How to Efficiently Rehab

[00:00:00] Mike: [00:00:00] Professional real estate investors are different. We’re not afraid to go all in and take educated risks to build stronger businesses and help our families live better lives.

This is the FlipNerd professional real estate investor show. And I’m your host Mike Hambright each week. I host a new episode live and bring you America’s top real estate investors as guests.

Let’s start today’s show.

Hey, everybody. Welcome back to the show. Uh, excited to be here the day with Glen laser, we talked about more efficient rehabbing. He’s rehabbed, a lot of houses. I read it. We have hundreds of houses. You start to learn a few things along the way. Mostly what you learn is what not to do.

Those are some of the best lessons of how to kind of move forward. But that’s what we’re talking about today is more efficient. Rehabbing, Glen, glad to have you on the show.

Glenn: [00:00:46] Thanks for having me. I’m excited to be here.

Mike: [00:00:48] Yeah. Yeah. We made a little joke here. You’re joining us from Venice. So

Glenn: [00:00:52] I kind of wish I can’t do that now, but beautiful city.

Mike: [00:00:57] Yeah. Yeah. So you’re you operate in the Minneapolis [00:01:00] area and, uh, of course. Um, you know, a little different than Venice up there.

Glenn: [00:01:07] Yeah. Yeah. It’s uh, it’ll, it’ll be snowy soon. I actually had to wear a windbreaker a couple of days ago, a little premature, little premature for that, but that’s how it’s gone this year.

A little funny. Yup. Yup.

Mike: [00:01:18] It’s a strange year all around. So it is, um, but excited to share this with everybody today, we’re actually live right now. The, uh, in the FlipNerd a professional real estate investor group. And so we actually, if you’re joining us right now, live glad you’re here. You could, uh, Check some questions down below.

If you’re joining us afterwards, you should join the professional real estate investor group. You just go to, if you go to flipnerd.com/professional, it’ll redirect you to the group and you can request to join. If you’re not already a member, so, and efficient rehabbing, maybe maybe get into cars. I didn’t start off as an efficient rehabber and they’ve been investing for a long time.

So tell us kinda how you got started in real estate investing.

Glenn: [00:01:54] Um, got actually got started. Uh I’m I’m an old timer. I got started 25 years ago, uh, [00:02:00] doing, uh, rental properties. I had a day job and bought a duplex slipped in one side, rented out the other, uh, bought, uh, bought several properties over. Over a, I don’t know, seven, eight year period, something like that.

And then decided to leave my day job and go into real estate full time. I was in real estate agent. I’m a broker now and start doing, start doing some wholesaling type stuff and an agent work. And then. Didn’t like what was happening towards the end of the two thousands. So I actually went back and got a date.

Gotcha. I kept my real estate license in 2012. I decided, okay, I’m ready to kind of jump back in. I took my lumps in the crash years and had some challenges with that. Like anyone who was actually active at that time. Yup. Um, I felt like I was in a good position to get started again in 2012. Got started again, and then full time again, rehabbing [00:03:00] houses ever since.

Mike: [00:03:01] Yeah. That’s awesome. So, so as a rehabber, um, you know, you’ve learned some things along the way, so talk a little bit more about, uh, some, I guess we’re going to kind of get into detail. I don’t want to steal our thunder from it, but just, um, you know, once you start to look back on some of your deals and you realize.

When you read this part, one of the problems that we have as real estate investors is, you know, usually our margins are pretty high and so it covers up a lot of sins. Right. But you start to look and you’re like, Oh, I still made 20 grand, 30 grand 40, or whatever it might be, but you look back and you’re like, yeah, but I could have made another 10 on that if I had just done this.

Right. And you’re like, and I did this many deals this year, and next thing you know, you’re talking about six and seven figures over time. Right. And so it just forces you to like, okay, Let’s get serious about this. Right. So kind of talk about like how you got to that point. Cause I’m sure it was through some, some war wounds.

