Tip #1, make certain you have a detailed timeline and budget with your general contractor that includes incentives for them to complete their work on time and on budget... More»
Tip #2, make sure your general contractor has a detailed timeline and budget with all of the major subcontractors including concrete, framing, roofing, plumbing, electrical, cabinets/carpentry and painters. Make certain the scope of work is detailed and all inclusive to minimize cost overruns.
Tip #3, subcontractors work on jobs in the priority of which ones make them the most money when taking into account their time which is typically 50% or more of their costs. If the job is clean and ready for them when they arrive they will stay on the job until it is done. If the job is not ready when they show up then you stand a high chance of going to the back of the line.
Tip #4, too much communication is better than too little communication. Let everyone know if timing changes. Nothing is worse than a wasted trip/day for a subcontractor.
Tip #5, plan for known unknowns and unknown unknowns. Things always take longer than planned and cost more than planned so plan for it.
Rule #6, choose your finishes not based on what you like but what will sell and what price level the market will pay for, at any price point. High end finishes in a lower end neighborhood are just as bad as low end finishes in a high end neighborhood. Both are likely to negatively impact profitability. Design and build for the market.
Tip #7, time is money so make certain your next steps are anticipated, instead of reactive, in order to reduce the total timeline.
Tip #8, pick a great realtor (which may not be your friend’s friend) and try to price the completed home at a value that is attractive relative to other available properties. Homes that are initially priced too high tend to receive little interest and sit for too long which then requires a real deal (for the buyer) to finally move them. Bidding wars are the best way to get someone to pay above market.
Tip #9, carry costs can quickly deplete hard earned profits so move finished inventory in a timely manner. Properly priced homes, assuming they were tastefully rehabbed, move quickly, overpriced homes sit and go stale.
Tip #10, emotions should not factor into business decisions. Better to make a small profit and move on to your next deal than hold onto unrealistic price assumptions and watch carry costs consume your profits, or worse yet your equity.