Pod Insights Wholesale Hotline How To Flip 15 Houses A Year Part-Time (Even If You Hate Renovations) | Flipping Mastery Weekend Edition About this episode On today's Wholesale Hotline Podcast (Special Saturday Edition), we help you start your weekend right offering tips, news and mindset advice. Show notes -- in these episodes we cover: Tips to level up your wholesaling business. Motivation to keep you going on your real estate journey. The latest industry news to keep you updated. Please give us a rating and let us know how we are doing! ➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖ ☎️ Welcome to Wholesale Hotline & Flipping Mastery Breakout! ☎️ Jerry Norton went from digging holes for minimum wage in his mid 20's to becoming a millionaire by the age of 30. Today he's the nation's leading expert on flipping houses and has taught thousands of people how to live their dream lifestyle through real estate. **NOTE: To Download any of Jerry's FREE training, tools, or resources… Click on the link provided and enter your email. The download is automatically emailed to you. If you don’t see it, check your junk/spam folder, in case your email provider put it there. If you still don't see it, contact our support at: [email protected] or 888) 958-3028. ➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖ 💲 USE THIS LINK FOR DISCOUNTS AND FREEBIES TO USE IN YOUR BUSINESS: 💲 Make $10,000 Finding Deals:b https://flippingmastery.com/10kpod Get 100% funding for your deals! https://flippingmastery.com/fspod Mentoring Program: https://flippingmastery.com/ftpod FREE 8 Week Training Program: https://flippingmastery.com/8wpod Get Paid $8700 To Find Vacant Lots For Jerry: https://flippingmastery.com/lfpod FREE 30 Day Quickstart Kit https://flippingmastery.com/qkpod FREE Virtual Wholesaling Kit: https://flippingmastery.com/vfpod FREE On-Market Deal Finder Tool: https://flippingmastery.com/dcpod FREE Wholesaler Contracts: https://flippingmastery.com/wcpod FREE Comp Tool: https://flippingmastery.com/compod FREE Funding Kit: https://flippingmastery.com/fkpod FREE Agent Offer Sheet & Scripts: https://flippingmastery.com/aspod FREE Cash Buyer Scripts: https://flippingmastery.com/cbspod FREE Best Selling Wholesaling Ebook: https://flippingmastery.com/ebookpod FREE Best Selling Fix and Flip Ebook: https://flippingmastery.com/ebpod FREE Rehab Checklist: https://flippingmastery.com/rehabpod ➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖ 🔌 PLUG IN & SUBSCRIBE 🔌 SUBSCRIBE: Jerry Norton and Flipping Mastery TV FACEBOOK: http://www. Facebook.com/flippingmastery INSTAGRAM: https://www.instagram.com/flippingmastery/ ➖➖➖➖➖➖➖➖➖➖➖➖➖➖➖ 🤝 #SQUADUP & GET MORE DEALS DONE in the Wholesale Hotline LIVE Facebook group: https://www.facebook.com/groups/759418414582645 🤝 ‼️‼️Pro tip: Make a post with your market & what you need help with‼️‼️
Transcript 0:03 Speaker 00 Hey, it's Jerry Norton. Welcome to the Wholesale Hotline Podcast and the Flipping Mastery Breakout. We want to know how we're doing, so please leave a comment and give us a rating.
0:18 Speaker 00 I think about flippers I know that do maybe one deal or two deals a year, and others that do as many as 15 or more in a year. And this is in the same given hours per week, let's say. So for example, one flipper is working 40 hours a week on a flip, and he does one or two deals, working 40 hours a week in the whole 12-month year. And then you have another flipper who does 15 deals in the same 40 hours a week in a given year. And what's the difference? Why is one only doing one or two and another one doing 15? And really, it comes down to the bandwidth that each flipper has. And so some flippers have a very low bandwidth and others have a very high bandwidth.
