30-50 rehabs per year? - Posted by James Morales

Real Estate Investing Office
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Posted by Sean on September 16, 2003 at 12:53:10:

JP, definately sounds fishy to me, unless he’s wholesaling… big difference between wholesaling and rehabbing.

I am not trying to make the case that NO ONE out there is lying… lord knows there are enough lies or half truths out there by “gurus”. My point was that the most I have ever heard so far is in the 50s-60s, and I believe that that is an accomplishable number with an experienced and well groomed machine.

Anyone claiming they are doing 100+ rehabs a year and they are running the whole show… I am going to have to come to his town and watch the guy before I am going to buy it.

The highest claims I have heard personally, and admittedly I am not out there culling for GURU claims, is a woman named Robyn Thompson in CT, who claims about 60 +/- a year now… and in her telling of her story, she did something like 6 or 7 year one twenties I believe year two and I could be wrong but hit 50 in year 3 or 4… and she comes across from what I have seen of her as very credible, and my questioning of old timers about her come back positive as well… or in other words, “she’s for real”.

Anyone claiming they are doing 100 rehabs a year, who is coming out of left field, I am going to be as skeptical as the day is long on them. I definately don’t buy any guy claiming 100 rehabs a year with a staff of 2 sales people and a book keeper bald faced… want to see that one to buy it, because if he is, I want to know HOW he is leveraging his time… because at that level, I am hard pressed to see how its being done.

Don’t get me wrong, there are all sorts of outrageous claims made by these various gurus… and the buyer should be skeptical. And anyone claiming 100 rehabs a year with no staff to speak of… that’s definately something I want to see first hand.

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30-50 rehabs per year? - Posted by James Morales

Posted by James Morales on September 14, 2003 at 01:53:30:

I’ve read about numerous people who claim to do 30, 40, 50 and even up to 100 or more rehabs per month. Obviously this takes quite a bit of coordination, your own full time crew, etc. but my question is … how in the world do these people find so many properties at a price low enough where they can rehab it and make a decent profit? Is it a matter of having a great cookie cutter system in place where they can afford to “only” make 10k per deal? Either way, what kind of marketing would be necessary to find this many properties to rehab? Bandit signs work great, but I just can’t see myself basing my entire business around something that is technically illegal … so I want to get some “legitimate” marketing campaigns going that are “scalable” and practical.

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Re: I know an investor who does 300/yr - Posted by Kathi

Posted by Kathi on September 17, 2003 at 17:08:28:

One of our local investor who’s company does 250-300 properties per year. He generally sells them on land contract. He occasionally speaks at Real Estate Incvestment conferences. However, speaking is not a major source of his income. He frequently speaks for free. He has or had a small business selling tapes through a tape of the month club. But that was a small side venture.

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“Guru” reality check - Posted by William Bronchick

Posted by William Bronchick on September 16, 2003 at 07:57:39:

I’ve heard a few gurus claim to have done 1,000 deals over 10 years - that’s 100/year. That’s 8 per month.

Think about the logistics of dealing with contractors, city inspectors, title companies, banks, employees, phone calls, purchasing materials, coordinating rehab projects, paperwork, dealing real estate agents, sellers, buyers and all of the zillion things that go wrong on a daily basis. Ken posted below about working 70 hours per week to manage 30 deals per year. Heck, I’ve got a full-time attorney in my office who can barely handle the CLOSING on that many deals per year.

Even with a full crew of contractors and a full office staff, it would take you 50 hours per week of your own personal time to manage this operation. At the same time, you are traveling 10 to 15 days per month speaking in other cities.

Credibility check…

Any “guru” who speaks at multiple seminars and says he CURRENTLY does that many deal per year is full of it!

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Re: 30-50 rehabs per year? - Posted by Rob FL

Posted by Rob FL on September 14, 2003 at 19:06:03:

I don’t rehab every property I get my hands on. Many are quick wholesale flips and many are lite (paint & carpet) type rehabs. But if things continue as planned, I will quick-turn about 30 houses this year. Only 2 I’ve bought so far this year have been major rehabs (over 15K is major in my mind). Wholesaling and lite rehabs don’t require big crews.

Read over Jim Kennedy’s 33 Ways to Find Motivated Sellers. Put about 7 or 8 of these methods to work. And in addition, tell everybody that you are looking for good deals. I’ve bought at least 5 houses this year from wholesalers and referrals of other investors. Also, being a Realtor I get to dig through the MLS all day long looking for good deals.

8-10K for a lite rehab and 3-6K for a wholesale flip may not sound like much (low end figures), but do several per month every month, and then compare that to the monthly salary of most executives. It’s alot.

