Take it from me, or anyone else you know for that matter, deciding to buy a fixer-upper and tackle the task of remodeling is no easy feat. Sure, all those infomercials out there claim you can make quick money flipping, but what they neglect to tell you about is all the headaches that come with it too.
My husband and I have done two homes – one small 1000 square foot home built in 1945 and one huge Queen Anne Victorian of 5000 square feet built in 1893. Here are some things we learned.
- Don’t let your eyes be bigger than your pocket book, no matter how much you love the home.
- If that little voice inside your head is telling you to walk away, do what it says! Don’t force the purchase of a home that will turn into a money pit.
- Always use a contractor. Yes, I know you do-it-yourselfers out there will disagree, but for the hassle of handling 6 sub-contractors yourself, being on the job site everyday, and making sure the city doesn’t shut you down because you forgot to pull a permit, is just not worth the ulcer it will cause.
- Always get a written contract with the Contractor that is VERY specific on what the contractor will be doing for his fee. A hand shake over lunch is just plain dumb. Protect yourself!
- Always put any changes you make during the project in writing and what the cost will be. Don’t make the mistake of hearing from the contractor that he doesn’t “remember” those changes. It will cost you more money!
- Do not pay for the entire project up front and do not pay with cash. Create a paper trail with receipts and signatures.
- Better yet, tell the contractor you would like to pay any bills to the sub-contractors directly. The last thing you need is for the contractor to tell you he paid them, when he just pocketed the money. (We lost $5000 this way)
- Please, please, please pull the proper permits. Don’t be dishonest just to save a few bucks.
- If you are not happy with the way something looks, don’t be afraid to speak up. Tell the contractor to fix it, and at no cost to you. Their mistake or poor work is not your fault.
- If your contractor doesn’t show up one day and is full of excuses, fire him now! If you let it happen once, he will keep taking advantage of you. Oh, and if you smell alcohol on any one’s breath, get rid of them.
- Lastly, ALWAYS have an exit strategy. Know if you are going to keep the home as a rental, flip it fast, or move into it.
Before we got into rehabbing, we educated ourselves about cash flow, creative financing, the local real estate market, and more. We spent two years preparing before we bought the first home. Trust me, it is nothing to just jump into. Understand too that you might possibly fail. Failure is normal in this line of business and you might face foreclosure, or have to sell the home at a loss. Keep your chin up and realize that you only learn from your mistakes.
All of the confessions above happened to us in one way or another. While I don’t know if we will ever tackle another project, I still get the urge every time I see a beautiful home hidden by dirt and debris!