Uh, they kind of brought that to your attention,

Glenn: [00:03:52] right? Yeah. I mean, I, I got started and I know would. I rehab a couple, two, three a year, and [00:04:00] I’m just kind of a grown since then. Uh, but one of the, one of the big kind of aha moments when I really think back on it was, uh, how much time and energy and everything I wasted on my.

Bunch of early rehabs, just because I didn’t have things well planned. My, my second rehab, I got done with the project. I realized in the envelope with all my receipts, I had 72 receipts personally, not what the contractor bought. 72 receipts personally, from trips to home Depot. Lowe’s Menards sure. Or Williams, all that type of stuff.

Yeah. Why I sit there and think about it. Between going to the store, going to a property either before or after going to the store, I probably spent 150 hours driving around, going to stores, going to the property for, for that single project. Yep. And obviously looking at it that is horribly, horribly inefficient.

[00:05:00] Um, so I look at it that way, going. Yeah, that kind of sucks. I mean, I got better over time incrementally, but just the fact that I didn’t didn’t coordinate anything, didn’t organize anything on the front end. I wasted so much time and, um, and so much money just kind of doing it that way that I look back and kind of just shake my head going.

Wow. I didn’t know a thing about why I was doing right, but like you said, I mean, You’re

Mike: [00:05:34] still making good money. So it’s like, ah,

Glenn: [00:05:36] still, still making money, real problems, Aiden, eight years of an it, the market here. So, I mean, so that covers up a lot. Yeah. But, but yeah, looking back on it, I mean, I think about the last bunch of years and said, I mean, that’s probably by doing things poorly and inefficiently and I’ve probably lost five figures on every property over what [00:06:00] it could have done or could have been if we had done it.

In an organized fashion and properly upfront. So, I mean, I sit here and go, well, I’m only lost a quarter million dollars or so over the last handful of years, it’s like, that’s no big deal.

Mike: [00:06:14] Yeah. I sure like to have that in your pocket, instead of all those receipts. Right.

Glenn: [00:06:17] That would be very, that would, that would be a much better position to be at an absolutely.

Mike: [00:06:21] Yeah. Yeah. And, and then, you know, uh, You know, I used to do that too. Of course you have multiple projects going on. Cause we ramped up really fast when we first started back in Oh eight and we would be. Commonly rehab in five, six, seven houses at a time. And so, like you said, I don’t even go to house anymore.

When I rehab now my contractor, we have a couple of text messages and things are run way more lean. Not everybody operates that way, but at the time I would have this pockets full of receipts or stacks of receipts. I don’t even necessarily know which house they’re from. It’s just isn’t that. So, so I know that you believe this, it all starts with kind of that upfront planning, like just being organized from the beginning.

So talk about that a little bit.

Glenn: [00:06:59] Yeah. I [00:07:00] mean, it’s the biggest thing I’ve really learned here is, I mean, I hired my project manager about 10 months ago. So I mean, I was making these mistakes even in the last year. So I mean been doing it for years. I was still making mistakes cause I was a one man show. I was doing everything in my business and if you get busy and you’re doing everything in your business, you’re doing everything in efficiently.

I mean, you’re not doing any of it to a level that. It necessarily needs to be at, in order to be really effective and efficient and, and successful. So once I brought her on, uh, She got trained. She, uh, and I told her, okay, bring the system back and implement it here. So all of a sudden we started doing complete scopes of work.

I mean, I just, I kind of played around with scopes of work before, but I never had complete scopes work. I didn’t have full material lists. I didn’t put together timelines. I mean, that was [00:08:00] pretty much. Talking to the contractors and they were in charge of things more than I was just because I did not, I didn’t put the plan together upfront to hand to them and actually take charge of the project.

I was just too busy, running around, doing everything to, yeah. Properly plan and manage the project. Yep. Yep.

Mike: [00:08:22] So, so what are some of the things that if you look back now, if folks are living in this right now, they’re like, I, that really resonates with me. Like I’m doing everything myself and I’m not doing any planning.

