In this instructional video, seasoned broker and investor Joe Homs shares practical strategies for reducing expenses and increasing profit on house‑flipping projects. He begins by emphasizing the importance of accurate rehab cost estimation, recommending a rule‑of‑thumb of 10 % of the after‑repair value (ARV) and urging investors to understand specific line‑item costs such as kitchen, bathroom, and flooring per‑square‑foot pricing. Homs stresses neutral design choices—avoiding personal taste, staging homes, and keeping budgets tight. He then discusses financing options, particularly hard‑money loans, explaining the typical 20 % down, 80 % loan structure, and how leveraging such loans can amplify returns if flips are completed quickly, while warning of long‑term costs. Next, he offers workflow tactics to shorten timelines: meticulous contractor coordination, eliminating idle gaps between trades, and treating the rehab process like an orchestra with a clear sequence (demo, framing, flooring, painting, etc.). Homs also covers partnership dynamics, outlining how to negotiate equity splits, control, and legal protections (LLCs, partnership agreements) and the need to align responsibilities. Finally, he notes market considerations, especially in a declining market, advising price adjustments based on recent sales and the importance of thorough market research. Throughout, he encourages viewers to leverage his 40 + years of experience, subscribe for more content, and reach out for mentorship.
Chapters
In today's video, I'm going to save you more money on your next flip. Coming up next. Make sure that you stick around for that last tip because this one is super important. Whether you're a seasoned investor or about to tackle your first fix and flip, saving money throughout the process directly affects your bottom line. Taking steps to reduce costs throughout all stages of the project will give you a greater return on your investment when it comes to sell. If you like flipping videos, let me know by liking this video. I made this channel from my over 40 years of experience as a broker, investor, and mentor. If you're looking to create the life you've always wanted through real estate, make sure that you subscribe to the channel so that you never miss a thing.
Okay, Joe, so on our first flip, I noticed that our rehab cost— there was quite a difference in our initial estimate to what it actually ended up costing. How would you go about more accurately estimating for those costs during your flip?
Well, that's not unusual. I do hear that all the time. I do talk to people that on their first flip, I mean, they're— you're pouring your heart and soul out into it and you want it to make, make it look the best that you can, which is understandable. But sometimes maybe you're overpaying for things that you shouldn't be overpaying for. So when you're estimating rehab Rehab costs. I mean, there's an easy formula, just use 10% of the after repair value. But once you start a process and get into the nitty-gritty, then yeah, you need to be familiar with, you know, how much it's going to cost to rehab a kitchen, how much it's going to cost to do a bathroom, what kind of flooring you want to put in a place. You can spend $1.50 a square foot on flooring all the way up to—
$10.
$20 to $30 a square foot. If you're doing a mobile home, are you going to pay $20 or $30 a square foot? Okay. Yeah, you're more towards down the lower end. So, you know, you have to know what the product is that you're flipping. And like I tell people, don't flip a property like you're going to live in it because obviously your tastes are way different than anybody else's. So the flips that we do are pretty much neutral all the way around. If somebody wants to come in and they want to paint a room purple or pink or, you know, whatever their favorite color is, then that's fine. They can do that after they purchase the house. But it's not necessary that you, you know, try to put some artistic style into the property. We do stage our homes as well. And I suggest that you stage everything that you are trying to flip because it just shows that much better. But make sure that you know what your numbers are, you have a budget, and you try to stick to that budget as much as you can.
So as we're looking to scale and do more flips on our own, we're looking at hard money. Is that something you recommend?
