The Science of Flipping - Best Practices On Managing Your Rehabs

Episode Date: March 16, 2021

Best Practices On Managing Your Rehabs

All right, all right. Yo, yo, welcome back to another episode of the Science of Flipping. I am your host, Justin Colby. And if this is your first time randomly coming across my podcast on iTunes or Spotify or any of the platforms, understand this. This is all about real estate investing, the best tools, systems, strategies, and processes for you to be the most successful investor you possibly can be. And so today I have a very special guest. One of my elite students is actually joining me today because I personally have flipped over 600 rehabbed homes. And one of my bane of my existence, and I know his and anyone else who has ever rehabbed a home is always your contractors. And he has developed a really incredible way to manage your contractors, but just manage the entire process as a whole. And so I want to bring my elite student on. Michael Malone, what's up, brother?

Hey, what's going on, man? man. Dude, everything. You kind of blew me away with your ability to wrap this whole thing together. And I just asked the favor. I was like, Hey dude, can we share this with people and let people know that there is an ability to really manage better, right? I think you know this, I know this, and anyone who's listening to this as a rehabber knows, man, your contractors are really the bane of our existence, right? A hundred percent. I mean, they are equal parts, the backbone of your flipping business and the bane of your existence in the flipping business. So there is a fine line you walk day to day with those guys. And you're either on this side or you're on that side.

So it's an adventure with every flip. No doubt. Now, the cool thing is if you are listening to this on itunes or itunes or spotify uh several times a week i actually do a video recording of a podcast episode and so this is one of those times so if you are not over subscribed to my youtube channel go to youtube.com forward slash justin colby subscribe because then you'll be able to see uh mike really good looking chap out of des moines, Iowa, really good looking kid and myself and you will be able to engage. And also, I'll kind of throw this out. This is something new I'm doing.

I have a level up academy membership group that I go live in several times. It is coaching. And so this is actually streaming live over there. So they get first access to any of this. If you're interested in being in that group, it is a. And so this is actually streaming live over there. So they get first access to any of this. If you're interested in being in that group, it is a coaching group. There is a very small entry level cost, but it is to help people get more access and more coaching. So there's that I just kind of created that this morning. But again, if you want to actually see some of these videos, some of these podcasts, I do several of them on video. Go to youtube.com and just subscribe to my channel, Justin Colby.

Without further ado, dude, give everyone a little 30-second pitch of who you are, why you even developed this. Obviously, you're a rehabber yourself and an incredibly successful investor. And then let's just jump in and share your screen and show them how to get this management thing going. Yeah, absolutely excited too. Thanks for having me on. I'm excited to be able to share this

because at one point I was in the position where someone else was sharing this with me and having this into my business. It's still an ongoing progress. It's one of these templates or systems that's always in the works. It's still an ongoing progress. It's one of these templates or systems that's always in the works. It's always evolving. So even what you see today is likely not what I'm going to have next year. If you're to start something like this, if you start from this space a year from now, you're just likely going to be different. But that's the beauty of this platform that we're

going to get into with Asana and these types of programs that can help you just run your business better, especially if you're a flipper, but all the way up to the operational level of your business. And so what's cool about these is you can really customize them to yourself, how you operate, how your team operates and how your business operates, which just allows you to be more successful. One thing I'll tell you, dude, and you know this to be true one thing is is people because they hire a contractor or anything for this matter right like they hire a cold calling company or they hire a direct mail company because they hire the company for whatever reason they stop managing it right like they're like oh they got it right they know what they're supposed to do I'm gonna

let them do their thing. And that's where it all breaks down. And rehab management can be very, very, very costly, right? They go over budget, they go over time, et cetera. And so this is really about the fact that you still need to manage your rehab job. I do not care how big a company is that you might hire or small. You need to manage them. I have a great company here in Phoenix. We just finished up our most recent remodel. And I still am in there like, the paint here doesn't look great. We need to do this. I'm still on them about making sure that

they finish right because they got it done. They got it done on time, but they didn't finish right in my opinion. So, management to all this. Yeah, 100%. There's no such thing as a hands-off business, right? There's no such thing as a hands-off entrepreneur. I know we all get sold on that image, right? You're sitting on the beach drinking a pina colada while your business is over in the States, you know, making millions, and you don't have to know. There's no such thing as that when it comes to the reality of it.