I’m just going, having a contractor. Give me a bid. If it sounds good, let’s go. So what are, what’s some kind of. I guess kind of high level guidance. You can give people that are flying by the seat of their pants. If they, if you will, with their rehabs of just some easy kind of a ways to kind of tiptoe and get started into this, maybe,

Glenn: [00:08:47] um, the, the biggest thing is to really, really know upfront what you’re going to do.

What is the full scope of work that you’re going to do. And I mean, you may not know, and especially if you’re newer, a newer [00:09:00] investor, you, you may not know completely, like you may know, not knowing exactly what the fits and finishes are on the project that you, that you want to have there, but you can, you can have an idea of, okay, well, we’re painting the ceiling, painting all the walls and we’re painting the trim and not a different color.

You may not know what those colors are, but you at least know what those, what the scope of that is. Right. And just actually spending the time to actually spec that out, scope that out, everything like that is just a huge first step, because one of the mistakes that I’ve made and, and. I mean, a lot of people kind of doing low volume are really new to it.

Have is they go out, they get up on time quotes from contractors. They’re not quoting the same thing you’re sitting there. You have you call 10 and five show up and. Three give you quotes. And [00:10:00] it’s a week before week, week and a half before anyone gives you a quote and the three quotes are all different because the scopes of work are different.

And, and in the meantime you got them out there after you’ve already purchased the property. So you’re sitting on it for two weeks before you even consider any work starting. I mean, that’s, that’s all real waste. That’s all real money. That you wind up losing right upfront. Yeah.

Mike: [00:10:28] That’s the biggest, that’s the biggest opportunity here is the holding cost, right.

Is to kind of eliminate that, right?

Glenn: [00:10:35] Yeah. One of the, one of the little tricks that we use, I mean, I don’t know it’s a trick, but, um, when we’re buying a house, we tell the sellers that we need to get in there. Twice before we close on the property. And we, we don’t, when I walk through a property, I’m the acquisitions guy.

That’s my inspection. I don’t do additional inspections or anything like that. Other people do it different. I don’t, uh, but then I [00:11:00] tell them, I need to come through with my project manager. Once we’re going to take some measurements, we’re going to walk through, we’re going to figure out exactly what. It’s going on.

She puts together the full scope of work. Then she walks through it one more time with contractors, um, making sure we’re all on the same page with everything. So that the day we close, uh, that next day, the dumpsters there were trashing out, were ordering, ordering materials, everything like that. So we have as little downtime as possible.

Just, just one of the things that was really eye opening to me and I’d recommend a lot of people do is we kind of all think we’re a little better than, than we really are. Uh, so I recommend people count on their projects. How many days from the day you buy it? To the day you list it and just really figure out those numbers.

Because when I sat down and looked at that spreadsheet of all my, I mean, almost wanting to cry [00:12:00] cause it’s so long. Yeah. I didn’t realize it until I was really. Monitoring and looking at the athlete tracking, right? Yeah. That becomes

Mike: [00:12:09] one of your KPIs is, you know, a lot of people look at their whole period, but it’s usually from the time you sell it, but that doesn’t always tell you how efficient you are with your rehab.

Sometimes a deal falls through or other things that weren’t really for the rehab part. So yeah, that’s pretty good.

Glenn: [00:12:22] Right. Or even if, or even if you’re getting really good with the rehab portion it’s yeah. How long until you get started. Yeah. And if, and if you’re sitting on it a while until he got started, it doesn’t matter if it’s a day on rehab or a day sitting, waiting to rehab.

It’s a day of hold costs. That’s money out of your pocket that didn’t need to be out of your pocket.

Mike: [00:12:42] Yeah. Yeah, exactly. Exactly. So do you, are there any specific systems you use that you’re using to kind of document and track this or.

Glenn: [00:12:48] Um, we’ve done. We’ve utilize, I used a variety of different systems we’re transitioning right now.

