Are there any folks on here who are rehabbing property in volume?
Let me explain a bit what I am interested in.
Some time back I was a regular at the Lenders Workshop. Charlie was also a regular and he focused on a buy, fix, sell model for a specific area in the Dallas Fort Worth area of TX. His company would complete about 100 projects a year. Charlie’s crews could turn around a house in a week if everything lined up.
I was speaking with another company recently and they are doing something similar in Detroit. They are buying cheap and selling a refurbished property to end buyers (owner occupants) on a 2-4 week cycle.
Anyone have any direct experience operating at volume? If not you, do you know anyone?
I am curious what sort of infrastructure is needed and how to track/monitor all the moving parts of such a business.
These days I only rehab maybe 4 projects a year. During the bubble times last decade we rehabbed a lot more, although never 100 deals per yr.
The biggest “infrastructure” decision you need to make is simply weather or not your going to employ your own crews or try and sub everything out. Turning out big volume will be easier if you have your own employees but your going to have more administrative duties to perform such as keeping payroll taxes and unemployment ins paid.
When you hit the peak of your business, how many units were you handling at any one time or how many did you finish in a 12 month period? You said you never hit 100. Just trying to gauge the size at the busiest point.
Second, were mostly using employees or subcontractors when you were running on a larger scale?
I am inclined to think that Charlie was BSing you, and probably everyone else, about doing 100 projects a year. Anyone that does anywhere near that volume in my market, and there are not many, would not be a regular at a lender workshop. There would be no point in turning properties that quickly in the 2008-2011 time frame since one could not resell the properties quick enough. Currently I have run into the 90 day anti flip rule enough times that I do not even put a property on the market until almost the 90 day mark. Don’t ask me to provide details on the 90 day rule, I don’t know what they are. In general it is just not efficient to remodel a property in two weeks, particularly in any kind of volume. If you purchase one property, are personally on site the entire two weeks, then sure it can get done, but not in any kind of volume.
@John
I tend to agree with what Jack posted regarding the volume your other guy is claiming.
The most sfh we rehabbed might have been 20 in 1yr.
In 2009, we rehabbed something like 47 townhouses (2 and 3 bed) in 120 days. I had, and have my own employees. I exercise my ability to hire and fire regularly. We still sub out several trades such as HVAC.
If your thinking of actually trying to get something big up and running, I’m not sure you can do it without your own staff.
Thanks for your input. Let’s ignore Charlie as my question is not really focused on his business or your knowledge of him.
Based on how you answered the question, you appear to know 1 or more people in your area who do operate at the level of 100+. Are any still operating or were they all from before 2008?
Did you ever attend the CREOnline Lenders Workshop? Just curious what you know about it.
[QUOTE=AmotoXracer;885884]@John
The most sfh we rehabbed might have been 20 in 1yr.
In 2009, we rehabbed something like 47 townhouses (2 and 3 bed) in 120 days.[/QUOTE]
Just so I have the details correct, you used to compete up to 20 SFR a year. At one point, you rehabbed 47 townhomes in 120 days so the run rate would exceed 100 a year.
[QUOTE=AmotoXracer;885884]I had, and have my own employees. I exercise my ability to hire and fire regularly. We still sub out several trades such as HVAC. If your thinking of actually trying to get something big up and running, I’m not sure you can do it without your own staff.[/QUOTE]
I note your point that control of the labor is critical and having direct employees is better than a pool of subcontractors. Thanks for sharing.
[QUOTE=John_Corey;885892]Just so I have the details correct, you used to compete up to 20 SFR a year. At one point, you rehabbed 47 townhomes in 120 days so the run rate would exceed 100 a year.
I note your point that control of the labor is critical and having direct employees is better than a pool of subcontractors. Thanks for sharing.[/QUOTE]
Basically, but so we are clear, the 20sfh could have been a 13 mo. period, but not more than that, and the townhomes were at one geographical location, so its was easier than projects scattered all over.
In the end i think a better question is; where is there a market that’s still deep enough to spend, say 75 grand plus 15 in rehab, then sell for 115 minus costs, in say 120 days, and do 100 projects every rolling 12months after the initial 4 months, and do all of that with reasonable amounts of risk.
If you find a market like that, and have real tangible proof (not rumor, hearsay and popular opinion) of such existence, such as public records, then I for one want to know about it.
[QUOTE=John_Corey;885891]JackS,
Based on how you answered the question, you appear to know 1 or more people in your area who do operate at the level of 100+. Are any still operating or were they all from before 2008?
Did you ever attend the CREOnline Lenders Workshop? Just curious what you know about it.[/QUOTE]
I don’t know anything about the Creonline lenders workshop, it was not apparant from your original post that was what you were referring to, you just said lender’s workshop, I assumed it to be a local monthly meeting.