1:02 Speaker 00 And you can see here, I've got like this chart here of like 1, 3, 6, 9, 12, 15. So if you think about a scale from like low to high, on a low bandwidth, you're doing one deal at a time. That's someone that's running to Home Depot, picking up the materials. They're probably swinging the hammer a lot or doing a lot of the work. They're out there every day. They're not really managing well. It takes them a long time to find contractors, get the work done. It's just everything is super slow. Now, this is no judgment. Everyone has to start somewhere. And it all depends on a lot of the things you bring to the table initially, experience and so on. The idea here is we want to move away from a low bandwidth to a high bandwidth and really maximize our time, energy and effort when it comes to rehabbing.
1:47 Speaker 00 Here's the way I try to think about this. If the average flip takes, let's say, four months, start to finish, takes four months. And it really should, unless you're doing some high-end stuff or some really big projects. You should be able to get in and out of a house in 30 to 60 days, put it up on the market, get a buyer pretty quick, and get it sold 30 days later. You know, my goal is 90 days, but if you can get in and out in four months, you're doing pretty good as far as a turnaround time. If a flip takes four months, that's three cycles per year, or three quarters per year. How many projects can you handle at a time? Is the question that I think about. So if you're doing three in a year, then you're doing one at a time.
2:29 Speaker 00 If you're doing six flips in a year, then you're handling two at a time. Nine flips in a year would be three at a time. So you've got three going on at a time. 12 in a year would be four going on at a time. And 15 flips in a year would be five at a time. 15 in a year doesn't sound like that much, but five projects at a time, that will bury some people. They cannot even handle five at a time, and it's going to kill them. Because they don't have the team, they don't have the contractors, they don't have the wherewithal. They're spread out across town or whatever, and it'll consume people. And a lot of people just can't. That's why, you know, 15 in a year is actually a very high operating flipper, doing 15 in a year. I mean, imagine doing 50 a year, like you'd have in this massive operation going on
3:14 Speaker 00 with all these projects everywhere. So when you think about it this way, what's the difference here? And what matters here? And there's some determining factors, I think. Skill and expertise, work ethic, how good do you delegate? What's your stress and risk tolerance? You know, like, some people just can't handle the stress of that many projects going on at a time. How well do you manage? What's your leadership skills? All of those things are going to really play a factor. In the beginning of your journey, these are things that you really need to focus on. These are some things you really got to put a lot of effort into, is the you side of this. Not the formula, not where do you find the deals, not how do you keep the budget? None of that, we'll talk about that in a minute. But more along the lines of, how do you manage all of these things going on? And get better and better at that management?
3:59 Speaker 00 And so- Early on in my career, I recognized these things here were my limiting factors. These were holding me back. And so I put a lot of effort into that personal development and still do. I still think this is a key thing like this is first and foremost. And I love this quote by John Maxwell, he calls this the law of the lid. Leadership ability is the lid that determines a person's level of effectiveness. The lower an individual's ability to lead, the lower the lid on his potential. The higher the individual's ability to lead, the higher the lid on his potential. Your leadership ability, for better or for worse, always determines your effectiveness and the potential impact on your organization.
4:40 Speaker 00 We all have this lid and our job is to lift the lid and raise the lid. So we have a higher lid or ceiling on what we can do and not do. I want to now go down into the weeds, but I kind of want to just emphasize that all of this guys, it doesn't matter if I show you really cool clauses to have in your contract or steps to do this or that, none of that really matters. If you're not first and foremost, developing as a better leader over your craft. I've been flipping houses for over 20 years now. And one of the biggest challenges with rehabbing houses is keeping track of everything. That's why I built Flipster. Flipster is your all in one deal management and CRM software for wholesaling and flipping houses. And the rehabbing tools in Flipster allow you to stay organized and easily keep track of everything going on.
