Andy McFarland elaborates on how no matter how thorough you when you’re running numbers and checking the home for repairs, surprises can always come up.
Whether it’s extra costs to repair something, extra cost to hold a property for longer than intended, or extra fees in general, they can arise and it’s hard to accurately predict how much they’ll cost you.
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Andy: Hey, everyone, my name is Andy McFarland and today I’m going to be your host for REI Classroom. And we’re going to be talking about each house has a surprise.
Mike: This show is sponsored by PassiveRental.com.
Andy: So I’m going to tell you guys, as you start your fix and flip career, each house has a surprise for you. Just expect it upfront. Each of us has going to have a surprise. And if you haven’t found a surprise, then you might be lucky to find that 1% house that doesn’t have a surprise, but I get to find that house.
So, this all stems from a conversation I had with my project manager. I do flips in three different states and my project manager in Indiana called me about this house and he was like, “Andy, this is Murphy’s Law house right?” Anything it can go wrong will go wrong and at the worst possible time. So one of the examples of this was we have this house and we put a brand new roof on the house. Awesome, right?
Well, then a windstorm happened and a tree fell on the roof three days later. Well, so we had to, of course, replace the stuff that happened as a result of that, right? The same house, we were moving forward doing stuff and a code enforcement showed up and made us tear out drywall to look behind the wall to see about that some of the stuff we did was up to code.
So okay, that was our time in doing that and we have to move forward and get permits on that house and do things. We found mold in the basement of this house, which we have to clean up. What other things happened specifically with this house? Oh, it’s just been a nightmare.
Okay. I’m going to jump into another house. That’s house has tons of problems. But this other house, if we got through the whole project, the renovation was beautiful, it’s a gorgeous house. We found a buyer, they’re buying the house and they’re set to close and the week of the closing, they decide they want to switch lenders, which is frustrating. Okay. We decide to go with them and switch lenders.
Three weeks later, after they switch lenders, and they were all approved and ready to rock, they decided the day of closing that they didn’t want to sign the new loan paperwork. They were just going to back out of the deal for no reason, no reason whatsoever. So again, Murphy’s Law struck right? So we took their earnest money, but we had to put the property back on the market.
So my point with all the stuff is telling you, you don’t know what’s going to happen, but just plan on it. Plan on your house having a surprise and if it’s not a surprise with the renovation of the house, it might be a surprise with one of your contractors that are working on the house. It might be a surprise with your buyer on the house, but every house will have a surprise. And if you plan on having a surprise on every house, then when it comes up, you can chuckle, smile and say, “Ha, here it is. This is the surprise of this house.” And life will not end and you’ll move on and you’ll learn from that experience and you’ll be stronger because of it. So just plan on it. When you’re doing fix and flips, every house will have a surprise for you.
Mike: PassiveRental.com is your source for turnkey done-for-you rental properties. If you’d like to be an investor and not a landlord, please visit PassiveRental.com to learn how to purchase cash flowing, professionally managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today and get started by visiting PassiveRental.com.
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