Foreclosure Investor Tips: Budgeting and Scheduling Work
Of the many skills that one has to develop as a foreclosure investor, when you take on fix and flip projects like I did on House #2, budgeting and scheduling go hand in hand. The following house flipping tips are basically project management skills that I had learned and used in the corporate world.
When investing in foreclosures you initially determine your profit potential by estimating what the cost of repairs is going to be. Once you choose the “Must Do”, “Should Do” and “Could Do” you pull them together into a scope of work.
On my first fix and flip project I had the budget and scope of work (SOW) as separate documents. What I did this time was to use the scope of work, divide it into line items, meaning each line was a task and then integrate it with my budget. The actual one I used looks like this:
As a foreclosure investor this helps me out in three ways:
- It allows me to create individual tasks. By using the details from the SOW I further break it down as needed to create individual tasks.
- Having individual tasks allows me to determine what trade or sub-contractor is responsible for that task (left column).
- I can now group tasks by sub-contractor. Since I do this in Excel I can sort by that left hand column so I can group all the tasks that way and then I give that listing of tasks to the sub-contractor when requesting a bid from them. That way they know exactly what I want them to do.
- By having a detailed breakdown of tasks I can better estimate costs. As you can see I divide my costs by labor and material. Some sub-contractors will include materials in their pricing (HVAC, Painter) but with others I want to keep materials separate (handyman). Now this document also becomes my budget.
An important consideration here is that as a foreclosure investor this was my first time as project manager for a full rehab of more than $15k. Previously I had hired a general contractor for such a project but this one I would tackle by myself. Therefore it was crucial for me to track who was doing what and how much would it cost me.
In turn I then used this detailed task breakdown to create my schedule for the project. In some instances some work cannot be completed until some other work has been completed i.e. can’t paint until drywall is done. As a foreclosure investor you want to have one document where you can see how all the work comes together. Enter the project schedule:
The advantages of having a visual schedule like this is:
- Big picture of the entire project. I am a visual person so this format works for me in order to see how all the pieces come together.
- Allows you to see what are reasonable expectations for project completion in terms of dates.
- I gave this to my handyman since a lot of the work he had to do he had to schedule around other sub-contractors. This way he could plan his work.
As you can see you can just copy and paste the individual tasks from the SOW into the schedule, then just plug in the dates.
Investing in foreclosures is really no different than the projects I used to manage in the corporate world, I just have less help
But seriously, as a foreclosure investor for your fix and flip projects you should seek out different house flipping tips and then use them to create your own processes, the ones that work for you. I know this process helped me get this house done and in the market in four weeks.
You can see the results of the completed work here.
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