Interested in building and running a successful house flipping business? We would like to help you! At Select Home Ventures LLC, we have been profitably flipping houses for over 10 years! We have operated in both hot and cold markets. These tools will work for you too!
We work with general contractors. We are not contractors. Our core business is finding and reselling houses that need work. We rely on contractors to do that work. This relationship should be mutually beneficial. Aspects of pricing and the construction market must be understood to realize a successful partnership.
This PDF Document product explains
- Pricing Construction
- How we find contractors
- Our system for setting a construction budget
- The advantages of our system
- The shortcomings of our system
This is not a comprehensive guide to pricing construction. This is our system, built through experience, expressed in writing to the best of our ability. The range inside our levels allows for variation in materials and scope of work. The shortcomings section explains the boundaries where the system can break down and how to avoid it.
How much should construction cost? Surely you must be able to gauge whether you have a fair deal or not with more than a gut response. This product explains how construction is priced from the perspective of the contractor as well as the consumer.
How do you align yourself with good contractors? Construction is one of the most common professions. Construction licenses are fairly easy to obtain. General contractors are entrepreneurs. Entrepreneurship is encouraged and regarded as honorable in our society. This leads to many licensed general contractors. There ARE more contractors than there is work. Unfortunately, not all contractors are equal. This product explains how we choose between contractors.
We realized early that our business model has a chicken and egg problem. Our system makes several offers per day. We only expect to buy one house per month. This low purchase rate means that for every house we buy, there are several rejected offers. Creating a detailed scope of work is very time consuming. We could not possibly create one for every purchase offer. Even if we could, contractors could not bid every potential job. Creating a bid for a contractor is also very time consuming. The contractor needs the scope of work to begin a bid. It would slow us down so much that we would be inoperable. The contractor would eventually stop returning our calls. We realized that the cost of construction had to be known to calculate the offer price for each potential house before the scope of work is created.
We needed a solution that was accurate and quick. We decided to create a construction budget based on unit pricing derived from past experience. That allowed us to put offers out quickly while setting aside a reasonable budget for the work to be done. This works very well for our business. Think about it as standardizing construction services in order to package them as if they were like-kind products. We have a few things that helped us to standardize.
- Choose similar materials over and over again. That reduces variability in materials.
- Price work for the entire house. This reduces variability in the labor required.
- Same work in the whole house. Problem houses usually do not have locally concentrated areas (think fire, mold, flood, etc.)
- Replace all of the light and plumbing fixtures throughout the whole house.
- Whole house painted inside and out.
- Whole house cleaned thoroughly and made show ready.
We create our scope of work immediately after the house is under contract. Afterwards, we invite the contractors to bid. The budget may be higher or lower than the contractor bids. The control arm is the scope of work. If the bids are too high, we scale back the scope to arrive at lower bids that fit the budget. We never agree to spend more than our budget. Any extra money comes directly from the investors profit. If we absolutely cannot agree on a scope of work within budget, then we back out of the deal. In practice, this is the last resort because we have done so much work to get to this point.
What it is
- A PDF Document.
- Our system for setting a construction budget.
- Delivered digitally and available for instant download.
What it is NOT
- A comprehensive guide to pricing construction.
- Tools to do project estimation for you. Please see B01 SHV House Flipping Calculator for that!
- Tools to sell the house after improvement. Please see B03 SHV Sale Price Plan for that!
- Tools to create a project summary. Please see B04 SHV Project Summary for that!
- Tools that find houses for you to analyze. Please see SHV Prospecting Products Collection for that!
- Tools that sequence construction in time for you. Please see SHV Construction Products Collection for that!
Start your journey to profitable house flipping today!