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Re: 30-50 rehabs per year? - Posted by JD

Posted by JD on September 14, 2003 at 17:07:24:

I can only manage 10 rehabs a year at the most. I like to follow every detail, I could not physically or mentally or financially do twenty. I don’t personally know anyone that does anywhere near 40 per year. I am sure that such people exist, but they are few and far between, and they don’t live near me. And they would most likely have partners. I would wager that most of these high volume people that you are ‘reading’ about have partners that they fail to mention. I think part of the answer is geography. There are some markets with a large supply of old, inexpensive housing. It is more practicle in those markets to keep an inventory of houses waiting on deck to keep a full time crew busy. That is not practicle in my market.

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Re: 30-50 rehabs per year? - Posted by Tom-FL

Posted by Tom-FL on September 14, 2003 at 15:49:14:

Well I suppose with adequate capitalization, it wouldn’t be that hard. Even at 50/year, it’s less than 1/week. If the REI had a network of agents and wholesalers feeding properties, and maybe two or three crews or sub-contractors, and listed them as soon as ready. So if you got it down to the point that you only own each house for 4 weeks or so, then you’d only have 4 in the pipeline at any given time.

On the other hand, it’s likely impossible if the REI is house hunting, fixing, and selling FSBO.

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Re: “Guru” reality check - Posted by Sean

Posted by Sean on September 16, 2003 at 09:50:22:

70 hours a week for 30 deals a year??? No way, if they are working that hard for less than 3 deals a month, they need to seriously reorganize their operations.

I admit I have not consistently done 3 per month, but I have done 2 a month and always have at least 2 properties going, and NO WAY do we put in anywhere close to 20 hours a week, I’d say its generally under 10!

I will agree, you can definately spend 70-80 hours a week doing 3, but if you are you really are doing things the hard way in my experience… I know, I was doing them the hard way not that long ago. Took me some time to find reliable professional contractors, and good support staff in other areas as well… but now, my personal time eaten up per house is no more than a few hours per house… I would say 40 total man hours per house would be on the very high end.
Generally I’d say we have 10-20 or less man hours per home of our time.

From acquisition to sale on rehabbing, if you are spending more than a few hours per property I really think your working way too hard. Find the property, this can take various amounts of effort, but once under contract, put lock box on door, call up my money guy, set up the appraisal, give them the lock box code, follow up with money guy and appraisor, call contractor, meet contractor at house, tell them what needs done, get bid (this can happen before closing or after depending on time frame). Show up to sign closing docs. Tell contractor go for it, sign contract, check in on occassion, phone and in person… when near completion, call up agent and put it on the block, stage the house. Follow up with agent to make sure listing is correct etc…

Follow up phone calls probably eat up more time than anything else, and it doesn’t come anywhere near 300+ hours a month.

How does that add up to 70 hours a week for 3 homes a month? I know people who do put in 70-80 hour weeks no doubt about it, but I don’t see how if you have a good operation in place, you should be spending 4.3 weeks * 70 hours per week or 301 hours a month rehabbing 3 homes a month.

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Re: “Guru” reality check - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on September 16, 2003 at 09:20:51:

William Bronchick–(CO)----------------

Be careful Bill. You are starting to sound like Jack Reed. Sensible and right about the BS that is dispensed by some folk.

Good Investing********Ron Starr*************

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Do you pay all cash? - Posted by JP

Posted by JP on September 14, 2003 at 19:49:39:

If you “only” hope to make 8-10k on some deals, are you paying cash or using investor funds, etc. … or are you using hard money and really expecting to make 15k just to net 10k profit? With the points most of these guys charge it seems like it would be difficult to do skinny deals unless you have a LOC, private investors, etc. which would give you an advantage.

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Re: 30-50 rehabs per year? - Posted by ken

Posted by ken on September 14, 2003 at 18:29:06:

I have done 30 a year. Yes some with partners,some on my own. This was before seasoning issues. I worked 70 hours a week had good banks for financing my buyers, a crew of 7 men and a secretary,bought very inexpensive houses with a steady supply of bank owned property.Then i met the processor at one of the banks,and that was the end of 70 hour work weeks.I paid off my house and office building.Everything has slowed down so i am buying rentals to hold for a year. It can be done but everything needs to be a system.

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Re: “Guru” reality check - Posted by Bronchick

Posted by Bronchick on September 16, 2003 at 10:15:29:

I guess I wasn’t clear…

Doing 30-50 deals per year would require 70 hours per week of your time. Doing 100 deals per year would require you to work all day long, all weekend long, with your cell phone glued to your ear. Ask any high-volume ReMax agent!

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Re: Do you pay all cash? - Posted by Rob FL

Posted by Rob FL on September 14, 2003 at 21:24:55:

I’m only interested in net profit. Gross profit means absolutely nothing. You can’t pay your grocery bills with gross only with net.

Shop around hard for money. If you are paying 4 or 5 or 10 points for your money, then you are doing it wrong. I’ve found several money sources that charge 1 or no points. There are alot of people out there with retirement accounts who think the stock market sucks. Also I’ve got credit lines.

