Flipping: Systems and Scalability

[Brian Davis]

Hey BP,

Over the past year, we have successfully completed 15 fix and flip rehabs but this year we are looking to greatly expand the business.  I am currently in the middle of trying to streamline the business and all its systems so that we can handle more volume.  Through some various research, I have found these couple of ideas that we plan to implement very shortly that we expect can help in our growth:

1. A “default house template”

a. Every rehab will be near identical in materials used unless specific circumstance changes it
b. SKU’s have been written and organized to hand to contractors and insert into contracts
c. Extremely clear directions on all standard aspects of a house

2. Hiring great General Contractors
a. Paying for these high end contractors will be the biggest jump for me but I believe will
pay for itself with managing multiple projects and not needing as much over site per job
as long as I have been very clear about what I want
b. Obviously this one is much easier said than done to find the right people but I do not believe it to be impossible. I would imagine it would be a “get what you pay for” type of thing.

I believe these two changes alone will make the biggest difference in our ability to grow because it will allow me to place more emphasis on finding deals and networking for partners/lenders.

I am hoping any bigger rehabbers can chime in with what they have done to bring their business to the next level. My goal this is to move from the 15 houses we did last year to doing 50-100 flips per year as we move forward.  I know this is possible since other people are doing it but I know we need some help logistically with our plan as it will be much easier with some good advice from those who have been there before. 

So to you guys and girls who have made the jump from 10 houses to 50 or more, what are some of the systems and methods you have used to increase your volume??  Any advice would be greatly appreciated. Thanks yall!

[Rick H.]

@Brian Davis Good for you! 

On the topic of scalability, you are certainly discovering the weal links in the chain. 

Less than 5% of the posters in BP will ever be in your situation, so consider the feedback you get. 

You first challenge is Dealflow. In a normal economy (meaning no major dynamic swings up or down) the solution will require marketing knowledge, including multiple channel sources and segments. You may not become an expert however your ll need to ally yourself with others who are.

This might be achieved by developing referral sources systems that are evergreen. Mine has been the probate legal community in my state, however that couldn't start until I already had much expertise, as you are gaining. This segment requires total dedication and commitment, took many years to ramp up and can be time consuming, something you are probably in short supply of.

So, finding - not working - deals will be your limitation. In order to scale up, you'll probably find it easier to delegate to a team of experts and eliminate those tasks from your own list that do not generate the greatest results. Let them target direct response marketing to mortgage and tax defaults, probate, vacant house owners.

There are several other factors that those reading this may not have considered: you have your priorities well set, you are willing to sacrifice other frivolous activities and probably some family activities, and you take significant action. Something rare, indeed.