On any home improvement project one of the most common thoughts is how can I save on on that appliance or labor or whatever. When flipping houses cost and cost overruns can directly affect the profit if there is nobody keeping an eye on them. Over time the house flipper will be able to estimate costs better because they are based on previous successful projects. The first time flipper can offset labor costs by doing things themselves or partnering with someone who already has these skills.
Every project has multiple jobs and therefore multiple opportunities to save on costs. In the kitchen there are cabinets and cabinet doors that could be painted instead of replaced or appliances that can be bought used instead of new. What about paint, you can buy paint in 5 gallon buckets and use it for more than 1 project. Door hardware, handles, locks and other common items can be obtained online in larger quantities to save.
A great place to start is how to save on the labor or hire contractors during their downtime. Lets look a some creative ideas on hiring people to get things done.
Hiring Labor
When flipping a house labor is an expensive and costly element that includes all of the work, tasks and time spent to rehab the home. The first time you may find yourself doing much of the cleaning, drywall, painting and other tasks because you do not count your time towards the labor cost. The reality is that the time spent is still part of the project work and completing these tasks can be very physically and mentally tasking for the first timer that still works that day job.
To make things easier, create a spreadsheet and organize what work is simple labor and what tasks might need a professional touch:
| Clear and Clean | Physical labor, anyone can do this. |
| Drywall | Some experience in hanging and taping drywall |
| Painting | Physical labor, anyone can do this with little instruction |
| Toilet Install | Requires some knowledge and experience working with the water lines and plumbing |
| Kitchen Appliances | Physical labor, anyone can move a fridge or microwave |
| Roof Repair | Requires knowledge and experience as well as special tools |
| Windows Install | Requires knowledge and experience as well as special tools |
When managing multiple flips it is very unlikely that you will be involved with much of the labor as managing the projects is more important at that stage. I decided to make a short list of other options when it comes to labor, so you have a resource to refer to.
1 Hire Moonlighters
Hiring a moonlighter is where someone works on your project after they are done with their day job, hence during moonlight hours. Today they might call this a side hustle. The best case scenario is matching someones day job skills with your job requirements as they will basically make more money doing the same thing they do everyday as a side hustle. If you were to hire their company the estimate would have to include the employees pay, insurance, business costs and a profit. For moonlighting you would just pay them an hourly wage, possibly more than they make at their day job. You can also be relieved that a professional is working on your project.
These individuals are like anyone else and they need a steady income to pay the bills and feed their family. Be sure to inquire as to what other skills and experience they have, you might be able to fill in more labor spots with 1 individual. You can find some prospective moonlighters by visiting worksites in your neighborhood or the neighborhood of the property.
2 College Students
Hiring a college student for beer money is a tried and tested method of accumulating low cost labor. One of the benefits for the student is they tend to have more time on their hands and making some cash on the side helps with the “high costs” of dorm life. The key here is to keep the work simple as they are not certified HVAC installers or professionals at much more than physical labor.
So simple even a college grad can handle it!
The downside of this is they might need supervision as they are young and the winds change often, so to speak. A college student will also be more limited as to the skills they have obtain at their age. You can offset simple labor intensive tasks like cleaning, demolition and throwing out any junk still inside the house. Park a dumpster in the driveway and have them throw everything in it for a few hours work. S
3 Local Handyman
Where I live I’ve had a few of these flyers stuck on my door where they state “I am a handyman and can do almost any home renovation”. Then it goes to state things like kitchens, bathrooms, roofing, power washing and a lot more. This type of person is great for offsetting labor costs as they are usually cheaper than a certified professional and more flexible with their schedule. Be careful as they will try to sell you on doing everything even if they are not very knowledgeable in that area.
The downside of this type is you may be tempted to hire them for more expensive labor such as installing a range oven, laying concrete or installing a new water heater. Things like this might require permits from the city. Certain work will need special knowledge when handling the natural gas lines or the electrical box. Some project tasks should be estimated and performed by a licensed and insured professional.
4 Schedule work off-season
This option is another play on the moonlighting from above as well as timing your estimates to take advantage of the winter off season. Your looking for skilled individuals that you can hire and work at a time when they are not getting job quotes. The ideal period to get some quotes or schedule work seems to be around December when there is little construction projects going on. Contractors will provide better pricing at this time because there is little work for the next few months.
I have seen articles mention a savings of 5-10 percent on season work such as driveways, roofing or windows when they are performed during the winter months.
5 Use Builders Grade Material
“Builder grade”, also called “contractor grade” materials are lower cost and considered low-grade materials. Using this will help with lowering your overall materials cost for the project. This is a great option for most lower cost flips in the $100,000 range. You can find more affordable options, such as prefab cabinets, lower grade tiles and carpeting.
Be advised that you will not be able to get away with low quality for everything if your expecting to sell the house in a more expensive neighborhood. If your sell price is in the $300,000 plus area you should be looking at higher grade materials.
6 Rent a Large Dumpster
I always thought that renting a dumpster was just part of the process when flipping a house. What I didn’t understand is that the contractors will sometimes include a “clean up” or “waste removal” item in the estimates. It does make sense, if I were installing a new toilet and shower there is going to be plenty of drywall, tiles, debris and the old toilet to get rid of and it’s going in my truck?
A contractor can include a waste removal cost but if you provide a dumpster then you can ask that the item be removed from the estimate and save some on contractor costs.
