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Nine
Strategies For Growing Your Home Renovating Business
by Robyn Thompson
I have become financially
independent renovating houses, and you can do the same; however, if
you aren’t prepared, the process can become completely overwhelming.
To help you avoid the pitfalls that are out there, I have developed
nine key strategies to assist you in growing your house renovation
business. If you are willing to learn from my experience, you will
enjoy greater success much sooner.
While I was able to renovate 17
homes during my first year in the business, by employing the
following strategies, I have grown my business to the point that I
can, in today’s environment, renovate 40-50 houses per year. Keep in
mind that I do an average of $26,000 to $50,000 worth of repairs to
each of my houses, so these are not quick carpet and paint jobs.
Here are the nine key strategies
to help you take your house renovation business to the next level.
Key Strategy
#1: Develop The Ability To Take Action Quickly.
One of the most important
elements of my success is my ability to take action quickly. In my
area, the competition is tough, and if I procrastinate I will lose
deal after deal.
If you want to “steal” a house, you’re going to have to be able and
willing to act quickly when a good deal presents itself. If I go and
look at a house that I feel is a good deal, I write an offer
immediately; get to the point where you are able to do the same.
Key Strategy
#2: Learn How To Find And Handle Contractors.
Learning this skill will save you
money, time, and heartache. I used to allow contractors to move very
slowly, and I would accept their excuses. No more! I currently have
up to twenty workers on my job sites, and the renovation process on
my investment properties is very smooth because I have learned to
handle contractors well.
The first important element is
finding quality contractors. Some of the best ways to get good
referrals are to ask friends and relatives for recommendations, call
your local building inspector, or attend the local REIA meetings and
network with the big players in your community.
Do not give contractors much
money up front. Until you are able to do a large volume, you may
have to give them some money, but always give them as little as
possible until some of the work has been completed. Knowing they
have money coming gives them sufficient motivation to show up at
your job site and do a quality job.
The last thing to remember in
dealing with contractors is this: don’t be afraid to fire a bad one.
Simply let the contractor know that you are not satisfied, settle up
on the spot, and call one of your back-up contractors to start as
soon as possible.
Key Strategy
#3: Develop A Sound Educational Plan.
I started out in this business
knowing nothing about renovating houses, so consequently I enrolled
in Hard Knocks University. Now, with all the materials and home
study courses out there, there is no reason for anyone to start this
business blindly. I still go to seminars and buy books and tapes. I
try to read one good book by a millionaire every month, and I listen
to audio tapes daily to attempt to improve myself.
An investment in education is the
greatest investment you will ever make, so you need to develop a
sound educational plan to help you achieve your goals. Plan to spend
one hour each day increasing your real estate knowledge base or
improving yourself. In two to three years, you will see a huge
difference in who you are and what you have accomplished. Always
strive to better yourself!
Key Strategy
#4: Obtain Access to Private Capital.
Growing my business to the point
where I am able to renovate over 40 houses per year did not happen
by accident. Using a hard money lender is what took me to the next
level, and private capital can do the same for you.
Anyone who has completed one or
two rehabs can tell you that they become very capital intensive. If
you do not have a private source of money, these funds must come
directly from you. You need to find a source other than your bank
account for the funds to purchase and renovate your houses. Whether
this money comes from a hard money lender, a line of credit, or a
private lender, the sooner you find a good source of funds, the
sooner you can accelerate your business.
Key Strategy
#5: Develop An Efficient Office System.
If you want to increase the
number of houses you are able to renovate, you must develop an
efficient office system. I can’t be involved with every aspect of
buying and selling 40- 50 houses per year, so it is important for me
to have an efficient system in place that allows me to maintain my
business at that level.
My focus is on buying houses and
cash flow; everything else is delegated to members of my staff. I
realized that I was worth too much per hour to be handling menial
tasks. I am much more of an asset to my business when I am out
locating deals and managing my cash flow. I delegate everything else
to good people in my office: answering phones, accounting and
bookkeeping, maintaining office supplies, dealing with contractors,
and placing standard orders.
You will not be able to develop a
system like mine all at once, but it is important to start piece by
piece. Add one person at a time as you can afford the payroll, and
watch your business grow.
Key Strategy
#6: Learn How To Estimate Your Own Repairs.
When I am interested in a
property, I go out and estimate repairs personally, and I recommend
that you do the same. If you don’t know how, learn. By relying on
someone else to estimate repairs, you are putting your profit in
their hands. They will not lose one minute of sleep if they miss a
bad furnace that eats up $3,000 of your profit.
Just as I do, I recommend that
you bring a repair sheet with you to each property you inspect.