Now, to your point, you hire on third-party services, third-party vendors because of the systems that they already have in place, but those systems are for their day-to-day responsibility. You still have to integrate that into your business and your business system. So to your point, it's absolutely right. You don't just hire somebody instead and forget it. You still have to manage, even at a macro level, the day-to-day to make sure that the systems that they have and that you're getting the benefit of are still integrating with the systems that allow your business to run day in and day out. And for anybody that's ever flipped a house knows that probably more so than any of the other investment strategies,

you do not have the luxury of not being hands-on. Now you can get your business to run systematically, right? To a certain degree where you don't have to be 100% hands-on with every single decision and every single step, but you're still going to be hands-on nonetheless. And so that's what this program is for. It's allow you to create and implement systems and a systematic approach to the flips that you're doing while allowing you to stay at a bit more of a high level, but still be completely integrated into what's going in on the day-to-day.

Because flips have a million moving parts. They cost thousands and thousands of dollars. They have multiple team members, different contractors, subcontractors, specialty contractors. You don't have the luxury of just setting it and forgetting it. So systems like these are intricate to the success and growth of your business. And I know this firsthand because it took me a while to, when I first got started to appreciate and accept the significance of systems. I was 100% a victim of being a solopreneur wearing a hundred different hats, trying to do a hundred different things while teaching myself every single step of the way.

And, you know, in the end it paid out because I learned from a lot of failure and it made me who I am today. But when I was living in that segment of the business getting started, man, it was, it was a nightmare looking back on it now, you know. Well, it can be very costly, right? So imagine if you already had this, like if you were listening or watching this, how much faster, how much money you would have saved, how much faster your rehabs would have done, how much more money, you know, money loves speeds. So if you can flip homes quicker, because you have good management, could you have made more money, bought more homes, right? So it can be very costly, like opportunity costs. A lot of people don't talk about it. It's a very real thing. And when you're trying to do it yourself and you have no help whether it's myself or michael like and you just

are doing the best you can man a rehab that should have went 30 days goes 60 or 90 right or a business you know whatever it is like yeah you know to get your first deal takes a year where it could have taken 30 days or what you know the case is having advisement, having coaching, having someone who's been there before to teach you this stuff is really important. And so why don't we jump right in here and start showing the people exactly how you do this. Yeah, 100% really blows my mind. And this is something everyone can do. Just in transparency, I'll try to figure out how I can get this to people. But I want Michael to show this and then we can go from there. Yeah. And, you know, anybody watching this that has further questions or wants to reach out,

you know, to just for myself, happy to connect with anybody about this. As I said, I'm, you know, a big proponent of paying it forward and being a giver. Because like I said, at one point, somebody gave this to me, right. And it just accelerated my business. It changed my mindset. It allowed me to recapture that time and energy and focus to really make sure everything was moving on. So anybody wants to reach out, I'm happy to connect, talk further, uh, about this as we get through it, but I'll jump over to this. I'll share my screen a little bit about me and my business. I mean, our, our bread and butter is fix and flip. So this is really at about me and my business. I mean, our bread and butter is fix and

flip. So this is really at the core of our business. So this specific document that I'll show you within Asana is literally the lifeblood of how we operate. It's how we get from point A to closing on the house to point Z, which is selling the house and everything in between. It has the front end closing requirements, administrative type of stuff, all the way to the back end when you're prepping it for retail sale. But this is a program that I would encourage anybody to use. Asana is an incredible kind of project management, team management, operational management software that is just going to allow you to go from, you know, writing everything on the back of a napkin and hoping to keep up with it to running your business like a business. Justin, I know, you know, I talk a lot about that in our, in, in the coaching program that I participated in with you and you're never

going to reach the levels of success that you want until you start treating your business like business. So this is an incredible platform and there's other ones out there like it, but this is a platform that will really help to, to speed that process up for you and your team. So with that, I'll go ahead and share the screen. Let me know if... Yeah, one thing, you know, people won't understand is the amount of time it took for you to build this out, right? And so, again, this is a finished product. And even to your point, it continues to evolve.