I actually know one investor pair that does probably 60 rehabs a year. Like me, over the past three years they have been keeping at least half their rehab properties as rentals waiting for the market to bounce back. They have a huge overhead, a huge advertising budget (they own a homevestors franchise), thus their profit margins are much smaller than mine. I have no desire to be them. they have 25 employees, I have 3, I probably net as much as they do on a forth the volume.
[QUOTE=Jack5;885896]I don’t know anything about the Creonline lenders workshop, it was not apparant from your original post that was what you were referring to, you just said lender’s workshop, I assumed it to be a local monthly meeting.[/QUOTE]
JackS,
The above reply is noted.
I figured we were not having a useful conversation on that topic.
[QUOTE=Jack5;885896]I actually know one investor pair that does probably 60 rehabs a year. Like me, over the past three years they have been keeping at least half their rehab properties as rentals waiting for the market to bounce back. They have a huge overhead, a huge advertising budget (they own a homevestors franchise), thus their profit margins are much smaller than mine. I have no desire to be them. they have 25 employees, I have 3, I probably net as much as they do on a forth the volume.[/QUOTE]
That is the second Homevestor franchise owner who was operating at volume.
A complete tangent. Is Homevestor still operating successfully?
I agree that a larger operation will have more overheads and therefore might be operating with a smaller margin. When you operate at volume you need a methodology and the supporting systems plus staff. That brings costs that a small operation can avoid in some cases.
Actually, I have to back up John Corey’s remarks on Charles. I believe it was 2003 when I went to the first creonline lender’s workshop. Charles had just gotten his first Working line of credit with Ed Garcia’s help. He just talked to Ed every day and made it happen. That credit line then helped him further building out his business.
He kept coming back to the successive workshops as a favor to Ed Garcia and Terry Vaughn. He was just so full of energy and a big role model to many of the investors and he became part of the schedule.
I don’t know how he made it through the real estate collapse and whether he’s still doing the same, but he’s the type of guy that would always find another angle and come up with new ideas to make things happen.
So, I do believe him about the volume that he allegedly did.
I have not reviewed the list so no comment on the detail there.
What I do like is how the info is structured as a checklist. Having a clear process that can be repeated does reduce the error rate. There is a great book on the power of checklists. Medicine and aviation both have benefited greatly by shifting to repeatable processes even when you have highly educated people driving the activity.
[QUOTE=Michaela-ATL;885922]Actually, I have to back up John Corey’s remarks on Charles. I believe it was 2003 when I went to the first creonline lender’s workshop. Charles had just gotten his first Working line of credit with Ed Garcia’s help. He just talked to Ed every day and made it happen. That credit line then helped him further building out his business.[/QUOTE]
Hey Michaela. I was there too (wasn’t it Atlanta?). I remember Charles. He was an inspiration to all of us.
Nice to see the traffic from LW grads! You guys were always my favorite gig of the year.
In re Charles Fuller (aka Mr. WeBuy!)… this thread made me pick up the phone and give him a call today. We’ve stayed in touch, but haven’t talked in a year or so. The recession hit him hard due to the banks calling a lot of loans because their loan portfolio was out of whack. (In 2008 he had 165 houses and several income properties and that type of exposure still makes banks nervous.) He had a couple of years of pure hell dealing with them, but as you guys noted above, he is a survivor.
He’s still buying and selling foreclosures, about one a month, and not even doing full rehabs… more along the sweep, paint and clean “pre-hab” model, and letting the buyers do the heavy lifting. Charles says he is doing better now than the years with 35 employees and six figure overhead. He said to tell everyone hi, and if in Houston give him a call.
In re the checklists, coincidentally I just read the book John Corey mentioned, “The Checklist Manifesto” by Atul Gawande. It is an excellent book, and the last 25% or so gets into the uses of checklists in the financial and real estate sector. I made many, many notes… I’ve always been a due diligence hound, and I’m continually revising and updating my pre-acquisition checklists. The book opened my eyes to using the same principles in asset and property management (that was a “duh” moment), and I’m developing some based on the systems we have in place.
I am just curious as to where you guy are finding most of your deals. I am always looking for property mainly through REOs and also through mailing owners on NOD lists as well as rundown property owners to work out deals but cannot seem to get anything to materialize. Its frustrating because I have the money and everything ready to go but just cannot get any deals to go through. I live in Los Angeles, there is a lot of property and a lot of foreclosures so would assume deals wouldnt be to hard to come by so am curious as to how you guys find yours especially those of you that are getting so many you are doing them at volume. Thanks.
What stage are you at? When you say nothing is working do you mean your offers are being rejected, you can not find deals where you want to make an offer or something else?