5:25 Speaker 00 With the scope of work tool, you can create a detailed list of everything that needs done on the project. The budget tracking tool tracks what's been paid and to who, how many draws, and what the remaining balances are. The paperless contractor management center is where contractors upload invoices, lien waivers and W9s, and it automatically tracks it to each specific rehab that you're doing. These and other time-saving tools in Flipster not only keep you on track, but they save you countless hours. I can't imagine rehabbing houses without Flipster. To test drive it for yourself for free, go to joinflipster.com. Now what I want to do is I want to talk about what I think are 10 very critical tasks to every single rehab that you do. We're going to walk through these. So first is design. You know, when you first look at a project,
6:10 Speaker 00 That you're going to rehab, the first thing you have to do is you have to get your head around the design of this project. What are we going to do to this? Are we going to open up a ceiling and and make the kitchen flow into the living room? Are we going to convert this into a three bedroom? Are we going to add a bathroom? Are we going to do nothing to the floor plan and just update all the surfaces? What are we going to do to this project? What is the design of this project? Once you've gotten clear on your design, the second step is the scope. What is the exact detail of work that we need to do now based on the design we've decided on? Once we have a scope, we can now get bids. We can go to contractors, we can get bids on all the scope of work that we want to do. Once we've gotten bids, we can put together a budget.
6:55 Speaker 00 What's this going to cost me to do this project? After we've got a budget, then a budget, we can then hire contractors and sign contracts with contractors. We can choose our contractors. Part of that process of choosing your contractor is going to be creating a timeline. When does this contractor come in, then the next one, then the next one? How do we have a very clear timeline to get this project from A to Z? After the timeline, we have to then figure out our scheduling. How do we schedule everybody to come in here and get this project done? Once we start the project, we have to make sure we have quality control. Make sure that the work's getting done to a high enough standard. And that's an ongoing process. Once we start, we have draws to do. How do we pay everybody for the work, materials and labor? How do we figure out the draws?
7:40 Speaker 00 And then finally, the punch list is making sure that everything is ready for this to go to market. There's always a punch list, no matter how well you manage a project. There's going to be a list of things that just need done at the very end. All 10 of these things have to happen on every single project we take on. What I want to talk about now is management. All of those things that need done, who is doing them? How are those things all getting done? How are all 10 of these things going to get done on every project that we do? And if I've got two, three, four, five of these going on, how are we making sure all of these things are happening and nothing slipping through the cracks? Well, I look at it from a spectrum of like, you can be heavily involved in this project or hardly involved in this project.
8:24 Speaker 00 And there are really four different styles of management, four different ways to manage a rehab. There's actually one before this that I'm not even going to put on the chart here, which is you do the work. And if any of you guys are considering or have done the work, you need to stop that immediately. The least effective thing you could do would be to swing the hammer, swing the paintbrush. The only exception I could possibly think of would be demo, only because that's fun. Like, I love doing the demo, just because it's fun. All joking aside, you should not be doing the work. The worst flippers are contractors that turn flipper. Because they're like, you know what, I can do it better, I'll save the money, I'll put the roof on myself, I'll paint the house myself.
9:05 Speaker 00 Anybody who does the rehab themselves, when you're all done and you divide the math out, you made $2 an hour. Like, it's the worst use of time. Your job is to manage the project and do it well enough to where you could have multiple projects going on at a time. And you make your money on the net profit on these projects. So it's critical that you do not get down into the work itself. Level one is self-management. Now, this is where you're doing all of it. Design, scope, bids, budget, contracts, timeline scheduling, quality control, draws and punch lists, you're doing it all. And these are the flippers that do one or two or three projects a year. Full-time job. All they did was they took on a full-time job. And it's not worth it. Even if you're making 50 grand a deal and you do three in a year and you make 150 grand and that's twice what you made before.
9:51 Speaker 00 This is not the way to go. Now, I'm fine with it if it's your very first one and you want to learn the process and you want to be hands-on, but you cannot live in this bucket. This would be like, I'm going to do it once, maybe twice, but then I'm going to quickly graduate away from self-managing. And this doesn't cost anything, and that's why a lot of flippers do it. You know, I don't take on any overhead because I'm doing all the work. The second level is what I call self-manage with admin. And all this means now is you took on some help, you have administrative help that is going to take on some of your duties. So you might still be doing design, scope, budget, timeline, quality control, punch list. But admin now can maybe get bids for you, or they can send contracts to get signed, or they can call up the
10:34 Speaker 00 plumber and schedule him for next Friday, or maybe they can like pay a draw to somebody. Like they can do that type of thing, but you're still making all the big decisions. For 20, 25 bucks an hour, you can get somebody that's really good at admin, really organized, and they'll be a tremendous help to you. And that's going to cost you 40 to 50 grand a year as a direct overhead expense to your rehab business. You know, somebody really good is going to be 20 to 25 bucks an hour, probably. Okay, next level is what I call a supervisor or a foreman. Now, this again is somebody payroll. This is just like admin. They're on payroll. A supervisor is going to cost you anywhere from 65 to 80,000 a year. Somebody with experience, that's good.
