Flipping Houses

Renovating Properties: How to Build Efficient Systems Surrounding Your Big Picture

Expertise: Personal Development, Business Management, Real Estate Investing Basics, Landlording & Rental Properties, Personal Finance, Flipping Houses
120 Articles Written
5 Renovation No-No’s When Putting Your House on the Market

Renovating properties is an all-consuming process and can become a nightmare both financially and personally if you aren’t totally dialed in with every part of your business. Our team has been developing the system to grow from a few dozen rehabs a year to well over 150+ for 2018. That volume comes with practice, dedication, failure, clarity, focus, learning, and time. By learning the lessons on both the successes and failures and implementing those things into our business, we have continued to refine what the processes look like. We’re working to change the way we tackle our renovations, our team’s happiness, and our bottom line.

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Big Picture Questions

Whether you’re flipping a few houses a year or scaling your business by any multiple, you need to know the rules of the game and how to score it.

  • What is your buying criteria?
    • Area of the city/town
    • Price point you are buying/selling at
    • Any other determining factors like square feet, beds/baths, neighborhood/schools, etc.
  • What is your expected profit margin?
    • Defining go/no go territory
    • Your cost of money
    • Acceptable profit compared to risk
  • What is your goal for the month/quarter/year?
    • Clear goals set for the number of deals, dollars, or both
    • Funding for X number of deals and the best use of those resources
    • What’s needed to hity our goals
  • What is my exit strategy?
    • Keep property as a rental
    • Sell on MLS
    • Sell off market

Remember, it doesn’t matter how awesome your construction team is if you don’t know what the goal or the score is. Then you have no idea if you are winning or losing. I do realize that the title of this blog has to do with systems, and we are getting there.  What we have realized is building a system around a concrete set of ideas and goals is way easier than trying to hit a moving target.


Related: How to Avoid Renovation Mistakes on Your Rental Properties

Different types of properties will require different kinds of systems.

Define Everything

Once you are clear on the acquisition side of what you are buying, you know what to look for buying. As you are looking, you’ll start to develop an idea of the type of rehabs you are doing. We are in the lower/middle of the average home prices in our market. Within these rehabs, we typically have two different types of renovations. We sell turnkey homes, and we sell fully renovated properties on the MLS. Although similar, there is a distinct difference with the level of finishes and potential complications with colors, tile selections, etc. within the MLS properties versus the turnkey properties.

No matter where you are in your construction right now, take a step back and ask the next question:

Am I clear with what the rehab looks like when I am finished?

  • Colors
  • Flooring
  • Bathrooms
  • Kitchens
  • Lighting/fixtures
  • Exterior landscape
  • Vibe/feel of the home

If not, then what do I need to do to be clear on the project?

I’ve gotten into renovation projects with no idea what the end result will look like, resulting in pain, sleepless nights, and lost money. Looking back, these were a very scary miscalculation. If you don’t know the answer to all those questions for your project, then you have two ways to solve the problem:

  1. You define the project.
    1. Know how detailed you want the outcome to be.
    2. Know how to ensure the conditions for the end result.
    3. Write down everything with a created scope of work.
    4. Review the scope of work with the contractor and sign an agreement defining timeline, cost, and end result.
  2. You get help defining the project. (If you can’t afford this but need the help, you may want to reevaluate your business.)
    1. Designer:
      1. Does this design make sense with the type of house?
      2. What is current within the marketplace?
      3. Do the colors and selections equal the cost and type of property you are selling based on the end result goal?
    2. Contractor:
      1. Are the designer’s information, the type of selections, and the end result review clear?
      2. Are the suggested budget and scope of work communicated? The key is to avoid surprises.
      3. Is there a clear timeline for results?
    3. Architect/Engineer:
      1. Is anything additional needed for the desired design?
      2. Is all the work completed to code, safe, and functional?
    4. Real Estate Agent:
      1. Does pricing for purchase makes sense relative to construction?
      2. Does the construction scope work for desired end price (ARV)?
      3. What’s the best to sell property?

We have nearly all of these folks on our team internally, but we didn’t start that way. There is a long list of mistakes we made buying properties we thought were “good deals” when we hadn’t determined the exit strategy or when the deal wasn’t worth the investment based on the other opportunities in the market.

Related: How to Get a Renovation Loan With Less-Than-Stellar Credit

This process might seem daunting, and at first it is. I am not a great detail person, but I am not responsible for that in my business. We have amazing people in our organization who are responsible for details and specific problems because they are good at what they do, and they are clear on what the goal is.


Final Thoughts

In the first part of this series, I’ve covered thinking of the big picture. This is the goal. I want to flip 10 houses this year. I want to make $20k per rehab. We want to earn X% of a deal per $100k invested. Just because you aren’t flipping dozens of houses doesn’t mean you don’t need these answers. If you start with these questions now, as you scale, not only will you already have those answered, but you will know who you need in what positions to help bring additional people power to your team.

In the next post, I will continue diving into the specifics of reviewing a deal, starting, rehabbing, and completing your renovation projects. This week, take time to write down the areas where you are struggling, need help, or want to grow, and leave those in the comments!

Where are you on your renovation projects? What roadblocks have you run into?

Comment below!

Nathan Brooks is the co-founder and CEO of Bridge Turnkey Investments, a Kansas City-based company renovating and selling more than 100 turnkey properties per year. With over a decade of experience in real estate, Nathan is a seasoned investor with a large personal portfolio and a growing business portfolio. Just last year, through Bridge Turnkey Investments, he helped investors add over $12 million in value to their real estate portfolios. Nathan regularly produces educational content to fuel his passion for helping other people learn about and find success in real estate investing. He has been featured regularly on industry podcasts such as the BiggerPockets Podcast, Active Duty Passive Income Podcast, Freedom Real Estate Investing Podcast, Fearless Pursuit of Freedom Podcast, Titanium Vault, The Real Estate Investing Podcast, The Best Real Estate Investing Advice Ever Show, the Good Success Podcast, FlipNerd, Wholesaling Inc., The Real Estate Investing Profits Master Series, Flipping Junkie Podcast, Flip Empire podcast, Think Realty Radio, and more. He is a sought-after speaker and writer and can be found on stage regularly at events across the country.

    Uriah D. Flipper/Rehabber from Cary, NC
    Replied almost 2 years ago
    Nathan- thanks for the post! Your insite is very true. We have been pumping out 15+ flips for the past several years and cant seem to move past that. This year we have it planned to hit 20, even that small change has made us realize that we must make adjustments to our business to sustain and not go crazy. I look forward to your future posts…. and our bios line up scary close, except church preschool leader and not a coffee addict.
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied almost 2 years ago
    Uriah! You can do it! Pick one thing at a time and dial it in. One by one. Track it. Review it. And make sure its working the way you want. You will be able to get it further than you think! Inch by inch, and mile by mile. Think with the END in mind. And love the bio too, that is awesome!
    Mary B. Real Estate Investor from Lansdowne, Pennsylvania
    Replied almost 2 years ago
    this is right on time. great blog. thanks
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied almost 2 years ago
    You are welcome Mary! Glad it could be helpful for you and wish you the best success (and patience) with whatever you are working on!
    Risha Walden Investor from Millburn, New Jersey
    Replied almost 2 years ago
    Looking to scale and have visions for everything but definitely need to create better systems for tracking and identifying areas to improve and grow. Look forward to reading your continuation.
    Marilou Ancheta from Clovis, California
    Replied almost 2 years ago
    Thank you, this is such a great article. And very helpful. Looking forward to your next one.