Um, we’re transitioning to, uh, Ari IPM, which [00:13:00] is a Roddys Friday’s rehab system. Um, actually we’ve been kind of, uh, talking to those developer quite a bit, kind of helping to. Build it out, even more based off of kind of some of the functionality that we would really like to see on it. We’re transitioning over to that one.

But prior to that, we were using, um, using a few different things to manage one Assata for all the tasks that we need to do. And my assistant would every new property transition over to the list of here’s everything that we need to do. Yeah, then, uh, then for all our team communication, we do it all through Slack, create a new Slack channel for every property, every property.

So we can track everything in one spot. We’re not wondering, was that call, was it a text? Was it an email? All of our communication about a property is in one channel in Slack. So we can always find you

Mike: [00:13:54] have your contractors using Slack too.

Glenn: [00:13:57] We do not. No, we, we, we [00:14:00] use the tricky part. Our, our goal will be to have them using the, uh, um, using kind of the communication piece of Ari IPM.

Again, we’re, we’re transitioning to that now. Um, but then we also used, uh, At one point we use house flipping spreadsheet. We actually use flipper force, which is made by the same guys who did the house slipping spreadsheet. It’s just online. So we utilize that tool or, uh, kind of managing the project too.

So there’s, I mean, there’s a lot of stuff out there to help you kind of put it together. But the challenge is a lot of people, even if they know they’re supposed to do it, they don’t do it. It’s it’s. Easy to go off and say, all right, I need to go look for the next deal. And you, you negotiated hard, you marketed, well, you got a good deal and you made your money there and then you lose it on the rehab.

You lose it on the whole time or you lose it on actually, uh, [00:15:00] spending too much on the road. Right? Right.

Mike: [00:15:02] Yeah. Those are great tools. We use Slack. I run a few different companies that we use. One of them we have. Gosh, probably 30 some employees. Now everything’s in Slack as much as we possibly can. Like it’s gotta be in there

Glenn: [00:15:13] just because,

Mike: [00:15:14] you know, email is just insane.

It’s a communicator, you lose stuff. And. Um, calls it’s not documented anywhere. So Slack is an amazing tool. Yeah,

Glenn: [00:15:24] it really is. I mean, if, if folks are not using that, I mean, just implementing that will do a lot for someone just implementing that one tool. It’s so powerful to have the communication in one channel rather than spread out everywhere.

Yeah.

Mike: [00:15:41] So as you start to put some systems and processes, this is a place to kind of better manage contractors. Inevitably, there’s some contractors you have that, like, they don’t want to hear that. Right. They’re like, ah, I know what I’m doing. I don’t need that. I don’t need this. And so how do you kind of find contractors that are open minded or how do you transition the ones that you have to say?

Look, we’re trying to get more [00:16:00] efficient here where sometimes efficiency means costing them more money, maybe because you know, they, there’s not as many change orders and stuff that they’re going to hit you up with down the line, but. Uh, I don’t think most contractors look at it that way necessarily.

It’s just, uh, you know, sometimes change is hard and for a contractor type person, it’s maybe especially hard because they do it their way. Usually it,

Glenn: [00:16:22] it, it is a challenge. And I mean, I’ve got some contractors I’ve used for years that once we once were starting to do it in a more regimented manner, Yeah.

It’s a matter of, no, we need to get this done in two months and it used to take three. Yeah. And, um, yeah, and here’s the full scope of work and here’s where our pricing. Uh, but, but the thing is, if, if you’re going to take it seriously, if you’re going to actually treat it like a business and run a rehab company, then.

Change needs to happen. And some folks will come along and play ball [00:17:00] and some will lot. And you just need to be the person in charge of it. If you’re not sure if you’re in charge of the project, you’re not in charge of the project. And if you’re not in charge of the project, that’s not going to end up well for ya.

Yeah. So that’s, that’s the big thing is just being crystal clear on what, what the scope is and everything like that. And especially in dealing with new contractors, you have all that stuff. You have your skew list, you have your timelines, you have your scope of work and you can kind of present it to them and say, here’s what it is.

