New at renovating and the BRRR method?
I provided someone these notes while discussing their business and thought it would be relevant to the group. Just a copy and paste but a good read:
“Investor for 5 years, 5 kids, full time job, 38 units, BRRR before it was cool. When I first started I had very little money and not much more time so I had to do most of the work myself. I drove a 2005 Buick LeSabre and we had a 2012 Dodge Grand Caravan with stow & go that I had to coordinate with the family for big plywood and drywall runs. This van also had a hitch for a 5×10 trailer I bought a few years into the game. There is a whole chapter of my life called “Lowes opens at 6am.” Heres what I learned that could help:
1 – Buy the right tools; dewalt cordless kit that includes the impact driver, drill, multitool, circular saw, sawzall, and grinder. Also buy at least one 2a battery if not a 5a for these big draw tools. Kobalt small sliding miter saw, 10″ table saw, compressor with 16g and 18g nailer. I’m a Lowes guy but swear by HDs Ridgid 9gal shop vac. Its the smallest of the large hose models. You’ll need one.
The Dewalt battery kit allows you to be quick and mobile. The impact will save your life when framing. I’ve used the circular saw to cut wood in the parking lot in order to fit in my vehicles.
2 – Make your lowes/HD run first thing in the mornings. Returns first, then purchases. Have a list that you review the night before so there is no guessing. AND USE MUTHA FN COUPONS every single time. Buy them online. Unless your a vet of course. Say high to everyone and make friends at these stores. They will bend over backwards to help with steep clearance discounts and heads up on promotional events. Also, if you have a desk job, make the big purchases online and have them ready for pickup. I do this whenever I redo a bathroom… supplies are pretty much the same so build the online list and have it ready for pickup the next day. Lowes also has a special deal with $20 local delivery if you make the purchase on their corporate card or LAR accts. However, it been my experience that their delivery times rarely work conveniently to your schedule.
3 – Use the same ceiling, wall, and trim paints for every project. Take the guessing out of this aspect of your business. Lowes offers 20% off paint when using their corporate or LAR card.
4 – Focus on efficiency. Know exactly what you need to do each trip you make to your rehab. Have an 1.5hrs before work? Hang the bathroom drywall. Have an hour at lunch? tape the seams; place a high velocity fan. Have an hour or 2 after work? First coat the seams. Always end your day with drywall mud because it takes the most amount of time to work through.
5 – Form a basic crew. Find some $10hr an hour guys and pay them $12.50hr. You need dudes to fill dumpsters, cleanout basements and attics, and general demo. Even when I was new, I rarely did large scale demo. It was simply a poor use of my time. I hate painting, but we have a lady Barb the painter who shows up with a bottle of water and a pack of smokes and will bang out an entire apartment in 2-3 days. Do not stand still or you will be painted. I pay her $12.50 and she does B+ work.
6 – Streamlining. It wasnt until I was 4 rentals deep that I started hiring carpenters and finishers to help move the process along. Now that I’m where i’m at, I’ve realized that the time between acquisition and leased is the most critical and its rarely worth trying to save a few bucks by doing the work yourself or waiting for the cheaper service guy who wont be available for a few weeks. Just get the project done and get the place leased.
7 – It generally takes 8mo or so after acquisition for the dust to settle on all the finances. This takes into consideration a full tax cycle and repayment of debts or refinancing. Plan for this.
8 – Pay your service folks immediately. Like within the hour of receiving a bill. Especially your painters, demo guys, and folks who usually need the money same day for beers or weed. Scratch theirs and they’ll scratch yours. The circle of life is real here.
9 – Credit card with points. 1 big renovation paid for our flights and car to/from CO this past year. A great perk! We use the Chase Sapphire card but friends of ours have had good success with the Southwest card too.
10 – Find a property management tool to use to help manage leases and collect online rents. I recommend Cozy to screen and collect rent. We use Appfolio now but started with Cozy and would still be using it if it wasnt for the volume we have now. (I own a property management company with 100+ units under management)
Good luck out there! let me know if I can help in any other way!”