11:15 Speaker 00 You're doing now design, scope, budget, but they're now doing all the heavy lifting. They're on the job site every day. They're going to meet contractors out to get bids. They're going to doing the timeline and the scheduling. They're going to be making sure the quality is there. They're going to be approving draws. They're going to be working on the punch list. Like they're doing now a lot of the heavy lifting. You're still involved, but not as much as you were before. And you still have to manage that supervisor, make sure the right decisions are getting made. You've now got a high skill person on the team doing the supervising on the projects. And then the fourth level is just a straight general contractor. And the way you want to think about this is a general contractor is basically just an outsourced supervisor. They're not on payroll. It's a per project basis.
12:00 Speaker 00 And they typically will either charge a flat fee for the project, or maybe like a percentage of budget. Like 15% of the total budget is what the GC charges. You are not that GC's only customer. They might have five projects going on and you're one of the customers. You still have to babysit the GC. Do not ever think that you can hire the GC and now you don't have to show up at the job or and they'll handle everything. If your hands off with your GC, what happens is you'll get a backseat to his other projects. Squeaky wheel gets the grease. If you're loud and you're in his face, you stay a priority. If you're quiet and behind the scenes, the general contractor will push you back and he'll put fires out with his other customers who are being loud.
12:43 Speaker 00 So I call this, you gotta get loud with your contractors, right? In their face, every single day, what's going on, what's going on, what, you know? And as long as you stay loud and in front of them, then you stay a priority on their list of things. But hypothetically, you may come up with the design, the GC is going to give you a bid and they're going to handle all of it. They're going to do the scope, the budget, the bids, the contracts, timeline, scheduling, all of it. And that's what they're supposed to be doing. So you could see here how you can move from like very hands-on to very hands-off, depending on what level of management you're doing. So when you hire a general contractor, your budgets go way up. And here's why. The general contractor does not want to do the work to bid out all the different aspects of the rehab.
13:23 Speaker 00 What he wants to do is he wants to call his plumber who's reliable, who will show up, who will do a good job, but he's not cheap. The GC does not care about your budget. He cares about getting the job done and working with cool people that he can count on. So every GC has their go-to people. You always want to be careful that you don't introduce dishonesty or facilitate dishonesty. You want to remove all temptation away from your contractors to screw you. If you introduce the opportunity for it, then you're to blame because you know, you're putting an alcoholic in a bar. He won't be able to help it. It's too tempting to say, hey, I can get my plumber to do the job for a thousand bucks, but you know what?
14:04 Speaker 00 The market rate's two grand, so I'm just going to tell Paul that it's two grand for the plumbing. And I'm double dipping, I'm making money on the work and I'm making money on the back end. Because you don't have a checks and balance to prevent that from happening, so it's going to happen. And if it doesn't happen on this job, he's going to be thinking about it and tempted to do it. He won't be able to say no to it at some point. Yeah, so here's how you prevent this. If you're ever gonna cut the GC into a profit share or even a supervisor, you could do the same thing. You could have somebody payroll that's your supervisor. I'll get to when is the right time to do each of these? Cause there is a right time and a wrong time to do each of these four models. Even with a supervisor, you could give them a percentage of profit on top of a salary. Same with a general contractor, you could say, look,
14:49 Speaker 00 I'm okay if you take 10% to cover your overhead, but you're not going to charge me for managing because you're getting a cut on the back end, right? But the only way that will ever work out well for you without you getting screwed is if you have really good checks and balance. Now, here's how you create checks and balance. You have to get multiple bids for every scope of work, and you have to see the bids, and you have to make sure you're part of the selection process on contractors. So then what would happen is the GC says, okay, we need the plumber over here. Let's say you've got to put in a water heater and this and that and faucets and everything, right? So now that goes to bid. So it's not him hiring his buddy and you see the invoice later. They can work together on that. They can create an invoice and kick him back money.