Write down each repair and the estimated repair cost. After you add
up all the repairs, add an additional 10% contingency to allow for
anything you may have missed or underestimated. You should also
allow an additional $2,000-3,000 for additional niceties and
upgrades that will help sell your house. Ensure your houses will be
gorgeous when they’re done by planning for these items in the budget
ahead of time.
Beginning investors will often
underestimate the repairs and will borrow $4,000-5,000 less than
what will be needed to do a quality job. If you underestimate, you
will be forced to cut back on important areas of the renovation
process such as the kitchen and bath. It is much better to
overestimate and lose a deal than to underestimate and have a
low-quality rehab that you are unable to sell.
Key Strategy
7. Do Quality Work.
This may sound like a simple
concept, but I have seen some students’ homes turn out looking as
bad as when they started.
Today’s buyers are smart, and if
they see that you have skimped on the carpet, vanities, and kitchen
cabinets, they may get worried about the quality of the more
expensive items: furnaces, roofs, and the foundation. On the other
hand, if your house is gorgeous, it alleviates the buyer’s fears
about these bigger items.
Most buyers don’t have much money
left over after purchasing a new home. They want to know that they
won’t have to replace a furnace or fix a structural problem two
months down the road.
It is better to spend a little
extra money on renovations to assure your house is top quality and
will sell quickly. In the end it is actually cheaper since buyers
will move quickly if your house is pristine, and you won’t have to
carry your house for 6-12 months.
Key Strategy
8. Get Your Real Estate License.
My real estate license is one of
the most critical tools I have. It allows me access to a world of
properties that I would otherwise be unable to find. I search the
Multiple Listing Service (MLS) two or three times every day looking
for brand new properties. If there is a good deal, I don’t have to
wait for a Realtor to call or fax me; I can be in my car looking at
the property immediately.
Not only can I find my own
properties, but I can also do my own comps rather than relying on a
Realtor’s opinion. When you are figuring how much you can offer, it
is important that you know what a house will sell for when
completed. You should not rely on a Realtor who is trying to
convince you that the house is a good deal. A house is only a good
deal if your numbers tell you it is. By getting your license, you
won’t have to rely on someone else to do comps for you.
Key Strategy
9. Develop A System To Sell Your Houses Quickly.
The last strategy is selling
properties at lightening speed. Buying a house at the right price
and renovating it properly are two important steps, but to realize a
profit you must be able to get buyers qualified and get to closing
quickly. The faster you pull your money out of a property, the
faster you can reinvest it in additional properties.
Finding a good mortgage broker is
one of the most important aspects of selling your houses quickly.
The mortgage broker I use is the most critical team member I have.
She has thirteen years experience and closes between 25 and 35 deals
every month.
It is very important to find a
top quality loan officer who deals heavily in first-time home
buyers. When you are looking for a mortgage broker, ask them the
following questions: how long have you been a mortgage broker, how
many deals do you close each month, and what kind of mortgages do
you focus on? By asking these questions you will screen out the
people you don’t want on your team and identify those you do.
There is nothing worse than
taking your house off the market for two months and then finding out
the buyers could never have bought it. By pre-screening buyers and
using a quality loan officer, you will totally eliminate this
problem. When I take a house off the market, I know it will close.
Spend a little more money on marketing to attract “A” credit buyers
to help accelerate your house-selling machine.
In conclusion by implementing
these nine basic strategies, you will develop a more profitable and
efficient real estate business. I wish you and your business much
success in the coming years.
| Robyn Thompson owns and
operates Home Buyers, LLC, a real estate investment company
which specializes in purchasing, renovating, and selling
single and multi-family homes in and around Waterbury, CT.
Under Robyn's direction, Home Buyers LLC has grown
phenomenally over the last few years. Robyn purchased 50 homes
in 1998. In 1999, only her fourth year of operation, she will
purchase 52 homes! Robyn cashes out 97% of her houses to "A"
credit buyers in record time. She has made retailing a science
and knows every technique imaginable to reduce rehab time,
minimize holding costs, attract and qualify good credit
buyers, and expedite closings! If you would like to contact
Robyn, you can do so on her web site
www.robynthompson.com.
|
 Robyn's
Buying Machine, Rehab Timeline & Handling Contractors, Marketing
to Attract "A" Credit Buyers and more...
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Retailing for all CA$H Course
By Robyn Thompson
Home Study Courses
By Robyn's definition,
retailing houses is a science which requires not only a broad of
array of knowledge and experience, but also a certain degree of
vision. "When everything is done," says Robyn, "nothing is more
gratifying than transforming an ugly, abandoned property into a
place someone calls 'home'." |