But that's the value is for you guys to see something that's already built and how to replicate it. And like I said, I'll find a way to get this into people's hands. I didn't think that through, but I thought sharing this would be super valuable. If you're listening to this on iTunes, make sure you go to YouTube. The video, you'll be able to see this because at this point now, if you're on iTunes, you may not really understand what's happening. Go to youtube.com forward slash Justin Colby subscribe. I do a video a day there and this will be on. So go ahead, Michael. Why don't we dive in? You might want to zoom in a little bit. It's a little, I mean, it's legible, but it's just a little. Sure. How's that looking better? A little bit. One more, maybe. There you go. I

think that's better. One more for safe measure. How's that? Yeah. Awesome. So as I said, this platform that we use for my business is Asana. I know a number of entrepreneurs use it every single day. It's a pretty popular platform. If you haven't heard of it, I would encourage you to go check it out. It's got a thousand different features, functions, templates, and management capabilities that I couldn't even begin to get into on this call, we're really going to take it. I'm just going to show you my scope of work document that I use for the management of these individual flip projects. But I will tell you, I use this platform to organize, manage, communicate, and run the entirety of my businesses across the multiple businesses that I have. So with that, what you're looking at right here is a scope of work template. What I like about Asana is that it makes it look very simple, very clean, very legible and accessible, but it is incredibly sophisticated. So this is a template that I've been working on for over a year. And as we mentioned, is kind of a continually growing template. It's evolving with every single project

and we're able to go in and craft it and curate it to our liking as we move forward, which is really great because as you know, your business always evolves. The needs of it continue to evolve as you grow, your team grows, et cetera. So what we have here is a scope of work document, which you should be creating with any of your contractors on any of your flip projects, right? You can't know what you're doing or track the project, but also track the progress of it. And more importantly, communicate with our contractors at every single step in an organized fashion so that we can make sure that all parties involved on the flip are up to speed on what's going on and that things are getting done when they need to be getting done and they're being done correctly. So a little bit about this template here is, and you can set this up a number of different ways. Really what's important is how does it work best for you as an investor, as a project manager, and for your business and how

you collaborate with outside contractors or in-house teams, whatever your setup is. You'll see here the layout of this, it's categorical in its creation, as you can see here, but these categories or these sections, as Asana calls them, are in kind of chronological order from the from the day one of the project to you closing on it and literally changing the locks all the way down to the final walkthroughs with your contractors and with your team so at a quick glance you can see here the very first section is prep work then we go into demo exterior yard lawn roofing exterior projects rough-ins mechanicals drywall drywall, etc. So what I

like about that and why I set it up that way is that you're really, you're working from the top down when you log into this and you're looking at it, as opposed to maybe jumping around. Now, previously, I've segmented this out in phases, as most construction projects are broken up into, you know, phase one, phase two, phase three, phase four four but I found I was able to get much more detailed if I simply broke it into the the exact specific categories and then put them kind of in sequential order of the project now this is outside of this but I have a a construction manual that I've created it's like a 20 plus page document that I hand to all my contractors that I work with, whether it's kind of my in-house general contractors or outside contractors that have larger scope of works included. And so this goes hand in hand with this, but that packet is

a three page packet and the odds of me getting my contractors to read through all of it is usually slim to none. So I find this to be much more accessible and much more inviting for the members of my team, as well as the outside contractors that I work with to operate within it. But what you do here, and as you can see, this is a project that we're currently getting ready to wrap up. And I have it opened up to show you all the sections and then all the specific tasks that are outlined inside of each section. Now, right now I have it showing completed tasks and tasks that are still open and needing to be done, but up here, you can filter that out.

You know, you can leave it to most of the time, since this is a progressive document that changes as the project progresses. And so, I less than lost my train of thought there. You can filter it out and show, you know, incomplete tasks or complete tasks. So that you can kind of get a quick visual of how much is left to be done and what's still on the board. So in looking at this, we'll just kind of break into one of these sections and kind of operate within it. But as you can see over here,

we have the section, we have the task, and then we have these six columns here that really give at a quick glance the specific details of each one. So, you know, looking at siting repairs here. So this first column is a signee. So that's what I'm going to tag to who is solely responsible for the oversight of that specific task. Right. So obviously, as the investor, you're always responsible for everything that's going on. But within your teams, and within your contractor teams, you know, there is specific assignments that specific individuals need to make sure that they're staying on top of because it's their responsibility within their scope of work. So what you can do here is you add, you build out your team inside of Asana, and then you can tag them.

