Hello, all! It has been a little over a year since I posted my intro message and figured I would provide a quick update. It is a bit on the long side, but perhaps some of my and my team's experiences will shed some light on matters many of you may be tackling.
After spending a few months in late 2016 working the two relatively minor projects I mentioned earlier and building administratively-oriented systems, such as entity compliance and structuring, email/network system setup, information management, business banking, pooling private funding, property analysis and targeting, and running the numbers, 2017 was a year of continued systems building while executing a number of projects (3 flips, to be exact, through Aug/Sep and all in northern VA).
Focusing on the operational aspects of fixing-n-flipping (all 4 phases of find, fund, fix, flip), each project presented a unique set of challenges, all ripe for much learning. Being a systems guy, I set us on a path of relatively slow but deliberate going to give us time to push our limits and emplace the necessary systems. This strategy went against all the gurus (for which, I admit, I did pay some into) suggestions and directives. My belief is to, first, build the foundation and the framework for success before even attempting to scale.
So, before, during and following each project, we set a number of those systems on the priority list to develop and refine. Of course much study took place before beginning the year, but by taking action and doing we were able to compound the learning and flesh out what was needed to manage various parts of the business and its operations. For example,
Project 1: A heavily outdated 3-level MRIS Townhome that was in pre-foreclosure, which had much cat / dog damage and an unfinished basement. However, this unit was in a very hot market.
Systems Built: vetting and selecting contractors (goes without saying how important this is), writing joint venture agreements (which helped immensely in this project), building contract document packets (for holding contractors accountable), processing hard-money lending (must understand the nature of this form of lending), creating initial material management processes (this is one expense you have total control over), selecting builder's risk insurance policies (must haves and what to know about coverages), managing the finances of a project (this is critical to control and tough to implement), and more.
Placed this property under contract in late Dec 2016, closed near the end of Jan 2017, allowed the previous owner to holdover with rent back for a about two weeks, and began demo a few days into Feb.
The other two projects followed in sequence. We spent much time in the field during each of these projects. My approach is that the organization must fully understand each aspect of what we do before we even think about outsourcing something or letting someone come in to do something without our knowledge about how that something works. All of this on-the-ground experience translated into constructing those systems necessary for smooth and efficient operating. This is why it was necessary to go relatively slow last year. I paused our operations around early Sep in order do a full review of what we built and what needed building or further refinement. The intent was to scale in the next phase applying these refined systems.
The pause was useful, because prior to Thanksgiving I decided to target an opportunity that doesn't come around often, rarer more on MRIS. This was a portfolio of 15 properties that popped up on MRIS that the owner was selling as one transaction. This deal consumed two months of time negotiating, was very complex, involved countless factors, and resulted in some huge learning and creative maneuvering. Perhaps, I will leave the discussion of this one for later.
Some of you asked how things were going, I hope this peaked your interest. Feel free to respond with any questions and we can chat further.
