי Eyal Pasternak and Yaron Pasternak #Post2
You know the military phrase "safety instructions are written in blood" it applies here as well.
If you do flips or have ever thought about doing flips, this post will save you time, money and most importantly unnecessary stress.
After every flip we complete, we conduct an "incident investigation" just like in the army.
Although there is no one here who went to jail as a result of the investigation, but the conclusions that emerge from the investigation can help and make the difference between success and failure.
Even with the experience we have gained and after dozens of books and podcasts on the subject, we still learn something new with every property we renovate.
Come on, let's roll up our sleeves, get down to the field and figure out what it really takes to be able to perform a successful flip:
We prepared a list of lessons learned over the years that helped us refine and calibrate our system.
Here are our 10 conclusions for a successful flip, which we recommend you take into account before your next project:
1. Dealing with the contractors
It may not be the most glamorous and sexiest part of your real estate business, but it is one of the most important, and without a doubt also the most difficult and challenging part of every Flip.
You might find a great deal, in a great neighborhood and amazing financing terms, but if you hire unprofessional contractors, or if you don't manage your contractors correctly, you will suffer, and most likely lose quite a bit of money.
Therefore, do not think of "finding a contractor" as a quick and easy task. Invest time in it.
The more work you do in advance in finding contractors and perform a more comprehensive due diligence process, the better your profits in the deal will be. And from experience, your blood pressure will remain normal (as much as possible in a flip).
2. Personal protection - it's not just a type of protection!
One of the reasons why many investors fail in Flips is because they fail to properly manage their contractors.
If the contractor is not under your absolute control, then even the most professional contractor can cause the project budget to double and increase the duration of the project.
You must properly manage the contractors you have hired and keep them connected to the tasks and times you agreed upon.
Look for professional contractors in the FB groups you are a member of, ask at Meet Ups you go to, even if you don't have a project at the moment, it's always good to have a good contractor on hand.
Work with people who are quality professionals. Yes, even if they cost more! From experience, what is cheap ends up being expensive!
Don't take your gardener for a painting job, because he said he can paint your house for a third of the price... believe us, that's how it will look!
(Think of your face after you update the expenses in Excel... it's a shitty feeling).
3. You're done, you got it
Once you start working with the contractors, you will always leave the contractor "hungry" wanting more money. Never pay him everything in advance, no matter how much he cries and what grandmotherly stories he tells you (and he will tell). Release funds to the contractor only after the goals you set for him have been achieved. This ensures that the work is done quickly and efficiently.
4. Presence in the field - Showing Face
Be sure to visit the property in person or have someone visit it on your behalf on a regular basis. Look at the presence!
They need to know that you are there to check the quality of the work every day, and the rate of progress of the work according to the pre-defined schedules.
5. Neighbors neighbors…
Ok, this is not a reference to the Australian series but it can have a huge impact on the success of your project. Neighbors can be your greatest help or your greatest nightmare.
When we buy a house, we always introduce ourselves to all the neighbors and give them our contact information. We explain to them that we know that renovating a property causes a lot of noise and dirt and that it is important to us to reduce the impact on their quality of life to a minimum, and if there is anything that bothers them to call us immediately so that we can resolve the situation.
Disgruntled neighbors can contact the municipality to cause you countless problems that will cost you time and money. You will be surprised, with the right attitude they can also help you. We had a neighbor who spotted a squatter trying to break into the new house we bought and called the police at 12 midnight. Thanks to him, we were spared the adventure of evicting an intruder, saving valuable time, money and unnecessary stress.
In another case, we repaired and painted the neighbor's parking lot in order to make the area around our property look friendlier and nicer than a competing property that was for sale across the street. The neighbor was so happy that he became a source of leads for additional properties that eventually led to the purchase of additional properties in the neighborhood.
6. Stick to the plan
Stick to the original rehab plan you prepared with the contractor.
If you didn't plan to renovate the garden when you bought the house that will look like the yard of Queen Elizabeth (the late), don't decide to do it halfway, just because you got a renovation from the movies and "it's a shame" not to do the garden. This is because making changes costs more money and delays the overall project, and you won't always get the extra premium you think you will, and a cheaper house sells faster anyway.
7. The flip doesn't start when you buy it
The first thing we learned very quickly when we started doing Flips is that the work doesn't start when you buy the property but it starts with proper prep work before buying the property.
What most investors do (we also sinned in the beginning) is to wait until the day after the closing and then start planning the Flip, but here you lose precious time.
During the "inspection period", you will use the time to close contractors, create a super detailed SOW, and select materials.
8. The three letters that are the difference between success and failure - SOW!
This is the most important document you will use during the Flip. This is a detailed list of every item that needs to be fixed in the house.
The more detailed the Scope Of Work is, the smoother your flip will run and with less overruns from the budget (yes you will overrun, the question is by how much). If you know your property from A to Z, you will be able to get more accurate estimates from contractors, you will be able to schedule professionals at the right times, reduce the number of "Change Orders" that are the contractors' bread and butter (why do you think you are getting a low price? They build on This). and reduce your stress level considerably.
9. You earn your money by buying.
Once you have purchased a house, your profit is already limited at a certain point and from there it does not increase any more. (Average renovation time for our regular flip house takes 1-3 months, so even if the market is hot or cold, it will not drastically change the price in such a short period of time). Therefore, if you pay too much for a property, you are unlikely to get the profit you expect
You cannot change the After Repair Value drastically no matter how many additions you add. (Value Add is a different story).
Therefore, always do your calculations carefully when purchasing a property for Philip. Never buy with emotion because of the situation you are in, it is only a numbers game.
10. Stamp? (Only we Israelis see?!?)
When a client does not pay the contractor, the contractor can foreclose on the property he was hired to work on, making it difficult to sell the property until he is paid. This is known as a Contractor's Lien or a Mechanic's Lien. Therefore, it's important not to be in an ASK atmosphere at the end of the flip, always ask the contractor to sign a Lien Waiver form. This form indicates that the account has been settled in full and the contractor waives his right to file a lien on the house.
Pictured: Contractors review - Showing Face, there are things you only see in the field!
Good luck, we'd love to hear comments, requests, and any feedback you'd like to share with us here below or in private????