As you can see, when you click on that, there's a dropdown that shows the entire team there, and you can tag them. They're going to get a notification that this is falling under their to-do list and that they're responsible for it. From there, you're able to plug in a due date, priority level. We get pretty detailed across the board, all the way down to there's a column for materials that identify what's the status of the materials. If this has to be done by this date, then you know that you have to order it by a certain date so that it gets on site by a certain date, so that they have what they need when they go to kickstart that specific project. So here, this is where the contractor and or a member of my team, whoever's responsible for ordering those specific materials, is going to give an update to the team of the status of that. And that changes, obviously, as the project progresses. So it's going to start off as not ordered, but as you get closer to, obviously, that's going to change once you start placing material orders and getting them on site.

Lastly, we have a scope tab, which is really for myself as the owner, but it's a way to communicate with members of your team. When you have specific plans or layouts or designs going into these flips that need to be reviewed, they need to be approved so the team knows kind of what the status of it is, whether they can move forward or not. this is where you can plug that in and they'll submit that notes or layouts or designs to you within this task, which I'll break it down here in a second. We'll actually go inside the task and see what all you can do inside there in the communication components of it, but they'll be able to upload in that and then I can review it. And if I'm good to green light it, I'm going to go ahead and mark that as approved. If not, I'll put it as denied. And then I'll input, you know, my notes as to why.

Lastly, we have a contractor. So obviously, there's an enormous amount of different components that go into every flip. And it's not the same contractor for each one. So here's where I'm assigning what contracting team is going to be responsible for that. So that at a glance, your project manager or yourself, whoever's overseeing your projects, can be able to see what team or what contracting company or what service is responsible for that specific task. So as it sits like this, you know, you can get a quick glance across the board and see kind of the status, who's responsible, where materials are at, and what the due date is on that at a quick glance. Now, what we can do here is actually go is still going to be right here underneath or at the top part of the specific task profile. But underneath, you can see here where the communication of're calling you with questions or they're texting you with questions.

And throughout the scope of a project, and especially if you have multiple projects going on at once, it is so hard to keep track of those notes, especially when you're on the and remember with specific detail what was said, what was decided and kind of where we landed with everything. I know a lot of times I have contractors that want to ping me and I'm in between meetings and I answer the phone. We'll talk about something and then we'll hang up and I'll go into my next meeting. And two hours later, I kind of forgot what the conversation was. Well, this is nice because they can drop me a note. I can catch it at my own, um, you know, uh, at my own leisure and be able to read it, digest it and respond accordingly and, or go back and reference it later on. Now within this, um, I'll try to show you one here that's a little more built out as to what you can do within it, which is nice. I'll go over to my painting tab here. Again, same stuff

up front. You can see who it's assigned to, what contractors responsible for it, the due date, et cetera. Also, a lot of times these tasks are a little bit more intricate than just do this and that's it. A lot of times they have some subtasks attached to it. So within Asana and within that specific task profile, you're actually able to build out subtasks. For example, we're looking at painting the interior. Well, we know that there's a few different levels that go into interior paint, right? Well, there's the primer stage. Or there's the wall prep stage, there's the primer stage, there's the trim and baseboard painting,

there's the wall painting, right? So you can create specific subtasks to kind of get an idea of how far through that project you actually are without the project itself either being marked as complete or incomplete. And also, depending on how you operate with your contractors or with your teams, there's going to be unique subtasks that might not be directly attached to the contractor doing the job, but rather to you or to your project manager. As you can see, the first subtask up here for me is order the paint materials from Sherman Williams. Well, with my contractors, I am responsible for material orders. I oversee that. I place it with my vendors.

I make the payment direct. That's just how we have it set up. It's easier for me to do it that way. But that specific task is going to be my specific task. And they can't move forward with the other ones until that one's done. So they're able to tag me directly, put in some comments and a due date. Fortunately, I got this one done. As you can see, it's already out of the way.

