5 Ways to Streamline Your Rehab Process

5 Ways to Streamline Your Rehab Process

When I tell folks that I purchase around 100 houses a year spending just 5 – 10 hours a week on my house flipping business I usually get some pretty interesting looks.

And when I mention that I don’t have to actually go and see any of my houses, the looks get even more incredulous.

One of the reasons I don’t have to look at the houses is because of how I’ve streamlined my rehab process. Today I’m going to share with you 5 simple things I’ve done which have allowed me to create these systems with my rehabs, keeping me out of the houses and focused on the bigger picture of my business.

#1: Only work with General Contractors – Never Subs!

Let’s face it, the more people you have to deal with, the more work it is.

Imagine if you went to a restaurant and you had to order your appetizer with the person who seats you, order your main entree with the waiter, order your side dishes with the bus boy, and then you had to go to the manager to let them know what type of salad dressing you wanted. What a waste of time!

When it comes to working with contractors it helps to have a single point of contact. That is why I never work with sub-contractors. In fact, I only work with 2 or 3 general contractors for all of my projects! They manage every aspect of my rehabs, including coordinating all of the subs, the gardeners, and the final cleaning.

East German Construction Workers - Flickr - The Central Intelligence Agency

Don’t deal with the sub contractors!

I make it clear that it is their responsibility to deliver the project 100% to completion from beginning to end. And we only deal with one person who has to do with that rehab project. Believe it or not, this actually helps the communication become more clear, and our general contractors appreciate how streamlined ouroperation is. They know exactly what is expected of them and nothing about their project is ambiguous or vague.

Having just one point of contact with your GC might sound like a small thing, but it has allowed us to save countless hours, and it has helped us to focus on other parts of our business, like buying more houses (which is really where we make our money). 😉

#2: Use the same materials on most of your projects

I often get questions about whether or not I hire designers for my rehab projects. The answer is, at least for the majority of my projects, I don’t. (Of course, for higher-end projects that require certain considerations, we might work with one, but 95% of my deals don’t fall in this category.)

I see a lot of people heading to Home Depot or Lowe’s to figure out the right fixtures, paint color, carpet, etc., and that is time you don’t need to spend on all those details.

Early on, we made some decisions about how our rehab projects would go. We set standard fixtures, paint colors, appliances, and carpet for our rehab projects — materials that look good, aren’t “cheap” looking, and would add value without breaking the bank.

StateLibQld 2 184151 Over the counter at the Downs Hardware Store, Dalby, 1937

You should never need to look inside a hardware store!

Having this “default template” for our rehabs has saved hundreds of hours trying to work out each detail for each house. Now, we just tweak things here and there depending on the situation. Sometimes, a certain type of flooring might not work based on the needs of a neighborhood, so we’ll address that when it comes up. But for the majority of our rehabs we don’t have to sweat the small stuff at all. It is business as usual.

Imagine what it would be like if you had someone come in and design your company letterhead. But then every time you had to write a letter, you decided to have another design of your company letterhead created. It’s a waste of time to create new versions of something once you have come up with a template that works just fine. And that is time that is better spent focusing on the deal acquisition funnel in your business!

#3: Have your contractors pay for materials themselves.

With the exception of appliances, we have our contractors pay for all of their own materials.

As a bit of perspective, there are basically three levels of investors who deal with buying materials:

At level one, you have the absolutely crazy investors that go to Home Depot and deliver the materials to the contractors themselves.

Level two, you have the “somewhat” crazy investors that will call and order the materials and have them delivered to the contractors.

And in level three you have the sophisticated investor that has a contractor call them from Home Depot so they can make the payment over the phone.

Well, after hanging out in level three for a while, I realized that this was still an inconvenient way to run the materials purchasing side of the rehab projects. Getting calls at inconvenient times of the day, or not being available for the call, which caused more delays, required me to switch things up.

So, I created level four.

In level four we pay our contractors a little more up front to cover materials and let them take care of all the details themselves. Since we always work with the same 2 or 3 contractors and have a single point of contact (see #1 above) and they know what type of materials to buy due to our “default rehab template” (see #2 above), this means they almost never require anything from us to buy the materials for the project.

It is amazing what this single change has done to help save our company from wasted time! And I assure you that the extra hassle of dealing with material buying is NOT worth the sky miles points! 😉

#4: Use a price list

This is something that goes hand-in-hand with #3, above.

Back when I started rehabbing properties on a larger scale I noticed something about the bids we received. There seemed to be similarities on the cost per square foot for many of our materials. paint usually worked out to around $1.00 / sq. ft. (based on house size) and laminate wood flooring came in right around $2.35 / sq. ft.

The same thing seemed to apply with things like counters, cabinets, fixtures, exterior paint, carpet, tile, and almost everything we put into a rehab.

If the price is almost always the same, then what is the purpose of spending so much time deciding on how much a rehab project should cost? This didn’t help us and it certainly wasn’t helping the contractor.

This is when we developed a price list.

You can bet that when car manufacturers approach each car they are building, they don’t sit around and have a meeting to figure out how much the steering wheel, stereo and bumpers should cost for each car they make. They have a standard set of materials that they use and they know exactly how much they should pay for them.

Edison & Swan price list 1893

Take your time to create your price list!

For 85% of our deal flow we use materials off of a price sheet. This means we never have to haggle or negotiate, prices never creep up, we never need more than one bid, and the contractor never has to wonder about getting the job based on his bid.

I don’t even need to tell you how many headaches this one thing has alleviated!

#5: Use your agents to oversee the project

I’ve spoken on this point before, but for me, I really utilize my agents for more than just looking at the MLS or making offers.

When I talk about having my contractor’s be 100% responsible for delivering a rehab to completion, a lot of people say “Well, don’t you need to at least go and make sure they did a good job?”.

This is where my agent comes in.

You see, not only do we hold our general contractors to the highest standards to deliver the project, we also make sure our agent knows what those standards are and use them as a “checks and balances” on the work of the contractor.

They do the final walk-through to make sure the house is 100% ready, cleaned up, and they even arrange for the photographer to come and take pictures.

If you think about it, its in the agents best interest to make sure the house is ready to sell, because that is where they’re going to make their money. Also, I really consider my agents as a type of “partner”, where they are almost like a part of our organization, helping us to bring our deals to fruition.

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By utilizing these 5 things to help you streamline your rehab business, not only will you save hundreds of hours, but it will allow you to focus on the parts of your business that really need your attention — growing and scaling your operation to increase deal flow!

The less time you spend on the nit-picky aspects of how your rehab projects run, the better you will be able to grow your business and elevate your systems!

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