At this point in the buying foreclosures series, we have purchased a property and obtained possession. Now it’s time to get to work, we need to get this property ready for the market and sold. This is where many investors get into trouble and end up losing money. There is a compromise between, the extent of the rehab, the timeline and money spent. You need to do the best job possible while spending the least amount of money and in the shortest amount of time possible. Many investors’ dreams of a grand remodel that will blow the minds of buyers, end up destroying their investment. Also, the expectations of the selling price needs to be kept in check as well.

Let’s start at the remodel/rehab. First assess your market. What type of neighborhood is the property in? What finishing products are expected and what is the lifestyle of the locals? This very important to know… It’s fun to remodel a home and make the property amazing, but this is business. If you’re in a neighborhood that calls for granite counters, don’t buy marble. Plan your remodel according to the market that you are in. Keeping it as simple as possible will keep you on track, because the more extensive the job, the more things that can go wrong, costing you time and money. Many first time flippers end up moving into their first flip. They go BIG on a remodel job and get in way over their head. They get put in a position where they’re going to lose money, so they end up moving into the property. I know from experience.

Now that you know the extent of the remodel, you need to get construction bids. Always get at least two bids. I suggest to get two bids from different general contractors along with individual bids from subcontractors. However, keep in mind that subbing out all of the work creates a LOT of work for yourself. If you don’t have the time to manage a construction site, use a general contractor (get three different bids too). When getting bids from the contractors, always have them itemize all work and be sure to get bids on some of the work you’ve decided not to complete, you may find out that something you thought would be too expensive, isn’t much work at all. Once you have the bid you can pick and choose the work you actually want completed. You can save a lot of money if you purchase all of the materials yourself, separately. If you purchase your own materials, you can shop for the best deals and likely get a contractors discount.

Which contractor to go with? If you get three bids, the difference between the high and low bid will likely be 20%. DO NOT JUST CHOOSE THE LOWEST BID! The contractor’s reputation is key. Do research on the contractors and get references. The low bidding contractor may do shotty work and be a complete flake. This will cost you in the long run. Choose the contractor with the best reputation and most reasonable price. Negotiate the cost of work by using the competing bids. Make sure that you have a contract with the contractor. The contract should state milestones along with the timeline for completion. There should be a penalty clause in the contract that deducts money for each day completion goes over, as well as a bonus clause for each day that completion is early. A payment schedule should also be included. DO NOT pay in full until the job is absolutely complete. Once the job is started, you need to check up daily, at least a drive by.

You now have a beautifully remodeled home that is ready for the market. Before listing the property, go check out the competition. Go view all of the active properties and note the condition and price they’re listed at. Compare your property to your competition. This can be difficult for some people to do this with an un-bias mind, take your pride out of you investment. When choosing your price, be competitive. There are different pricing strategies. I prefer to list on the l