My Flipping Journal - Part II

Day -7: PM and I spoke today confirming Wednesday morning is our new sub day. We confirmed who was notified, and who has yet to be called. We also identified that a few more subs are needed for specific tasks. Therefore, I spent the rest of the day researching people, and reaching out to set-up estimates for Wednesday morning.

Day -6: Super busy day today! Made at least 20 calls, trying to get a few more subs lined up, and was actually pretty successful at doing so. We are still looking for a few people, but I think we are off to a great start. Of course I spoke with PM today, and we went over all of the updates. I updated our Master File on Google Docs to reflect the same (note: I update this document multiple times a day). We also heard from our Real Estate Agent that the title is clear (Yes!!!), and we decided the place and time of settlement. The Title Agency called to provide an update on the Good Standing Certificate and the Corporate Tax Lien. Although we are paying in cash, the Good Standing Certificate is a company requirement for financing and cash purchases. However, the Corporate Tax Lien is not needed as we the entity purchasing this proper is in its first year of business, and has yet to file taxes. The Good Standing Certificate is $75, so at least we saved $90 by just asking the Title Agency to confirm that these documents were absolutely necessary.

Day -5: The big day, Sub Day!!!! I am so excited that I started writing this post before the Subs even arrived. So while we are waiting for their arrival, let me just take a moment to talk about how much I love BP! Several months ago, I connected with an individual, from Pennsylvania, on BP. We hit it off, and he asked me for a good floor guy, and I provided him with two contacts. Since then I have asked him for a few recommendations. Not only has he provided them, but he has been very supportive of my business too. To be honest, I was a bit sceptic about the longevity of BP's community willingness to help others. In my personal experience, outside of real estate, I have seen people burned only one time, and it dramatically affect the way they interact with others. I thought it would not be long for some “bad eggs” to ruin it for everyone. However, I am happy to see that is not the case. Lets get back to talking about the Subs. The Subs arrived, and everyone came, except one who called to let us know something came up. PM took each person around the house and talked through what was needed, and requested quotes to be submitted by the following evening. We also discussed what light fixtures were needed, options for the Kitchen and the master bath. There were a few surprises that we missed in the initial walk-through (note: we saw this house about a month before the offer was submitted). It turns out the flooring is engineered hardwood, and not solid hardwood. Fortunately, the engineered hardwood is thick enough to be stained and refinished. It's worth noting that not all contractors who refinish hardwood, refinish engineered hardwood (which proved to be the case for one of our Subs). All of the other items were minor, but we will need to address them.

Day -4: Estimates are coming in! I am not only keeping track of them for this specific job, but also my Master Sub Tracker. What is that you ask? I keep track off all Subs' estimates for each project. At this point you might be thinking I am just anal retentive, however, the reason why I am doing this is for flexibility and scalability. In the short term we may run into a scheduling issue that requires a new sub. In the long term, if we are flipping more than one house, the need might be overlapping. As Warren Buffet once said, “Someone's sitting in the shade today because someone planted a tree a long time ago”. Remember in last post I mentioned we discovered the flooring is engineered hardwood, and not solid? Well it turns out refinish engineered hardwood flooring is a delicate process (read: expensive). The cost of refinishing engineered hardwood flooring is almost the same as ripping it out, and putting in new engineered hardwood flooring! We also learned that painting cabinets is almost the same as replacing with new cabinets! I imagine the higher end floors and cabinets you have, the more it would make sense to refinish vs replace. However, for builder grade materials, the difference is not that great.

Day -3: We have almost all estimates. Things at this point are looking pretty good. On the last call with PM he said a very good quote, “I am not going to get overly excited about how things are going, as in this business things change daily. There are days that are the highest of highs, and others that are the lowest of lows. I do not want to let this affect me this time, and just approach each day with a balanced outlook.” However, with this being a journal to not only reflect on things we can do better, it is also worth noting what we are doing correctly. To date here are the things that are going well: 1) Sub days, 2) Original Estimate Forecast, 3) Building a good team, and 4) Administrative Organization. First, with the Sub Days, we are able to not only identify who we are selecting, but we are able to both lock down the schedule and the budget. This is allowing us to make decisions on whether or not to move forward with any of the items from our “optional list of improvements”. (Side note: We create an absolute must list for each flip, and then an optional list, which we reassess during the renovation after analyzing both the budget and the cost/benefit). 2) The bids that are coming in are all around the original estimate forecast. I don't think I need to explain the obvious benefits of this. 3) The people we brought in for bids are strong. Unlike our last flip where we only had one option for a majority of the tasks, we have multiple options for almost all tasks. 4) With all of the organization we are doing administratively, we are able to be organized at the project. While we are talking about organization, PM suggested for our future Sub Days, we should create a packet to hand each Sub. Included in the packet would be the following: Information about us, the project and our expectations, and information about the needs for their specific task. This is beneficial as the Sub will have all of the information upfront, for efficiency reasons PM could schedule all Subs to come in at the same time and give them the packet and only answer questions as needed. It will also give the Subs a first impression that we are a serious business that expects the same in return. During the call with PM we discussed some of the bids we received and some pending questions we have. We also confirmed that our final walk-through will double as our second and final Sub Day. Even though it is only the day before settlement, we know that every day counts.

Day -2: Today PM and I had a few calls, one of which was 2.5 hours long! We went over submitted estimates, pending estimates, pending questions, the Subs who are coming tomorrow, the materials that we are providing, kitchen configuration, kitchen cabinet color (specifically differentiating between white and bright white - it was particularly entertaining), and we started the schedule. BP talks a lot about the importance of having a good team, specifically bringing together people with different strengths. PM has been self-employed for over 40 years as a General Contractor. Therefore, it's quite obvious that his expertise is invaluable when it comes to flipping. He knows building code, the proper way to do so many different things, and the order in which to do them. He is very good at finding multiple solutions when a problem arrises. He is very easy to get along with and very well liked both in business and personally. So what do I bring to the table, besides excellent journal writing skills? Previously, I worked as a Global Project Manager, and as a Director of Project Managers in one of the world's top pharmaceutical companies. I also have a Masters in Leadership Development, and I am Six Sigma Lean Certified. I am always researching the latest home design trends and glued to HGTV. Despite how well we work together, we sometimes have disagreements. Typically those disagreements center around budget, or scheduling. PM is responsible for actually scheduling the subs, and keeping the project moving, however, at the onset of the project PM and I set the initial schedule together. Our scheduling conflicts center around building in buffers and allowing for flexibility for weather and project unknowns. If you take a moment and step back this makes perfect sense; PM has the experience to know the high probability that weather and unknowns become a factor during renovation. So we always build in some sort of buffer, but it may not always be as much as PM wants, or as little as I want. The most important aspect of our relationship is we work very well together, and if we disagree, it is very easy to move forward.

Day -1: Final walk-through and last Sub day. Walk-through went well, but there were two large items left in the house. Our Real Estate is agent is asking if they can come and take these two items. We had two Subs scheduled today. One showed, and one was a no-show. We have all estimates in, minus the one Sub who came today, but he is sending tonight. With the pending questions, we are going to decide on all Subs tomorrow morning. Tomorrow is closing day! With next week's posting, I will be posting several pictures. So stay tuned!!