I mean, how’s this work for you? I mean, does this look reasonable? Does, I mean, are there any challenges with that? Um, it’s a lot. It’s a lot easier to get better pricing that way than just having them walk through and they know full well, you don’t know what you’re sure. I mean, that’s, it’s just the nature of the beast.

Yeah. So, um, so what I mean [00:18:00] with us, with finding contractors, I mean, we. We’re in a bunch of investor, Facebook groups and whatever anyone’s asking. Okay. Do you have someone for this? Do you have a plumber? You have electrician, everything like that. I mean, my project manager, my assistant and I are always in there just trying to, trying to snipe those contracts and say, at least they’ve, at least they’ve worked.

To some degree, possibly with an investor before. So we at least wanted to engage in a conversation with them to see where they’re at, what they’re trying to do and see if there might be a fit. Um, and then the other thing that we really do is anytime I see a property or hear over a property that someone’s rehabbing or has rehabbed.

We checked to see who pulled, permits on those, because yeah, if there’s a plumber who already works with an investor and an established investors, sapling rehabber well, I want to have a conversation with that person because they already know that investors [00:19:00] are not paying top dollar prices. Right.

There’s some degree of. A potential reasonableness in their pricing and expectations and all of that. And if we can show them a really strong, solid process that we have put together for them, they may say, okay, well this will work out well for me, because I don’t have to not know when the job is happening when I’m showing up this, that, or the other thing, it’s pretty certain, there’s always changes and there’s always surprises, but.

They have a good level of certainty if you have it well planned out.

Mike: [00:19:36] Yeah. Yeah. So now that you have a project manager, are you still using a general contractor or is that project manager managing all of the different trades?

Glenn: [00:19:43] We, we are. We are just, I mean, literally right now in the process of forming our own construction company.

Okay. So, I mean, we’re going to have the, we’re going to have the general under. Under a different company of ours [00:20:00] will be the general contractor enabled to pull the building permits. So, so I mean, my investing company will hire that company who will hire all the subs. Yeah.

Mike: [00:20:10] Yeah. Once you get, once you truthfully, that’s mostly what the general contractor is doing is coordinating all the activities and material flow and stuff like that.

Right. So once you get that down, you know, it’s logic and you have a dedicated project manager, it’s kind of that’s that fills that void, right?

Glenn: [00:20:26] Yeah, it makes, it makes everything a lot easier. And I’ve, I’ve gotten to a point now where pretty much I will I’ll walk the property with my project manager. I mean, I walked the property to buy it.

And then I walked the property with my project manager to go off and work through the scope of work and everything like that. Um, I get pictures multiple times a week of where we’re at with things at the project, uh, just through Slack so I can see what’s going on. But then honestly, I, I don’t see the [00:21:00] property.

I don’t go to the property again. Maybe ever, um, I’ll, I’ll typically go just because I’m a broker and I list my own stuff right now. My assistant’s getting licensed and we’ll be listing it soon, but, um, I may go at that point or I might not even go and I’ll just list the property so I don’t have to go.

Right. So. So we’re at a point now where my job is to fill the pipeline. Yep. I mean, once I get something in the pipeline, I can just kind of hand it to my project manager. Who’s, who’s amazing at what she does as just pass it off. Here’s the next one. Here’s the next widget to put on the conveyor belt and you know what we do, you’re, you’ve experienced enough of ’em already with us.

You’ve got a clue of how we’re doing things and. And all of that at some, at some point, hopefully it’ll just be a matter of, I won’t even have to walk through to put together the scope of work. Right. Just because it’s like, you know [00:22:00] how we do this, I don’t need to be there. Right. Um, but we’re not quite there yet.

We will. Yeah. Yeah. That’s great.

Mike: [00:22:07] So in any other tips for people that are trying to get started and get more efficient, trying to move down that path of how do they make that transition early on a lot of stuff we said,

Glenn: [00:22:14] I think we talked about

Mike: [00:22:15] your, it makes a ton of sense. Sometimes people are like, well, what do I, what do I do first?

