Property refurbishment is an all-consuming process and can be a nightmare both financially and personally if you don’t dial in completely to every part of your business. Our team has developed a system that will grow from dozens of rehab times a year to more than 150 times in 2018. The amount includes practice, dedication, failure, clarity, concentration, learning, and time. By learning the lessons of both success and failure and implementing them in our business, we have continued to improve what the process looks like. We are working to change the way we approach refurbishment, team well-being, and revenue.
Questions about the big picture
Whether you flip a few homes a year or grow your business in multiples, you need to know the rules of the game and how to get it.
- What are your purchasing criteria?
- City / town area
- Price points you are buying or selling
- Other determinants like square feet, beds / baths, neighborhoods / schools, etc.
- What is the expected rate of return?
- definition of go / nogo territory
- The cost of your money
- Acceptable benefits compared to risk
- What are your goals for month / quarter / year?
- Clear goals set for the number of transactions, dollars, or both
- Funding X transactions and maximizing their resources
- What you need to achieve our goals
- What is my exit strategy?
- Store as a rental property
- Sell at MLS
- Sell off the market
It doesn’t matter how great your construction team is, even if you don’t know your goals or scores. That way, I don’t know if I won or lost. I understand that the title of this blog is related to the system and we have reached it. We realized that building a system around a set of concrete ideas and goals is much easier than trying to reach a moving goal.
Different types of properties require different types of systems.
Once you know who gets what you want to buy, you know what to buy. As you are looking for, you will start developing ideas for the type of rehab you are doing. We are at the lower / middle of the average home price in our market. In these rehab, there are usually two different types of refurbishment. We sell turnkey homes and properties that have been completely refurbished at MLS. Similar, but there is a clear difference between the level of finish in MLS and turnkey properties and potential issues such as color and tile selection.
No matter where you are in your construction right now, take a step back and ask the following questions:
Do you know what the rehabilitation looks like when it’s finished?
- Lighting / equipment
- External landscape
- Home atmosphere / feel
If not, what do you need to do to clarify the project?
I participated in the refurbishment project without knowing what the final result would be. As a result, I lost pain, sleepless nights, and money. In retrospect, these were very horrifying miscalculations. If you don’t know the answer to all these questions about your project, there are two ways to solve the problem.
- Define the project.
- Know how detailed the results will be.
- I know how to ensure the conditions for the final result.
- Make a note of everything in the work area you created.
- Review the scope of work with the contractor and sign a contract that defines the schedule, costs, and end result.
- Help is displayed to define the project. (If you can’t afford it but need help, it’s a good idea to reassess your business.)
- Does this design fit the type of house?
- What is the current one in the market?
- Are the colors and choices the same as the cost and type of properties you are selling based on your final outcome goals?
- Is the designer information, selection type, and final result review clear?
- Is the proposed budget and scope of work communicated? The important thing is to avoid surprises.
- Is there a clear timeline for the results?
- Architect / Engineer:
- Is there anything I need to add to my design?
- Have you done all the coding, safety, and functionality?
- Real estate agent:
- Does Purchasing Pricing Make Meaning Compared to Construction?
- Does the construction scope work at the desired final price (ARV)?
- What is the best way to sell real estate?
Almost all of these people are in-house on our team, but we didn’t start that way. The mistakes we made in buying a property that we considered a “good deal” when we were not deciding on an exit strategy or when the deal was not worth the investment based on other opportunities in the market. I have a long list.
Related: How to get a remodeling loan with less than stellar credit
This process may seem daunting, but at first it is. I’m not a detailed person, but I’m not responsible for it in my business. Our organization has great people who are responsible for details and specific issues because they are good at what they do and clarify what their goals are.
In the first part of this series, I explained the idea of the big picture. This is the goal. I want to turn over 10 houses this year. I want to earn $ 20,000 for each rehab. I want to earn X% of the transaction for every $ 100,000 invested. Just because you haven’t turned over dozens of homes doesn’t mean you don’t need these answers. Starting with these questions and scaling up will not only give you answers already, but also show who needs in which position to empower the team with additional people.
In the next post, we’ll take a closer look at transaction reviews, launches, rehab, and completion of renovation projects. Write down and comment on areas you are struggling with, need help, or want to grow this week!
Where are you in your refurbishment project? What obstacles did you encounter?
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