It is something that I recommend, but I also recommend that you educate yourself on hard money and that you make sure that you know what you're doing. So a flipping process, if you're buying a property and it's taking you a month or 2 to flip the property, then yeah, that's great. Use hard money. The reason that you use hard money is you only have to put 20% down. They're going to give you an 80% loan. They're also probably going to throw in the rehab money itself. So instead of buying one property that you're spending this amount of money in cash, you may be able to use hard money and buy 5 properties. If you're making 10% return on each property. So now instead of just doing one and getting 10% return on that, if you're doing 5, you're getting 50% return on that same money. So yes, hard money is good, but you have to educate yourself and be aware that hard money can hurt you in the long run. So the quicker you can flip a property and get out of that hard money, the better it is for you. Cash is always king. It's less pressure. You're going to make probably around the same amount of money, but remember, it is cash, so you have to put all your money down. So if you're trying to scale up, using hard money is a good idea. But like I keep saying, educate yourself on that hard money.
So referring back to that first flip that you mentored us on, We estimated 6 weeks. It kind of turned into 2 and a half months on our timeline. What are your tips for streamlining that timeline and getting things done in a quicker fashion?
So you have to be on time with everything, obviously on budget. The biggest thing is just pushing your contractor as much as you can, making sure that He's moving along and any subs that are coming behind them are planned and ready to go and moving along. So if he's done, let's say painting, and the next thing is flooring or vice versa, flooring and the next thing's painting, make sure that there's no time in between those 2 tasks. So keeping everybody on time, and if that's pushing them a little, then that's what you have to do is you just have to push them. Knowing what the process is is very important as well. What do you do first? Demos first. What do you do next? You know, start putting everything back together. You know, flooring, doors, painting, kitchen, all that is on a timeline and you're moving these folks in like you're the conductor of an orchestra. You're moving all these people to play your song. So the more that you're used to doing that, the quicker that rehab is going to be.
All right, so I feel very lucky to have partnered with you on a few flips now and a couple in process. Our first one, uh, got to learn so much. So do you recommend partnering with people on flips? Is that something you like to do, or is that something you generally avoid?
I do. Um, you know, in your case, you're my favorite people, so I didn't have a problem partnering with you, but partnering is a good question. We know what it is, what it looks like. It could be a matter of, okay, Joe, I found a property and I want to partner with you. So my input into this partnership is the property itself.
Okay.
Okay, so then we need to talk about, okay, well, who's going to put the money up for this property? And that's something that you negotiate with anybody. So if it's a 50/50 partnership, then fine, one person puts half, the other person puts half, and you go into the partnership. If one party in the partnership is bringing the property, then maybe you say, okay, well, I'm bringing the property, so why don't you put the money down and then we split at the end of the day? So that's what I love about real estate. Everything's negotiable in real estate. And so it really depends on who you're dealing with, what they've offered, in that partnership itself. I can tell you this, that in a partnership, me personally, I like to keep control. As long as I'm involved, I keep control. If I'm not involved and I'm just kind of guiding you by the sidelines, then I'm going to give you my best 40-plus years of experience. And if you go off and do something that I didn't tell you to do, that's on you. That's not on me. At the end of the day, pricing is really important, and We're in a market where it is actually declining now. A few months ago, I mean, we're just shooting to the moon. Now we're in a declining market. So as we get ready to list this property, we're going to look at what's been selling for in that area for the last couple of months, maybe not the last 6, and know that we probably need to price it a little bit lower to get the buyers through there so that they can see the property and buy it at the end of the day. So partnering up with somebody is Is not just hey, let's be partners. Okay? Again, you guys are special people, and I appreciate that. And I was happy to partner with you. But know who you're getting involved with. You guys have your own LLC. We take the property in each of our LLCs to protect ourselves and the property itself. So know a lot more about who you're partnering with, how to structure the deal. Who's in charge of what? Maybe even I have partnership agreements that I put together, and it pretty much spells everything out. You're responsible for this. I'm responsible for this. There shouldn't be any arguments at the end of the day. Did I miss anything? Let me know. Of course, this is just a short list of ways that you can reduce your expenses. If you have done your research, are knowledgeable about your local market, and have secured a good contractor, you're already on your way to success. If you want to see. A recent flip that I completed, click on this video right here. As always, feel free to reach out. I'm always here to help.
