Learning From a Failed Fix and Flip
Watching reality home improvement shows that detail the process of fixing and flipping projects gives the appearance that undertaking such a project may be easy. However, restoration is a risky affair not for those who are afraid of failure and a deep commitment. Even the most successful professionals in the restoration business have had projects that have fallen flat or outright failed. However, the most diligent pros know the value of learning from a failed fix and flip project and turning it into a future success.
The key principle to any fix and flip project is to buy low and sell high. Before beginning any project, it is important to have a budget analysis that employs a strategic cost estimate. This estimate compares how much is invested in the project and how much the refurbished product will be worth in the end. The greater the difference between the two numbers, the higher the profit margin is.
The first itemized cost to consider is the initial cost of purchasing the original product, be it a piece of furniture, a vehicle or a home. The next price point to consider is the cost of materials needed to restore or replace the project. This cost estimate should also be padded to take into consideration unexpected costs that may arise from unforeseen issues. As you can imagine, the extra padded cost is of course the hardest to predict because of its uncertainty. However, learning from a failed fix and flip means taking into account this extra cost as a risk management measure and anticipating worst case scenarios.
Finally, there should be an estimate on the outsourcing of any labor. Some of the largest costs can be for the labor that is used to install materials and equipment. For instance, in dealing with a home, estimates should be made on the cost of plumbers or electricians who have to install pipes or wiring. These experts are often required because of the specificity or requirements for installation of these items and because of their certifications in these areas.
Not learning from a failed fix and flip project can be costly. Failure to learn is the primary reason that people often lose money on projects. Something as simple as doing a little research and coming up with a budget analysis prior to beginning a project can save a lot of time and money. If the costs outweigh the finished project’s worth, perhaps it is time to consider a new approach or even a new project.