Roberto writes: I am going to buy a home with the intention of fixing up and then re-selling it. How would you go about finding the right contractors? I’ve heard so many horror stories about contractors not doing a good job or running off with people’s money.
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Welcome back to real investing. This is Tim Herriage. Thank you so much for stopping back by today. Roberto writes, I’m going to buy a home with the intention of fixing it up and then reselling it. So fix and flip. How would you go about finding the right contractors? I’ve heard so many horror stories about contractors not doing good job or running off of people’s money. All right. So look Roberto. Good question. Great question. Fantastic question. In this business, there’s only three levers that you control, right? It’s what you pay for a house. It’s what you spend on a house and then ultimately it’s what you sell or lease the home for. And so many of these levers, you have not much control. You don’t have much control over, right? So what you have to pay for the house, kind of the market decides that, um, what you sell the house for the market kind of decides that a lot of that’s based off of what you do to the house.
So assuming you’re not super experienced, I can’t tell you how important it is to have a good general contract. And so many investors get tied up over the 5, 10, 15, 20% that that GCs gonna make. But what I know from 20 plus years experience is you will spend that money on wasted time, wasted interest, wasted expenses, wasted deposits from someone that runs off, like you said, material, uh, overages, uh, shortages, all these things that just add up into waste. And I’m just a huge fan of having competent people do what they’re great at and then me doing what I’m great at. And so the fact that you’re actually asking this question kind of tells me that you’re not great at managing renovations. So my opinion is just you shouldn’t do it right, Roberto. I mean, I, my opinion is you stick with what you’re good at.
I mean, your day job, you may be an engineer for Texas instruments and this may be a little side hustle. So why would you take on someone else’s full-time job who gets paid to do that thinking you could do better at it. So while you’re getting started highly recommend, you use a good general contractor that has references that has referrals, preferably one, that’s used to working with investors. Typically these GCs that work with investors, they know what you need to do to lease or sell the home, uh, in your case sell, uh, and they can give you advice. Uh, you know, think you should have a good project manager, realtor, uh, designer, stager, someone making the decisions, right? Because if this isn’t your full-time job, it’s not what you’re good at. If you don’t have a lot of experience at it, I mean, look, you can, <laugh>, you can spend a lot of money you don’t need to spend.
And this business isn’t about taking pictures for your Instagram or your Facebook to show your friends how smart you are. This business is about making money and you don’t make money if you overspend, or it takes too long. So, you know, good designer, stager realtor in your back, in your pocket, in your, uh, in your, on your bench, we’ll help you make the right decisions. Uh, we break all of our renovation, things down into three categories, must, should, and could. Um, and so must health safety, structural issues that must be corrected, um, should, are things like hardwood floors or solid floors, hard surface floors instead of carpet, um, should or things like granite countertops versus for Mya countertops should, or things like, um, you know, uh, new doorknobs and things of that nature that maybe the ones there already work, but I mean, let’s face it.
That’s not what people want these days. So, and then the coulds are things like open up a wall and uh, hand scrape hardwoods instead of luxury vinyl plane. And you know, you really need someone advising you that can tell you if that’s a good expense or not, right? Because it may not be a good expense. It may be a fantastic expense. The ROI on it may be, you know, two or three X, but you need someone helping you make the decisions from a monetary standpoint versus a I watched HGTV and wanna make it look pretty because one of my favorite general contractors, Blake Johnson with finishing touches, remodeling over in Fort worth. His email signature always said, remember, it’s your investment, not your home. So I’ll leave you with that, Roberto. Thanks for the question. Uh, hope everything’s going well, hope this helps. And uh, if you’re out there listening, you have questions like Roberto, just hop on over to, Ihavelunchmoney.com. Submit a question. I really appreciate you guys every day. Spending time with me. I’ll see you tomorrow.
Thank you for hanging out with us today on real investing. If you have questions, comments, or feedback, please visit Ihavelunchmoney.com. Tim. Can’t wait to hear from you. We are always grateful for your reviews. And if you enjoy this episode, please subscribe and share it with your friends. Remember the business is the vehicle, not the dream. See you. Next time. The proceeding program is provided for general education purposes only and does not constitute legal tax, financial investment or other professional advice. No information contained in this program should be construed as financial investment or legal advice from any individual author of host or guest. You should always consult a financial advisor before investing.