Is it possible to Rehab a 100 houses a year?

Question

Hello, some may say anything is possible, but realistically, how possible is this?  This thought came across my mind after I had three properties that I should be closing on in one week.  The thing is, I don't have any systems or large networks yet.  I could only imagine if one really tries to put systems in place then do 2-3 deals a week.  I believe its possible, but a lot of work.  Any thoughts?  Thanks.

Ryan Pyle · Answer

If you're talking just straight fix and flips for yourself, as opposed to what J Scott is doing, I think the hardest part would be finding 100 good deals a year. You would either have to be in a large market or venture into multiple markets. I don't think I could find 100 good deals a year in Toledo. Also, your margins would most likely get very thin because of added staff and other overhead and the constant need to keep the deals flowing. I know I've bought some poor deals in the past simply because I had dead money that I needed to put to work. That's the problem with shooting for a certain number that isn't profit-related. Volume does not always equal profit.

Matt O. · Answer

I've been buying and selling for a few years now and I am a big believer in buying quality deals. The investors I know that focus on hitting volume goals seem to buy deals that are too slim. I've been in that mode before and the stress that comes with it isn't worth it for me. The answer to the question is yes it can be done but I think anybody is better off to make 25k per deal than the same amount in 3 deals.

J Scott · Answer

I can't speak for others, but I don't pay any expenses for my PM.  He pays for his own gas, etc.  Of course, I pay for any tools or materials he needs to do his job, but he takes care of the personal expenses (which he can write off, of course).

J Scott · Answer

I'm quite certain it's possible, given the right team and the right set of processes.  This year, my team (my wife, my project manager, myself and our crew) will rehab about 15 of our own properties, as well as about 20 properties for other investors.

We just started doing the projects for other investors last month, and we currently are working on 5 for other investors and 2 of our own -- in other words, we're currently working on 7 houses simultaneously.  These 7 are pretty much requiring my project manager's full-time attention, about 60% of my time and about 40% of my wife's time (she does the staging, listing and marketing).  Realistically, I think given our current team, we could maybe do one more simultaneously, or about 8 at a time.

A typical project is taking about 3-4 weeks, from first viewing to listing/marketing and putting it on the MLS.  So, I think we could probably do 100 properties with this team using the processes we currently have implemented.

Now, I'm working hard to build better processes around rehabbing for other investors, so it's possible that we'll be able to scale a bit bigger, but I think if we got to much more than 100 per year, we'd probably need to hire at least one additional project manager (and I'm actually looking for a new hire these days, whether it be an intern or a full-time employee).

So, that's my experience, and I'm sure there are plenty of investors out there that have processes and a team that is as good as what we have in place, so I'm sure this is probably realistic for many investors if they really put their mind to it.

Michael Quarles · Answer

I paid mine 3000 a month...

You certainly can pay them way too much... The key is that they dont need to know much if anything about contruction however they must be very organized.  after thye get their feet wet on a couple houses they will know enough and we as investors can pick up the knowledge slack.

Their job is scheduling the crews and subs... Make certain materials were on the job, walk houses prior to close of purchase and resell. They must have great people skills as well.

Mine was a 22 year old who was great...

Company perks: Truck, gas card, health insurance and paycheck...

Michael Quarles · Answer

One of the largest types of real estate investors do it all of the time year end and year out...

Track Builders.

In a construction project there are only about 25 sub-contractors... Not hard at all keeping them busy...

I had two full time crews working the year I did over 200 deals.. Not that I did major rehabs however youll find it very posible.

Chris Clothier · Answer

I was quoting J Scott in my response for the first three paragraphs.  The quotes didn't work!

Sean H. · Answer

It seems like the biggest factors will be your team and your processes to get to 100 deals.

For investors who are currently flipping a decent amount of homes per year (10+), what would you say is your limiting factor to expanding to 100 or even more than that?  Some folks earlier were talking about lack of deals, is this true for everyone or are there other factors (say financing, lack of crew, etc)?

Suppose that the answer to the previous question had been solved.  What would be the biggest change to your business as you know it today, besides the addition of more bodies?  I am thinking more in line with additional / different processes.

Chris Clothier · Answer

A typical project is taking about 3-4 weeks, from first viewing to listing/marketing and putting it on the MLS.  So, I think we could probably do 100 properties with this team using the processes we currently have implemented.

Now, I'm working hard to build better processes around rehabbing for other investors, so it's possible that we'll be able to scale a bit bigger, but I think if we got to much more than 100 per year, we'd probably need to hire at least one additional project manager (and I'm actually looking for a new hire these days, whether it be an intern or a full-time employee).

So, that's my experience, and I'm sure there are plenty of investors out there that have processes and a team that is as good as what we have in place, so I'm sure this is probably realistic for many investors if they really put their mind to it.

Notice the words used over and over again...processes and team!

We buy, fix, rent and manage properties and investors from around the world purchase them from us on the back end.  We then manage those properties for them when the purchase is completed.

We have been doing between 180 and 225 properties a year for the past three years, but will complete between 310 and 320 properties this year.

100% of the credit for that type of volume goes to having a fantastic team, continuous education of the team and having really, really good systems for tracking and reporting results.  We track everything from the number of hours it takes to start a renovation after closing, to the number of days to complete a renovation, number of days before it is occupied etc....  We have 9 full time crews and each crew is tracked the same way from cost over-runs to number of days to complete jobs.

If you have the right people (TEAM) and systems in place as well as know which numbers to track, doing high volume and maintaining a high standard of work is very possible.

BTW, we do not buy tapes, we hand pick each property we buy.  We also have 24 full time employees now after starting with 1 full time employees in 2002.  So it can be done with a good plan.

Greg P. · Answer

How do you keep track of their gas mileage etc?  Seems like a lot of work to verify expenses for a project manager.

Is it possible to Rehab a 100 houses a year?

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