Like, what’s the first thing I should do. So what do you recommend any other tips or tricks you could share?

Glenn: [00:22:25] I mean, honestly, honestly, the better you organize it on the front end, the better everything is going to go. I mean, I know people. When I’ve, I’ve posed the question in a variety of Facebook groups over the last month or so saying what’s your biggest challenge in the rehabbing business and almost invariably they say tractors.

And the reason I think they say contractors is because when push comes to shove on all the, on all the projects, the contractors are the ones who are in charge. Because you’re not in charge because you [00:23:00] don’t know how to be in charge. Yeah. Um, you haven’t put together the plan, they’ve put together a plan for you.

They’ve put together the timeline, they’ve put together the budget and they’ve put together your scope of work for you so effectively. They’re managing the project and not, you. Yeah, and that’s just going to be more costly, upfront. It’s going to take longer. Um, and variably, there are change orders and, and a change order that costs 10 grand would have cost three grand in the original scope of work.

So it’s really spending the time upfront and. Putting together documentation and the single biggest thing is the scope of work. I mean, you can have the conversation about, okay, what are the timelines and kind of work on your skews. And if you’re, if you’re a newer, you may not even have your list of skews and you may be doing.

Something like I used to do where each project is a little bit different. I didn’t use the same [00:24:00] tile everywhere. The same doors, the same hardware, the same, everything like I do now. Uh, but back then it was what’s on sale. Okay. Where’s where’s the deal here. Where’s the deal there. So you may not know your skews upfront.

Like getting a clear scope of work is number one priority. So you can hand that off to folks and have contractors through and get a number of bids. And they’re all working from the same point. Yeah. They’re not all making up their own thing.

Mike: [00:24:32] Yeah. That’s good. Good stuff. Cause so, well, Glen, if folks wanted to reach out to you or get ahold of you one way or another, what’s, what’s a good way to connect.

Glenn: [00:24:38] Um, well, we’re, uh, Easiest way is probably going to be email. And, um, and with all this stuff, we’re talking about project management, we’re actually launching a company to help folks with. The project up for upfront, upfront planning and organizing part of projects. The website is R E [00:25:00] project management, calm and a weave.

We don’t have the website up yet. It’s, it’s a coming soon page, but, uh, it’s, it’s coming up soon. Uh, but someone can reach me through there. Uh, or my direct email addresses Glenn with two N’s. At R E I project management, calm. Awesome. And honestly, with what we’re doing, I figure the, uh, the, the, the folks who can benefit the most are, are really the folks who do, who are newer, do a smaller volume.

Of houses. If someone’s doing 10 plus houses a year or something like that, they should probably learn to do it, learn to do the whole thing themselves. I mean, it just makes sense because they’re doing that type of volume. Yeah. But someone newer, smaller volume kind of like I was for a whole bunch of years, I look back and wish, um, and wish I had.

Couple hundred thousand dollars more in my pocket from [00:26:00] actually having done that. Right? Yup.

Mike: [00:26:01] Yup. No doubt. Awesome. Well, Glenn, thanks again for joining us. Thanks for sharing some of your insights.

Glenn: [00:26:05] Thank you very much for having me. I’m happy to be here. Glad to be a part of the group. Um, I enjoy the insights I get from being in there.

Mike: [00:26:12] Good. Good. It’ll only get better with time, so awesome. Everybody. Thanks for joining us today on the flip very professional real estate investor show. Again, if you haven’t yet joined our private Facebook group or really broadcast the show in there, and it’s more experienced real estate investors, sharing their stories, tips, and tricks and, and, uh, knowledge and maybe helping each other with, uh, Getting over war wounds and their issues.

I guess we all have some issues, but as you can go to  dot com slash professional, we’ll redirect you to the professional real estate investor network group. In Facebook, you can find access. You can access that seven years of shows able over 1500 shows on flipnerd.com simply by going to flipper.com.

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