The 5 Olympic Rings of Energy-Wise Renovation
March 24th, 2009 categories: EnergyWise Education, EnergyWise House Flipping, EnergyWise Renovation, RENOVATORS
In a previous post I said that if you were careful, you could go against common wisdom and do Energy-Wise house flipping in today’s market. At a profit. And sell quickly. Dont hear me wrong, I didn’t say it was easy. To win the Gold in this contest, we must do a lot of things right. I liken it to the 5 Rings of Olympic competition. Here are 5 areas that an Energy-Wise House Flipper must master. Failure at any one of them can take you out of the gold category.
1. Buy It Right. This may be where more money is won or lost than any other. It is an uphill fight doing the whole rest of the project perfectly if we’ve paid too much, or bought in the wrong area. In other economies we had to have many strategies to find enough good deals. Today there are plenty of good deals listed in the MLS. Of course we dont pay the asking price. And rarely do we pay the accepted offer price. That’s what the due diligence period is for. I’ll elaborate in a future post.
2. Design It Right. Here is where we choose the things we are going to do and not do in the project. At GreenEarthEquities, we do almost everything there is to do Energy Wise. We call that the “Energy Package” and it costs about $20,000. Then we add the “Wow Package” which allows us to grab the buyers attention because they aren’t seeing these things in the competitor’s offerings. Like Granite, Hardwood, Crown Molding, Chair Rail, etc. We finish with what we call the “Done Package.” Once again it is to stand above the competition with things like front and back landscape with automatic irrigation, new garage door with openers, new faux wood blinds. The weekend after they move in, our buyers can go to the lake, not start in on their project list.
3. Build It Right. Here we assemble our team of contractors and suppliers. They must understand that we need two things, Wholesale Pricing and Velocity. In return they know that we will be providing a lot of jobs this year. For the gold level in this ring, we need to beat Home Depot pricing. Significantly. More on how we do this in a future post.
4. Market It Right. Our marketing is multifaceted with a goal of selling a large percentage of the projects before they even hit the MLS. We work in conjunction with our realtor, doing some of the things she cant. Like planting a construction sign on the property during renovation. Canvassing the neighborhood introducing ourselves and our project. And advertising on Craig’s List and other venues. When we are about two weeks from done, we open it up to our “Preferred” group of realtors. Although not officially listed, they know they will get full commission if they bring the buyer. At this early point, only one home of the first five has gone all the way to full listing. The others have sold before that. The realtors who have seen the three packages mentioned above, want to be alerted of the next foreclosures we buy so they can get their offers in immediately.
5. Sell It Right. This means that we have our exit strategy(s) planned before we even start but have a good level of flexibility to dance with the circumstances that life brings. We have 8 exit strategies in descending order of preference. Of course selling at full price FHA is our first choice. We’ve been blessed and the first three sold that way and the next two are under contract with loan approvals to sell that way also. We are ready to do Rent to Own, Lease Option and Owner Carry financing if necessary. We dont want houses around more than 30 days after they are done. And we prefer not to rent. Part of who we are is “neighborhood builders” and we believe that putting an owner into a home does more to build the neighborhood than putting a renter in that home.
So if we pass successfully thru all 5 Olympic Rings we reach the Gold! Not only do we make some money, we really are doing our part to “Save the planet, one house at a time!”
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