15:33 Speaker 00 So just because you get an invoice doesn't mean you're paying the right price or that you're not getting screwed still. But bids eliminate that because now you're like, okay, we got three bids on the plumbing and the scope of work was defined. So it's apples to apples here on the bids. You do not pay the GC and the GC pays subs. You pay the subs directly. Because if money passes through the GC's hands, what did you just introduce? An opportunity to steal. I call that skimming. They'll skim. We never want to do this business on the honor code because maybe that works, maybe it doesn't, and it's your neck on the line, not theirs. It's your business model and you want a business model that's sustainable. You know, a business has to be consistent, repeatable, sustainable. If you're doing some model where you're partnering with the GC
16:17 Speaker 00 and that GC holds all the cards and he runs and you're out of business now, like how do you build the business that if that guy doesn't work, you can replace him with someone else who does work? Because your processes are dialed in and you've got a model now that you can feel good about. So like, for example, it's a lot more work for you, the flipper, to pay subs, but you have to. You have to pay the subs directly. I cannot tell you how many times people get screwed. I've gotten screwed when you pay the GC and the GC is supposed to pay the subs. What typically happens is the GC now uses your money to finance his other projects. He's in over his head. He doesn't pay your subs. He pays guys over here on the other job. Your guys don't get paid.
17:01 Speaker 00 You don't know about it because you're not dealing with them. You're paying the GC. You don't find out that the subs never got paid until they put liens on the property and you go to sell it. And there's $100,000 in liens on the property from the subs and you're screwed. Now, ask me how I know that. I created my own software called Flipster. Flipster has all of my management tools and it's all digital. We have what's called in there a contractor management center. They have to upload their invoices and lien waivers digitally. It comes right into a dedicated folder for that project. It's all organized. And at the end of the year, I go boom, and it sends it off to the CPA for 1099s. And I don't even have to think about it. It's got my budget tracking, my punch list tools, all of it.
17:44 Speaker 00 My scopes, everything are tools that I built in that software. The basic level of 97 bucks a month, you get all those tools. A paperless digital tracking center and it does it per project. So I could have multiple projects going on. Even my budget tracker, what it does, as you pay your draws, it tells you your balance is owed. You set it all up in the beginning of your project. You put your entire scope in there, all your subs in there. And then at a glance, I instantly know what I paid, what's still owed, what's still outstanding, how many draws I've paid. I think it's just a great way to stay super organized. You can do a trial of that and see if you like it. If you go to joinflipster.com, you can do like a free seven day trial and see if you like that tool. You guys had a rehabbing, but I built it based on all the projects I do and how I would like to run the project.
18:28 Speaker 00 But I think they're really cool tools. Guys, when you think about this self-management, management admin supervisor or GC, when is the appropriate time for each of these? Is there a right, is there a wrong way? Here's what I want you to think about. If it's your very first flip and you don't have any other flips going on, you got one going on and you're dipping your toe or you're getting started in your flipping business, then I got no problem if you self-manage. Just know that it's going to suck up a lot of time, energy and effort. And everything else that you're doing is going to probably take a backseat to that rehab. It's going to suck you in and you're going to be all involved. You're going to be out there every day. You're going to be learning, making mistakes, all the things. It's all fine, but maybe self-manage that first one.
19:12 Speaker 00 Okay, once you get past one or two, maybe, and you're doing a couple, then go to a GC. Why? Because the GC is per project and you don't have volume to leverage yet. Because you can't promise anybody a lot of work because you don't know yet if you can get a lot of work. Now, the GC is going to cost you more, so you got to budget more on your rehab. Again, why? You got to pay the GC and the GC is going to tend to hire more expensive people no matter how hard you try not to, which try hard, but it's going to always cost you more with a GC than if you self-manage. Because self-managing is you find the subs, you're being the GC. You're not paying yourself a GC fee because you're self-managing.
