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How much can you do yourself? You mention a head contractor⌠You wonât make sustained money doing this unless you can do the general contractor role yourself. The more you can do yourself the more youâll make. Also, youâre going to need to do these quickly. Financing costs kill. Can you turn one around per month? Six weeks? What happens when one doesnât sell for a month? Now your capital is tied up and you canât buy the next house and your trades are working elsewhere. Need to think that through. The real estate side is huge too. You have to know the neighborhood and you have to understand how to find comps, then have a plan to get your undervalued property up to the standard of those comps with a budget that leaves you a 20% ROE with contingency. Real estate agents will eat your profit, you need one you can trust and can cut you a deal on fees for repeat business. Iâve done one of these flips before and made a few dollars, and Iâm currently doing one for my house (doing ALL the work myself, concrete, electrical, framing, plumbing). Iâve also done dozens of major landscape projects as a GC, including commercial work (I manage estimating, financing and sub contracts for a landscape firm Iâm partner in). Iâve considered doing what youâre doing as a full time gig, but itâs not as easy as it looks. Have a project go sour on you and see if you still like the job before going full in. You will have losers that cost you more than you make. If you still want to get up the next morning, then maybe this is for you. But only if youâve got some basic skills. You need to be able to sub-in for your drywaller when he calls in sick and youâve got a painter scheduled tomorrow and rescheduling him means a three week delay and destroying your whole schedule. Etc. Etc.
Financing wise I can get some people to chip in their dollars so I wonât have to borrow money, but as you mentioned having your money tied to a house until it sells is a nightmare. The good thing is there are a few people with the know how who are willing to join the team.I am with you on having the basic skills, one thing Iâve learnt is dealing with these contractor types can be a nightmare if they sense your urgency, so yes you will have to have minimum skills.I am persuading my brother to get a realtor license so the money wonât go out of the pocked that bad.But I guess doing this gig back to back and dealing with multiple demands is where you make big bucks and also where you may go wrong.You seem alot more informed than me on this topic though.
Itâs not easy as far as making money, but it is an âeasyâ way to get into business for yourself if the whole âbeing your own bossâ thing is something that drives you. This is an area that Iâve dabbled and the one thing I found is that the perfect is the enemy of the good. I bet I looked at 50-60 properties before I pulled the trigger. I more than doubled my money on the first house I took on(pure dumb luck) and that has soured me on wanting to tackle a property where I might net $30K on $150K, even though thatâs blowing my usual earnings out of the water.
As far as capital, it seems like people tend to go one of 2 ways. All cash, or leveraged to the hilt. I donât have large piles of cash, so I A) lose out on a lot of properties that I would like to buy and B) put as little of my own money on the table as possible. Carrying costs wll kill you if you arenât hitting your schedules, but itâs the only way a guy like me can operate.
Iâve only had a financial stake in 4 properties over the last 5 years, so Iâm far from an expert, but with enough due diligence and a sound plan, you can definitely make money.
^Yeah,I looked at about 100 houses.Now I can almost tell about the quality of the house from my computer.
The only luck I had was the fact that I was actually looking for a house to live in, the idea of selling it struck me later after I saw the added value.The problem is you cannot find too many crappy houses in good neighborhoods and you cannot get decent ROI for a crappy house turned to a decent one in a shitty neighborhood.
If you think youâre going to make money painting and replacing old carpet, youâre not. Donât necessarily look at crappy houses. Look at ones that you can upgrade to higher comps. Like look for a 2 bed + 1 bath where you can finish the basement and move a wall or two and have a 3 bed + 3 bath including a master ensuite. Thatâs a big strategy in my market, of course local markets will be all unique. But itâs not necessarily a beaten up piece of junk that will make the most money, because youâll eat up your budget in cosmetic fixes that have low return when selling.
I agree with this. Weâre currently looking to upgrade our primary residence(so not a flip, but purchasing on the same equity generating principles) by finding something that can be easily converted to something bigger/more. Weâve had offers in on 3 places so far, all with unfinished SF, just havenât been the high bid yet.
Iâve also done dozens of major landscape projects as a GC, including commercial work (I manage estimating, financing and sub contracts for a landscape firm Iâm partner in).
