Flip Manager? Is this a thing?

Question

I'm sure someone else has thought of it, but with the number of people on BP asking about investing in flips from outside the local area, is there an industry built around managing flips?

For example, I'm an out-of-state investor (small time) looking to buy a property in another location and flip it. I don't have the ability to regularly visit the property because of my full time job, etc. Besides a general contractor, are there professionals who manage flips for clients? As in, someone to manage the general contractor to get the most out of the flip? I realize that may be redundant, but a GC is generally concerned with making the most money on his job, and filling the clients wish list. He doesn't really care what it costs.

I'd say a realtor might be interested in that role, but their duties stop once the sale is complete.

Think of it like a property manager, but the point of the flip manager is to prepare the house to make the most money on a flip. As compensation, they get a percentage of the proceeds of the flip. The owner wouldn't have to deal with contractors, vendors, etc., just big decisions, like how much to spend. It would also apply to rental properties where the manager may not have the capacity to apply any level of appropriate oversight on a larger project.

I started thinking about this after I had my property manager coordinate to rehab one of my units. They received 10% of the cost of all the work they coordinated. I thought to myself that would be a pretty cool job to coordinate the flip/rehab. Basically, you're spending other people's money to rehab a house, within certain parameters.

Is this already an industry? What licenses would you need, GC or realtor? Any other obstacles?

Vince Lucas · Answer

@Jack Pinney I am currently doing this in the Cleveland market. I am a Realtor, Appraiser and local investor. I work with out of state investors who do not want to just purchase turnkey properties. I help them located and evaluate the investment and over see any repairs that are needed. This also works with flips. Let me know if you have any more questions about how I am doing it and if you have any interest in the cleveland market. Hope you find what you are looking for!

J Scott · Answer

They are called project managers, and they exist. There are lots of bad ones out there, so I would recommend you spend a week or two on-site with whomever you choose to verify that he knows what he's doing. I'd also recommend putting systems in place to keep him accountable and honest.

Anthony Angotti · Answer

@Jack PinneyFor my out of state clients I just have a GC that I trust and know will oversee the work. Then I check in on the project when clients hit milestones. It's about vettting the GC. The one that I recommend for out of state people is a little bit more expensive, but does what he says and keeps to his budget as long as there aren't any items added to the scope. I've considered adding project management to my scope and getting my GC license. Just charge a little on top to manage the job. I know other Realtors that do that and it works out well for them. Then it's just honesty and not taking kickbacks. That's pretty unethical for a number of reasons. If you are hiring the subcontractors for someone else you'd need a GC license in most areas. You don't need a Realtor license to manage a construction project. If you are selecting designs, colors, etc. then having a Realtor that is a GC managing your flip is probably a good idea, but not 100% necessary if you have a system and a good plan up front for what you want to do. Assuming you can communicate that plan well.

Vince Lucas · Answer

@Brian Garrett Feel free to reach out.@Doug Woodville I can't see someone doing it without an RE license.I agree with @J Scott Just like hiring anyone, you want to make sure the person is competent and have system in place where they are held accountable.@Jack Pinney I over see the GC for the owner of the property. I have not marketed this service to the masses. I have already received a lot of out of state investors looking for this service. @Oren K. I have no issue outlining my services and how they are structured. I was just letting you know that it varies on the actually investor and how exactly they want the transaction to be handled. I do receive compensation from investor on the buy (obviously when they are buying the properties are low in value and Realtor compensation is also low). Investor just works this fee into purchase price. I only receive a fee once closed. I supervise GC and also receive a fee. I am currently working with a top selling sales agent in the area who goes to work on marketing/selling the property. If this is for rental then I also have a reputable property management company to help on that end. Again, it varies per investor and per deal but thats pretty much how it goes. Also, there are obviously many things that go in to the buying and rehab that was mentioned. Sorry if I missed anything there was a lot to go through. I can't not go into great detail on this forum but would be happy to discuss further in PM.

Ken Wilkinson · Answer

Yes, this is what Besorat Investments does. I don't know anyone in your area that does this, and I just tried to give you details, but BP flagged my response as self-promotion. Ken Wilkinson

Sam Shueh · Answer

They way they work is PM also chips in their own money as investor also. There was a major investor sensed something was not right. An audit shows bills to Vegas, expensive lady purse and underwear all in a 7 figure deduction irregularity is caught after many flips. The investor trusted his PM. They were friends from HS days.Most realtors operate on lawyers hourly rate. My thinking is if you want to flip you need to stay on top of it. Those buying out of a cheaper state tells me the home prices are over valued in many cities. Most people feel the margin is so thing there are better ways to invest more conservatively.

Oren K. · Answer

@Vince Lucas Yes, different situations result if different structures but maybe I missed it but I don't think you actually stated how you generally structure things.That's fine if you don't want to say.@Jack Pinney Anyone with good time management skills, co-ordination skills, some accounting skills and excellent people skills can fill this role. As long as the person is not pulling the permits, I am pretty sure they don't need to be a GC or have any kind of license. Experience in / with obviously helps. Their authorization comes from the owner.Just as a PM will make or break a property for a remote owner, a person in this role will make or break the rehab. Changing mid project is very challenging, disruptive and almost guaranteed to create cost and time overruns.

Larry Fried · Answer

Ditto @J Scott on his warning - be careful who you choose to trust with your project management.

Jack P. · Answer

To clarify, I'm asking out of curiosity. I'm not looking to invest in flips out of state, that's way beyond the level of risk I'm willing to assume. However, that "project manager" piece sounds like something I would enjoy during active retirement, or on the side of my next career.Any thoughts on the regulatory restrictions? @Vince Lucas, do you still have a GC oversee the labor? Or do you coordinate directly with the subs? I'm wondering if there's a line you cross since you're not the owner. I would assume that would be kind of like wholesaling, where it's not exactly illegal, but pushes the boundary? Obviously having a GC license would help immensely, but that's probably beyond the reach of most people, given the experienced needed. Having a RE license would help, since you could see the project through completion, and sell it on the back end.The marketing aspect of it is also interesting. Aside from an ad in the yellow pages, how do you communicate your unique service?I don't think you're spilling industry secrets here since the competition is strictly local.

Doug Woodville · Answer

Do you see a way to market to people to do this without actually being an RE agent? Any recommendations of how or where to market for this type of service?