Photo by Hudson Hintze on Unsplash

15 Tips For Rehabbers From A Fix & Flip Old-Timer

Buying your first flip property can be a daunting undertaking. I bought my first in 2011. It was terrifying.

There are a ton of moving parts. The good news is…you don’t have to reinvent anything. There are tons of books, including my friend Mark Valenti’s book, Flipping Your Way To Prosperity.

Read every book, every blog, and watch every video you can find. There are plenty of people who blazed this trail before you. Find them, befriend them, learn from them and then, model them.

Then ACT.

With that in mind, here are some lessons we’ve learned, the hard way, here at Clark St over the past 10+ years.

1. Be A Problem Solver

There is no better feeling than helping to solve another person’s problem. It’s one of the (many) things I love about business.

Recently, we met an older couple whose home fell into significant disrepair. They didn’t have the money to fix it and made the extremely difficult decision to move out and rent elsewhere.

We found out about the property through a direct mail campaign. Within a day of the family contacting us, we walked the property and put in a fair offer to take responsibility for the property. It took the family some time to decide on our offer. Unfortunately, the couple had fallen ill with COVID-19. Sadly, the husband ultimately succumbed to his illness.

After a month or so, the wife followed up with us to accept our offer. When I dropped the agreement off at her new place, we were able to chat and get to know one another a little bit. I’ll never forget her gratitude for helping her family get back on their feet.

We got a deal, and the family got some much-needed money, as well as relief from the stress of this vacant and dilapidated property. Win / win.

2. This Is A Team Game

To scale your business, you are going to need help. Here’s just a brief list of who should be on the team.

  • Realtor
  • Real Estate Attorney
  • General Contractor
  • Bookkeeper / Accountant
  • Mortgage Broker / Banker
  • Insurance Broker
  • Inspector

For more information on your team, read my recent article, The Who — Building Your Team.

3. Have A Plan & Stick To It

If you fail to plan, you are planning to fail.

So true.

You need to lead your team and provide them with the playbook to accomplish your project goals. You need a:

  • Scope of work
  • Budget
  • Project schedule

Every week (we do this twice a week), you need to meet with your contractor to make sure everyone understands what is done and what is left to do. To be clear, ‘done’ means there is nothing left to do. ‘Almost’ is irrelevant.

Ask the following basic questions:

  • Are we still on time?
  • Are we still on budget?
  • Do you have everything you need?
  • What is standing in your way?

If there’s a problem, solve it. Right then and there.

Having a plan enables you to be proactive, which is critical, especially in this COVID world. Everything takes longer and is more expensive. Appliances, windows, lumber…everything. The global supply chain is completely jacked up and it’s going to take a while to come back to normal (2022 or beyond). So having a plan from which everyone can understand their roles, their responsibilities, and the actions to be taken is an imperative.

4. No Double Yellow Lines

Knowing your customer is critical. For us, here at Clark St Homes, that means families. Our customer is almost always a young or growing family who is buying their first (or next) home.

Mom and Dad want their children to have a neighborhood…a place where the kids can ride their bikes, safely. So we focus on areas with a single yellow divider line on the street or no line at all.

Those areas, we know are less traveled by cars, better places for kids to play and for families to lay down roots.

5. You Will Never Live There

Fight your excitement. Your new investment is just that…an investment. This is a numbers game, not a design competition. What you like, is not, necessarily, what your customer likes.

Keep your design neutral…whites, light grays, light blues, subtle yellows, and off-whites. Your objective is to create a canvas upon which your customer will paint the design of their new home.

Avoid the temptation of making a statement. Leave the unique, interesting, and cool stuff to your customer. Having a neutral design approach enables your buyers to imagine themselves in the home, which is exactly what you want.

6. Clean & Safe

I’ve mentioned this before, but it bears repeating. Clean the chimney. Service the HVAC system. Check the electrical system. Check the plumbing system.

The last thing you ever want is to see one of your houses on the evening news because you cut a corner and something bad happened.

7. Focus Your Target Market and Buying Criteria

Here at Clark St, we focus on one county and one county only. That doesn’t mean ignore surrounding towns and cities. When a lead comes in from outside our county, we evaluate it from a project management perspective. The basic question is…can we be on site within an hour if needed? If the answer is ‘Yes’, we chase it. If it’s ‘no’, we either pass or we wholesale it.

As you scale your business, you’ll need to be on-site every week. Do you want to be efficient or do you want to spend your day in your truck? Focus makes it easier to manage your projects. It also makes it easier to recruit and manage your team.

8. Concentric Circle Marketing

When I was a young technology geek, I had the good fortune to meet and learn from Gabe Denunzio. He has since retired, but when I met him, he was one of the “go-to” marketing gurus in the Boston technology scene in the late 1990s and 2000s. If you wanted to launch a company or a product and grow it to enormous proportions, Gabe was the guy you called.

Over lunch one afternoon, Gabe taught his framework for setting up a marketing plan. It begins with a simple circle. That circle covers either a particular market segment or specific geography. For our purposes, we’ll focus on geography.

At Clark St, we drew a circle around the county in which we live and operate. All our marketing…direct mail, texting, calling, emailing, driving for dollars, all of it, is focused on our county.

As Gabe taught me, a customer needs to see your message a minimum of seven times before they begin to associate your brand, your message, and value. Focusing your marketing maximizes the number of times you can contact your target seller, customer or buyer, in a specific period, by making your marketing machine more efficient. That efficiency enables you to spend your marketing dollars more effectively and drive more deals.

This brings us to the importance of following up…

9. The Law of Seven Touches

Did you know most people never follow up with their prospects enough? They may call back once or twice, but then they drop the contact. This is a big mistake. HUGE.