7 Rent Now Buy Later
Here is another area where you can save by renting equipment instead of buying it. Every flip is different and will require a different set of skills and tools. Any subcontractors that you hire will be responsible for bringing the required equipment unless specified by your agreement. I made a list of some common tools that you may not need year round but you might want to rent to make your project complete faster .
Some common tools to rent before buying:
- Floor stripper and sander
- Power washer
- Carpet cleaner
- Air compressor
- Leaf blower
- Industrial Vaccuum
- Stump grinder
- Bobcat (moving earth)
- Truck rental
8 Stick With a Budget
Sticking with a budget may sound rather obvious but it can be very easy to get wrapped up in the details and challenges of a project and waste time and money making it perfect or trying to fix it. Be sure to step back and look at the overall costs and budget so you can make a profitable decision.
An example I ran into is where my oven had “something” in it that was burning and pumping out black smoke every-time you ran it for more than 20 minutes. I spent hours taking it apart, replacing things and cleaning it inside and out and I never found whatever (or wherever) the “something” was. I finally got sick of taking the batteries out of the fire alarm when I was cooking. Since the range was outdated and over 20 years old I eventually decided to just buy a new one. I wish I would have made that decision after the first 2 or 3 attempts to fix it.
Sticking with a budget means controlling the time and money spent on appliances, wood floors or carpet, windows or any repairs so your costs are minimized.
9 Ask a Realtor
The realtor is a valuable resource to anyone flipping houses. Not just for their access to the MLS but for their knowledge of the market and what sells best at the best price. There are cost savings involved with just collaborating with a realtor and asking the right questions. They will have insight on the cost for contract work, where to get low cost materials and how best to stage and sell the house for a nice profit. If your realtor is not providing your flip properties, I would recommend networking with them and staying in touch. You could save thousands at the cost of a lunch and a good conversation.
10 Big Box Stores
Anyone who owns a house will look at the big box stores for some home improvement savings. Their inventory changes as the seasons change. The products are not always the best or high quality but there are plenty of low cost deals a house flipper can take advantage of often. Use big box stores like Costco or Sam’s Club to buy items in bulk like paint in 5 gallon buckets, paint rollers, drywall and tiling tools or floor tiles, kitchen cabinets and appliances and much more.
Watch for clearance and sales when they appear and use profits from previous flips to stock up on the most common materials. Every house has a bathroom and toilet or vanities and wood flooring. Buy these materials at a discount to be used for the next house flip project.
Also be sure to talk to your tax professional about storing materials for future projects as opposed to completed projects by year end.
11 Building Material Auctions
I was not aware that there were auctions for building materials but I googled it and found a bunch of companies that do this. One of them is called “Paranzino Auctioneers” in my area and they claim to put on over 50 auctions per year. Look for other auction companies in your area or check out this companies schedule as this company is around the OH and PA area mostly.
12 Recoup Your Costs
Reducing your materials cost is one method but you can also do the opposite and recoup your cost when you have extra material at the end of a project. The idea is to sell off or donate the remaining material after your rehab has been completed. The most obvious method is to just sell it off using Craigslist.com or eBay.com, depending on the size and weight.
There is another method where you can support the community and offset your taxes at the same time. You can donate building materials to a non-profit for a tax write off. One of these non-profits is Habitat for Humanity who “helps families build and improve places to call home”. Be sure to ask your tax person for advice on who to donate and by when, sometimes in needs to be done before the end of the year.
Also, you can shop at Habitat for Humanity Restores for used materials too.
Online Resources
13 Amazon.com and eBay.com
The internet has many low cost websites selling items at bulk or discount and an excellent resource for home improvement items is ebay.com and amazon.com. They tend to have more competition and no store front costs so you can find hardware and materials at a low cost. With Amazon prime there is free shipping too.
14 Craigslist.com
Similar to Amazon and eBay Craigslist allows anyone to post items for sale. This includes new and used home improvement products. You can find used materials, fixtures, wood flooring, windows, door hardware and more at a fraction of the cost. An additional detail is there are also estate sales that get posted which may be another resource to save money on.
This is a variable resource as you can find your next distressed property for a fix and flip or a contractor selling excess materials. Not to mention you can also sell your used or excess stuff to recoup on costs as well. I highly recommend learning and using craigslist.com.
15 Youtube.com Training
One of the first cost saving ideas most people come up with is to do much of the work themselves to save on labor. If one is willing to learn a new skill, the internet offers many sites with training and youtube.com is one of the largest and the videos are free. Youtube is a vast resource for training and examples especially in the home improvement space. I have been able to find entire walk through on installing a shower from rough-in to tiling.
Some examples I found:
Use youtube to find channels that are dedicated to home improvement and showing how thigs are done. You can also use it as a advisory resource, for example can you unclog the toilet to save money or just install a new one to save on time.
16 Angieslist.com and TheBlueBook.com
Angieslist.com and thebluebook.com are online resources that’s specific to service providers or contractors. The websites are easy to use and you can find a contractor to get done whatever needs to get done.
The downside of these sites is that locating a moonlighting or off season resource is usually less expensive that even these quotes. The best method to save on labor is to find an individual contractor that is an expert at the job you have and hire them at an hourly rate.
17 Build.com
I find that build.com is a great site for ideas as well as materials and appliances. I also caution to compare prices with eBay and Amazon to make sure your getting the lowest cost for your project. The website is very well done and extremely usable but we are concerned with cost savings here.