Finding ways to save money in this business is very important in determing your sucess. For every property you purchase and complete you take away some new found knowledge and experience. With those experiences you find ways to work more efficient.
As investors we are continuosly trying make properties fit our numbers so we can take the necessary profits from our investments and use them towards our next purchase. When you are flipping houses, the 2nd most important aspect of the process is the rehab. Finding ways to save during the rehab process while still resulting in a premium product will determine the longevity you have in this business.
A few ways to save during the rehab process are:
1) General Laborer: Find a general laborer that you can pay a very fair price to do all of the work your general contractor doesnt want to do. Finding kids in college, individuals off craigslist or people just looking for work will do the trick. You do not want to be paying your high price subs to be doing very basic tasks. Save those payments for the interior finishes. Tasks the general laborer can take on: mowing the lawn, racking the leaves, putting down top soil (yard maintenance). Since these individuals are not experienced you will have to give them specific instructions but the savings will be phenominal.
2) Debris/Trash Haulers: Usually when you are purchasing distressed properties there will be large amounts of clutter/ debris/ old furniture etc... You do not want to just throw these items into the same dumpster you are using for your construction debris because you will be tagged for residenital items and you will see a price increase. You want to find an individual who hauls trash/ debris/ furniture to the dump and have him take care of this aspect of the demo. It will be substantially less to pay them for labor and also will save you on your dumpster costs.
3) Buyout: When I say buyout I mean getting several bids from different sub contractors to take on specific tasks your general contractor doesnt feel comfortable doing or feels you can get a cheaper price somewhere else (refinishing hardwood floors, windows, painting and so on). You have to be careful here because you cant always go with the lowest price. Be sure to ask for pictures and references on past work.
4) Purchasing your own material: Even though this is 4th on the list you can come up with a great amount of savings with this tactic. If you are organized and have created a detail scope of work and schedule you will know what material you need for each week of the job. For large purchases like appliances, vanities, countertops, cabinents, interior & exterior doors, bath tubs, flooring etc... be sure to shop around at all of your closest big box and discount stores to compare prices. This will allow you to come in below the allocated budget for each of these line items.
5) Negotaition- This last one is just common sense. "Everything is Negotiable" No matter what prices you get for certain tasks of the job, always be willing to negotiate with the contractors you are using if you feel you are not recieving a fair price. I personally negotiate everything, some people don't like that, but I have profit to make to and with negotiation you can make anything happen.
Conclusion: Always be on the look out for different ways to save in your rehab. The more ways you find to save the bigger spread(margin) you will have to profit. Be sure to carry over your past experiences with properties to your newest purchase. Pretty soon you will have systems in place for each property you purchase to get the most savings out of each and every task of the project