In fact, according to the National Sales Executive Association:

  • 48% of salespeople never follow up with a prospect
  • 25% make only a second contact and stop trying
  • 12% only make three contacts and stop
  • ONLY 10% of salespeople make more than three contacts.

This is completely disconnected from how customers (in our case property sellers) decide to act.

  • 2% of sales are made on the first contact
  • 3% of sales are made on the second contact
  • 5% of sales are made on the third contact
  • 10% of sales are made on the fourth contact
  • 80% of sales are made on the fifth to twelfth contact

In our office, we adhere to the Law of Seven Touches. This means we, professionally and courteously, touch the client (seller) at least seven times before we move on.

Keep in mind, that doesn’t mean we harass them until they either give in or tell us to go pound sand. What it does mean is we ask questions. We find ways to serve them. We give them value through articles, market insights, and case studies similar to their situation. We find ways to continuously add value until they accept or reject our offer.

10. The 3FT Rule

I’d love to take credit for this one, but I got it from a guy who called himself “Big Sip” on a BiggerPockets podcast. I do this naturally anyway, but I have to give Big Sip his due for naming it.

If I am standing in line, at a dinner party, or simply consuming oxygen within 3 feet (now 6 feet) of another human being, I strike up a conversation. During that chat, I find a way to let them know I am a real estate investor. This conversation starter isn’t to brag. It enables me to tell them what we look for and let them know we are always in acquisition mode.

This may sound pretty basic, but I’ve lost count of how many off-market deals we’ve earned just because I met someone who knew someone with a problem property.

Can’t find your next deal? Make a new friend.

11. Make Your Neighbors Your Friends

Whenever we close on a new property, I knock on the neighbors’ doors to the right, to the left, and across the street. I give them my card and let them know we are going to be working on the house next door. If there is ever a problem, I ask them to call me directly.

I want them to be comfortable with what we’re doing. I also want them to understand the improvements we’re making to their neighboring property will likely increase the value of their home, as well.

Lastly, I want them to tell their friends and family. While it’s kind of rare, we have sold several rehabbed properties to a neighbor’s friend or family member. This significantly cuts down on days on market because the property is going under contract before it even hits the market.

Deal velocity is always a good thing.

12. Timing Your Market

In short, don’t bother. To succeed at buying, rehabbing, and selling unloved properties you need a stable market. Hot markets are nice, but you simply need predictability.

You should be aware, in some regions, the winter months can be a little slow. It’s a great time to buy and rehab properties because the sellers do not want to carry the property over the winter.

These houses are typically bought by families looking to move into a new school district. In most cases, they want to be in the house by early summer to get their kids settled and ready for school.

You need to understand your buyers’ motivations for moving. That will dictate how fast you go at different times of the year. Here in Connecticut, for instance, we no longer have a slow period. Sales are pretty consistent throughout the year, but you can still find deals from September — January.

13. Document Everything

Did you know most insurance carriers won’t pay for an accident or loss if you fail to have a contract with your contractor?

We once hired a General Contractor to clear and secure a four-story brick commercial building. As part of that contract, they were hired to demo the roof. That GC, in turn, hired a subcontractor to handle that demo work.

Instead of demolishing the roof structure, the subcontractor removed all structural supports for the fourth-floor walls. Without the proper structural support, Murphy’s Law kicked in and the fourth-floor back wall fell into the back parking lot. The front wall fell into the building, destroying the floor joists between the third and fourth floors. It was a disaster! Thankfully, no one was hurt. It was a miracle.

Fortunately, we had an agreement with the GC and everyone had insurance. The GC also had an agreement with the subcontractor. When the insurance company arrived, we had our documentation in place and were able to navigate the situation, with the help of our lawyers, of course.

With EVERY project, you need the following in place (at a minimum):

  • Master Agreement
  • Hold Harmless Agreement
  • Evidence of Insurance (Liability and Workers Comp) for your General Contractor and all subcontractors
  • Project Scope of Work
  • Project Budget
  • Project Timeline

If you’re working with a contractor who refuses any of these things, find a new contractor.

14. Submit An Offer, Every Single Time

Remember, we are in the arithmetic business. Every property has a “fair” price.

Admittedly, fair is a subjective word. Fair to you and fair to the seller are usually different numbers. Sellers tend to be emotional about their property. Making an offer that is lower than they expect can sometimes be received as you calling their baby ugly. But you never know. Sometimes, sellers say yes.

When you can transparently explain how you arrived at your offer, you stand a decent chance of getting them to see your side. If not, that’s OK too. As my former boss, Peter Black used to say, “’No’ is the second-best answer” to your offer. ‘Maybe’ is a waste of time.

Make your best and final offer. Don’t haggle. Educate the seller. Close the deal or move on to the next one.

15. Consider A Partner

If this is your first flip, seriously consider a partner. At the very least, find a mentor. You will benefit from their mistakes as much as their successes. It will save you a lot of learning time, it will likely prevent you from doing dumb stuff, and will help you get to profitability right out of the box.

A good place to begin is your local REIA. Here in CT, CTREIA is one of the best networking groups in the Northeast, with over 1,000 members. We also have a coaching program.

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Dad, Husband, Coach, ‘Nova BBall fanatic w/an addiction to real estate. Founder @ Clark St Holdings & Co-Host of The Real Estate Underground podcast.

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Ed Mathews

Ed Mathews

Dad, Husband, Coach, ‘Nova BBall fanatic w/an addiction to real estate. Founder @ Clark St Holdings & Co-Host of The Real Estate Underground podcast.

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