19:54 Speaker 00 And you're going to be able to get cheaper subs because you're finding the subs yourself, not hiring the good ones the GC wants to use. Once you start doing three, four, five, maybe one at a time, GC is the perfect model. Once you hit nine, and remember, nine flips in a year is three at a time. You're doing three flips at a time. You are about at the point where you could bring on a supervisor. And you are going to save a ton of money when you hit this nine, 12, 15 mark. And you can payroll a full-time manager of your projects. Now, you can't bring that guy on until you're doing enough volume. So this would be, you're like, okay, I know I can consistently do nine, 10 deals a year.
20:39 Speaker 00 That's three at a time. I can bring on a full-time guy. I can make his payroll every week because he's busy doing three projects at a time, running around. Once you get past 15, even 12, it starts to get really hard for that supervisor to manage five at a time. Five at a time is hard for one guy to manage. They better be close together. Even then, it's a stretch. How you're ready for your supervisor and by the way, what I want to show you is I want to show you how to pay for the supervisor without it coming out of your cash flow. Who would like to see that? Who would like to know how do I pay full time without coming out of pocket? Okay, here's the formula. You're going to take your foreman's annual salary. You're going to divide that by the number of flips you're currently doing. And that's going to give you your supervision cost per flip.
21:25 Speaker 00 Then you're going to take that cost per flip and you're going to add that to each rehab budget you do. And this is going to be our management fee or category. Step three is you're going to finance your supervision with each project. And you're going to pay their paycheck from draws out of your project. Okay, now let me break this down. I don't know if you guys are catching what I'm showing you here. But let's say that you've got a foreman and he's on an $80,000 a year salary. And you're doing 15 deals a year. If you divide an $80,000 salary by 15 projects. Then that means it's costing you on average $5,300 per deal. $5,300 per deal times 15 deals equals $80,000. Now, when I budget a rehab, I got my budget for the rehab.
22:07 Speaker 00 I add $5,300 to every budget on every rehab I do. And then when I go to hard money and private money. I finance my foreman's salary on every project. So now I have a line item literally on my draw schedule with my hard money lender called supervision. And I put $5,300 in there. Hard money lenders will let you do that as long as it's reasonable. And now I draw from my budget on my rehab to pay my foreman. It does not come out of cash flow out of the business. It's financed on every deal. This is how you get to doing nine, 10, 15 projects a year with a full-time skilled foreman on the job site every single day. And you're not there now every day.
22:51 Speaker 00 Now you're still managing, but you're not there every day at the job site. And it's financed through your lending. You want to hear something crazy? When I was doing, let's see, two to three, $3 million to $5 million projects in Scottsdale. I had one foreman that was 120,000 plus I think I gave him a truck and some allowances and stuff. Let's call it 150. He could do three build projects at a time, three big ones. So three, call it three to $5 million homes at a time. Okay, so now I'm dividing 150,000 divided by three is it was basically costing me 50 grand per build for my full-time foreman. Do you know how cheap that is to pay 50 grand for
23:36 Speaker 00 someone to build a $3 million home? And I financed it with my lenders on my projects. I just built it right in and I drew from that schedule as a line item and paid my guy, did not cost me anything. If I were to hire a builder to do those projects, it would cost me 200 to 250,000 per project to hire a GC or a builder to do what the supervisor was doing. Because guess what that builder would do? He would put his $150,000 supervisor on my project. So I'm paying him 200 grand and he's got a payroll supervisor at my job. So skip that, go right to the supervisor and finance it into your budget.
24:15 Speaker 00 Thanks for listening to this podcast. To get more free tips, check out my YouTube channel. Just search Flipping Mastery TV on YouTube where I have over 1,000 videos teaching you how to make more money with real estate. On my channel, I also give away free stuff like my Quick Start Kit with everything you need to flip your first house in the next 30 days. Or my deal finding software called Data Cruncher, which finds discounted houses in any zip code in a matter of seconds. You can get those for free at myquickstartkit.com and mydatacruncher.com.
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