Geo: just curious how do you price your jobs? Iâm looking at getting my landscaping done and Iâve had two quotes ($15k - $20k range).
Estimated actual cost + contingency (depends on project) + margin. Real simple. We look for a 20-25% margin. So if we are doing a $15,000 job, we will make about $3k. Thatâs after labour but before SG&A overhead. We are only doing a few projects a month, itâs become more of a part time thing after going full out in past summers. Weâre subbing out some labour now rather than having guys on payroll, itâs a much smaller operation than it was, but pricing model is the same. You can get better pricing if guys are not booked up as they need to recover fixed costs. Itâs good to get in early. As a guyâs book fills for the summer (in Canada we only can do some things May-Sept), his pricing becomes much less negotiable.
^ ok thanks.
Do you provide a design service for your clientele? One firm quoted a fee of $500 to have the landscaping designed, in addition to the cost of the job.
Another firm offered this service as part of the down payment if we engaged them (but he wouldnât come out to provide a free estimate).
(I would think if your spending over $15k on a job the design should be free).
Nothing is free. 
It depends on the extent of the design. If itâs a basic deck/hardscape type thing then we could do that in house. We more or less go out to the customer, talk it through at a high level, take some measurements and then build it out in some software (this isnât my area of the partnership). We have done a few elaborate layouts where we have contracted a landscape architect to do a design. Generally high end homes. To be honest $15k isnât much for a single family home landscaping. Thatâs generally a basic deck, patio and sod in my market for a fair sized lot. If youâve got a fence, youâre stretching $15k. It all depends on what youâre doing. If youâre looking for a $15k deck, then yeah, I might engage a designer but a basic deck, grass, patio, fence, probably not. Make sure you get references and verify the contractors license and insurance information before providing ANY money. And yes, he should come out for estimate and provide you an itemized quote.
ok great thanks. So nothing is free?
Each firm did provide an itemized quote and the work is only for the front landscaping (front walkway, topsoil, mulch, plants, few trees and lighting & tax @ 13%). Iâll probably do my deck next year. No fencing.
Didnât Arnold do this before he became famous? I think it is advantageous to offer some kind of novelty - have your house built by Austrian uber men. Not sure what we can do though.
^The best chance I am getting is having a p&rnO movie being shot at one of the houses.
Why canât I make an offer and close on real estate by the click of a mouse? Software can take care of most will and trusts, but real estate transactions are still a major PIA. Can someone please create a website that takes the hassle out of real estate? Make and accept offers would be a great first step. Hell, I might even invest. The f-ing industry annoys me so much I became an agent to capture at least half the commission. Probably has saved me close to six figures to date for a few hours of my time. The real estate exams arenât exactly rocket science.
Anything âfreeâ is worked into the quote. Thatâs a healthy budget for front landscaping. If the guy is telling you to go get your own design and others arenât, then negotiate accordingly. Honestly, maybe you should approach a design firm of your chosing and pay the bill, and work directly with the designer, then have the landscapers bid on your drawings with a fixed price. Iâm more comfortable getting aggressive on pricing with a professional design in hand as the contingency is less risky then a homeownerâs design. People change their minds or design dumb things that look terrible when done (then blame the contractor and youâre sticking working for free or a bad reference), whereas a designer can do real magic with what theyâre given.
We are still considering our options at this point.
Whatâs your feeling on cash jobs?
The one guy is a patient of my wifeâs so she knows him from her office so we feel comfortable working with him however he seems to be a little high on the price (after seeing my house I think he may be trying to jam me a little).
If itâs a licensed contractor with current insurance, cash is fine. Bounced cheques are common and guys will cut a deal to avoid this. Itâs not necessarily all tax avoidance (though lots is). But a reputable contractor needs to accurately report revenues or his insurance can be jeopardized, so many will play by the book. If going cash just make sure you have a contract and that he is insured (hopefully a $10mm policy). The last thing you need is a fly by night guy and some kid gets killed on the job site or a gas line ruptures or they drive an excavator through your neighborâs house and you get left holding the bag. Get a receipt of cash deposits and make sure heâs registered with the appropriate provincial authorities for accepting pre-paid deposits. Most provinces force prepaid contractors to provide some kind of deposit, so you have some protection if things go south.