Hitting a flipping ceiling. How to push through?

Question

I have been flipping houses for 6 years and feel ive hit a hard ceiling. It started with me doing all of the work, and 1 house a year. Now I hire out 90-95% and can get through 3 houses, almost 4 in a year. Its not a bad side hustle (im a firefighter) but im getting frustraited I cann’t seem to break through to the next phase or level I guess.

I know some of the things holding me back is me and also not having a second crew of guys so 2 houses can be going at once. I typically deliver all materials to the job site and I am still doing some of the work at the end of project like cleaning floors and windows, installing appliances, odds and ends stuff. I know i need to grt away from that to free my time up but for some reason, it seems to be a struggle. I feel like i should push any odds and ends to my contractor and hire out a cleaning crew but I hate putting more money into something I can easily handle.

The other is finding a second crew of guys so we can have 2 houses running at one time. Currently my guy has a crew of 2 (him+2guys) and they cant really divide and concor. I know how to solve this issue, obviously its just finding the right crew to come on board but easier said than done

On a positive side, I know the Indy market well and for the most part, funding isn’t an issue.

I would love to hear how some of you broke through and took your business to the next level. I want to go from 4 to 8 houses in 2022 and I feel like that is a realistic goal. Any tips, tricks, insights?

Thanks so much

Will Barnard · Answer

Without additional crews, you will remain stuck. Most of the common issues to scaling from where you are to the next level is $$ so if that is NOT your issue, then you really only have 1 or 2 left. The construction crews and the sourcing of deals. Rather than spending time doing the cleaning and appliance installs yourself, hire that out to and use your time for tasks more suitable for a business owner - finding more deals, more money and more team members!

John Teachout · Answer

In lieu of expanding the business, another option would be to make your 3 or so flips more profitable. Purchase price would be the most obvious way, so perhaps spending more time locating excellent prospects? Regarding final punchout projects, that may free up some of your time but it also gives you an opportunity to observe the almost finished product to help maintain quality control. We don't flip but do buy/hold and are involved in every aspect of our business. It's our full time job and I know it's not as "efficient" as it could be but it's very stress free only dealing with ourselves and no one else. We don't have big dreams and are simply generating living expenses and our future retirement (whatever they looks like).

Dave Schmidt · Answer

@JR Connor Unfortunately it sounds like you may be getting in your own way. Spend less time at the projects and spend more time finding excellent deals. If you want to get to the next level then it is time to delegate more tasks. Sure you can save money cleaning the floors yourself but is that really the best use of your time? It is probably unlikely you can hire someone that is as knowledgeable about the market and can negotiate great deals for you, so that should be YOUR job.Hire another crew or contractor, focus on managing projects from a higher level, and then go out and find more deals. I have one other thing to add - in my experience I have seen others wanting to scale and do more deals each year, but in an effort to do more deals they are willing to settle for weaker deals. Don't give up margins and risk tolerance so that you can do more deals, this is how someone like you will crash and burn. Stick to your principles, continue to do deals that make sense and have great margins.

Brian Nally · Answer

I agree with what @Will Barnard said above. The only way to scale is to find people you trust and delegate responsibility to them. (Much easier said than done, I know).

Dave Schmidt · Answer

@JR Connor Yes, those "forced" deals usually end up biting you in the end. I have done it myself and also seen it firsthand with others. I agree 100% with what @John Teachout pointed out. If I had to pick between doing a few very profitable deals versus doing a ton of less profitable deals, I would go with the less stress/less headaches route of less projects.

JR Connor · Answer

Thank you all for the responses. You have all confirmed what I suspected and I am the main hold up and need to really tighten my focus on where I add the most value. @Dave Schmidt your last point makes a lost of sense and I am really glad you said that. On the current houses we are finishing up thats exactly what I did. We had been looking for 2 months for a property and we kind of “forced” these two houses to work with our numbers and we are paying for it now. Money should still be made, but not what we typically see. Thanks for that point, needed it. Thanks again all!