It's not outstanding. But then they know that that's done and that those materials are on their way now, right? So they're in the know in real time without me having to stop, make a phone call, talk to them, give them an update, and then get back to my day. It just, it's amazing how quickly your day can get eaten up just making those little one-off phone calls or having those one-off text conversations. And that's really a benefit from a communication and efficiency standpoint with a program like this is that it allows you to be quick, efficient, and communicate in real time without having to really stop the momentum of your day and jump into something else. But as you can see on this one, why I want to show you this one this communication chain is a little

bit more built out my contractor can upload specific progress photos so if I'm getting a notification that says that the wall prep and primer paint is up well I take them at their word but I also want to see a progress photo and this is nice because now I don't have to necessarily go all the way to the job site to put my eyes on it in person. They can send me these progress photos showing me that that task is done. And I can see it clearly that, okay, it is done. These walls are primered. That task can be marked as complete. And it just saved me an hour there and back, driving back and forth to the property. So again, efficiencies, efficiencies, efficiencies. When you're in flips, everybody knows you only make your money when you turn your money. So you need to be moving these projects as fast as you can. You can't afford for

a flip to take six months, nine months, 12 months, because not only are you just sitting on carrying costs and expense, you're delaying your paydays. And if you ain't getting paid, you ain't making any money and we're only doing this to make money. So efficiencies are king and you can start accelerating those efficiencies with proper communication, with proper project management, you know, with proper tracking of specific tasks with specific contractors. So that right there, that one component right there, not having to drop job drive to the job site day in and day out to check in to whether they're doing it, whether they're not doing it is, I mean,

the amount of time and energy you're going to get back just from that alone is worth its weight in gold to you as a business owner. Cause the reality is you got three or four flips going at a time. You don't have time. You don't have time to be doing that. You'll be driving all day long, site to site to site, babysitting contractor after contractor after contractor, and you'll never get anything done for the sake of your business. So that little communication thread doesn't sound like much, but it's going to save you hours. It's everything. And just for the sake of time here, and I know a lot of you guys are listening to this. If you are listening to this on iTunes, just go to youtube.com forward slash Justin Colby.

But like, there's a lot to this. This can be even more expansive. There's a lot more to do, but just having just the basics here, guys, is what you will need. If you are rehabbing at all, I don't care if you're rehabbing just one property or your first property, or if you're like Michael or myself and have multiple going, you need this, right? And like I said, I will find a way to figure it out to get this stuff over to you guys. Don't worry about that. But any last words before, like I said, I also took this and I'm streaming live in one of my other coaching groups. So I want to take you and I in over there and try to answer a couple of questions if

we have time. But, um, and by the way, guys is, is kind of another note. If you're watching this or listening to this and you're interested in me coaching you being an elite program like Michael or otherwise go to the science of flipping.com fill out the form. It's totally free. Someone on my team will talk to you about, uh, whether I'm a good fit, fill out the form. It's totally free. Someone on my team will talk to you about whether I'm a good fit for you or you're a good fit for us. But obviously,

Michael is the type of caliber person that we are working with. And then there's different levels. And so just go to the science flipping.com, fill it out, write for you. Great. If not, that's okay too. But any last words, Michael? I would just say, as we said earlier, this is a conversation that could literally take a week to go through the intricacies of project management, systematizing your business, stuff like that. It's an insanely important topic, right? Because it's the difference between you being a solopreneur

wearing a thousand hats and you running your business like a business with a team, right? So I would say the takeaway, the sooner you can start to implement systems into your business to allow you to automate and expand efficiencies, the sooner you do that, the better. Even if you're literally taking down your first flip tomorrow, don't wait until flip number 10 to start doing this stuff because that's just lost time and opportunity. Start making systems day one. And your business is going to, it's going to grow substantially faster. You know, I was told one time by a former mentor or whatever that said, you know, treat your business today the way you want it to look five years from now. And that was, it's incredibly powerful because once you do that,

and once you start acting that way within your business, it's amazing how fast your business will grow, right? Because you've already shifted your mindset and your mindset is five years down the road rather than the five days down the road. And so systems, systems are key, and you'll never be able to scale business without them. So I guess that's my final word is systems, systems, systems. Absolutely. Well, right on, dude. I really appreciate your time. Thank you for sharing with my tribe. Appreciate it. And we will talk very shortly. You and I are going to stay on real quick, see if we have any questions in the group. And then we'll wrap up from there. Thanks, guys.