Among the threats to your fix-and-flip project's ROI, theft of materials is one that can take a big bite out of your profits. On any given day, your fix-and-flip work site can contain tens of thousands of dollars worth of construction materials, tools, appliances and other items of value--and it only takes one criminally-minded worker, neighbor or passerby to decide the value of your materials is worth the risk of stealing them.
What items are at risk at your fix-and-flip work site?
One of the most popular work site targets of thieves is copper, which is easy to trade for cash at recycling centers. Also at risk are any materials made of metal, such as metal roofing, and anything brass, bronze or aluminum.
Lumber is also a significant target of work site thieves. If a worker or neighbor knows lumber will be sitting unattended for hours or days at a time, and they have a need for your decking, shelving or framing lumber, you could arrive on site to find it missing.
Tools, hardware and materials
Popular items for employee theft at a fix-and-flip property are small tools that are easy to conceal and other small but pricey items like cabinet hardware and plumbing and lighting fixtures. Although the value of a few of these items is often not worth reporting to your insurance agent, over time, the cumulative loss of these small items can add up to hundreds, if not thousands, of dollars.
If you have the good fortune of running several fix-and-flip projects at the same time, it can be challenging to keep a close eye on projects that are located in different residential neighborhoods. Appliances are popular theft targets from homes that are under construction or renovation, and even homes that are completed and are on the market are at risk of this kind of theft.
Having heavy machinery stolen from a fix-and-flip work site is less common, and it is usually an inside job when it happens. With this type of loss, the high replacement cost of the equipment is typically worth paying the insurance deductible--and the majority of the loss can be recouped, but it does cut into overall costs and ROI, and can significantly delay project timelines.
Best Practices to Prevent Theft
Keep an Inventory
Keep an inventory of materials you have on site and check regularly to make sure what's listed is present. At the end of the work day, materials and tools that can be stowed out of sight should be. If possible, place valuable items in an interior closet or room with a door that locks.
Install a lock box
Place a lock box on the front entry door and change the code daily. This way, rotating work crews will not have access to the property after hours unless they are given the new code by you or their supervisor.
Bright exterior lighting
Thieves work best in dimly lit and dark settings. Be sure to keep your fix-and-flip work site well-lit with bright exterior lighting that includes motion lights that can detect and deter intruders.
Steel entry doors with deadbolt locks
Law enforcement experts report that the vast majority of break-ins are done by thieves kicking in the front, back or garage side entry doors of a home. If it is in your budget to replace the entry doors on your fix-and-flip project - you should consider paying a little extra for the security these doors provide. The good news is, a steel front entry door actually adds about 90% of its value to the home value, so it practically pays for itself.
Security system and signage
You can purchase a portable video security system with wifi service included that will save motion detected security video footage to the cloud. These systems are offered for sale by the major cellular phone companies and are perfect for installing temporarily at one work site, then moving to another project after your fix-and-flip property is sold. Although they can be expensive up front, since they are portable you will get many uses from them and they can save you quite a bit of money and worry in the long run.
If you cannot afford an entire camera system, consider buying one camera that actually works and have several "dummy cameras" that cannot be differentiated from the real one. The real camera should be positioned, if possible, to capture the license plate of a car or truck pulling up, and the face of an approaching thief.
Along with installing the cameras, print out signs that read "YOU ARE BEING RECORDED ON SECURITY CAMERAS" and tape them on the doors and inside each window in the house (facing out so they can be clearly seen by anyone approaching).
Set clear expectations for contractors
Let contractors and workers know in advance that your project is under security surveillance at all times and that their help is needed in keeping the work site secure. Let them know that they are responsible for checking to make sure all doors and windows are secure at the end of the work day.
Although tracking devices will not prevent theft, they can be affixed to your major appliances and tools to aid in their recovery should a thief get past your security measures and get away with stealing your items. Without tracking devices, stolen tools and appliances are rarely recovered by law enforcement.
Meet the neighbors
One of the most important things you can do to protect your fix-and-flip work site is to introduce yourself to the neighbors before beginning work on your project. Be sure to give them your cell phone number and tell them to feel free to contact you at any time if they have concerns. Although this might also open you up to hearing complaints about noise or parking, it also gives you several sets of eyes to keep watch over your property and alert you to any suspicious activity.