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Re: “Guru” reality check - Posted by Sean

Posted by Sean on September 16, 2003 at 11:05:00:

Sorry, I’m still not buying and rehabbing 30 homes a year is a 300+ hour a month job. I agree if I wanted to personally handle showing the houses and take every potential buyers call sure you could easily take 70 hours a week, but I sure as heck ain’t doing that, that’s an agents job, and that’s why they get their commission.

I said if you are spending 70-80 hours a week, for 3 houses a month, you need to reorg your organization. And since you are likening the work to that of an RE Agent, I am assuming you are selling the houses personally… which is a HUGE time drain, and can easily be offloaded to a good agent to do.

If you are playing real estate agent, sure its 70 hour a week job… but if you noticed I sure as heck am not playing RE AGENT. I get a phone call or a fax from the agent we list with when an offer comes in… I don’t physically go show it to everyone interested in it and I don’t answer the calls from potential buyers etc… if you are playing RE Agent, you are indeed going to be in for a 70-80 hour work week… frankly let them take their comission and I will enjoy my time with my family while they are running around doing all that crap.

I call up the agent, sign the listing contract, occassionally follow up to make sure listing is correct, and house is on MLS as it should be as well… That’s their job and I let them do it. They are the ones who have decided to trade their lives for their 6 or 7% or whatever comission… let them earn it.

There is absolutely NO WAY on earth you are going to convince me 3 rehabs a month means you NEED to be spending 70 hours a week working… none. I wholey agree, you can spend that much time, if you choose to, but no way you HAVE to.

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READ what I said - Posted by Bronchick

Posted by Bronchick on September 16, 2003 at 11:28:07:

I didn’t say 3 deals per month will take 70 hours, although a 3 serious rehabs could take 20-30 if you supervise your “goons” like a good investor does.

What I’m saying is there is no way a person can be on top of a real estate acquistion, rehan and flip business that does 10 or even 5 deals a month, and be out of town 10 or 20 days a month speaking at seminars.

AND - USE YOUR REAL NAME IF YOU WANT ME TO RESPOND FROM NOW ON.

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Re: READ what I said - Posted by Sean

Posted by Sean on September 16, 2003 at 11:51:02:

You said, and I quote:

“Doing 30-50 deals per year WOULD REQUIRE 70 HOURS A WEEK OF YOUR TIME. Doing 100 deals per year would require you to work all day long, all weekend long, with your cell phone glued to your ear. Ask any high-volume ReMax agent!”

And I am saying no way 30 deals a year (which is a little under 3 deals a month) needs to be a 300+ hour job… There is no way 3 deals a month is a 70 hour a week job.

I agree that if someone is out there claiming they are doing 10 rehabs a month then yes they are going to need 70-80 hours a week if they are doing all the management themselves… however I don’t know anyone claiming that many rehabs… They may be out there but I haven’t seen them. I know no one claiming 120 rehabs a year… I know some wholesalers claiming those sorts of numbers, but highest rehabber I have seen so far claims around 50ish to 60ish per year… which would put them in the 4-5 a month range… which frankly I believe can be done in a 40-50 hour week if you have a good system set up.

I agree 3 deals a month would roughly be around the 20 hours per week range if you need to overly supervise.
Frankly once I have a good guy in the system, management is usually little more than a status call every day or two and a visit to the site every few days as well. However even with 20 hours a week, for 3, six is only another 20-30 hours on top, which basically puts the number right at the 60-70 per year range, which is the absolute highest I have ever heard claimed by a rehabber. As to training, if you have good staff around you that knows their stuff even much of the oversight can be transfered to day to day manager to where only time you are involved is when major decision needs to be made, which certainly would not limit a person to not being able to do weekend trips or 4 day seminars every few months.

I am not saying their are shysters out there making rediculous claims… but I don’t agree carte blanche that “NO ONE COULD DO THAT”. One man is the CEO of GM, yet GM produces tens if not hundreds of thousands of vehicles a year, an impossible task assuming that one CEO oversees every single cars construction personally…

As for my real name, I am using my real name… if you mean my EMAIL address, sorry, get more than enough spam already, forgive me if I don’t give their harvesters yet another source…

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100+ a year… - Posted by JP

Posted by JP on September 16, 2003 at 12:03:32:

I stopped by a DFW REIN meeting last night just for fun since I was in the area, and there was some guy there speaking named Sam Madrid who claims to do 100+ houses a year in the San Antonio area. Same old same old … they were putting up copies of big fat checks that he supposedly was making … like 5 in one day totally $140,000 or something crazy like that. Of course the purpose of the whole thing was to get you to signup for the $250 seminar this coming Saturday LOL. He’s some new and “upcoming” guru I guess, supposedly he will soon be speaking at the big ticket LeGrande seminars, etc. etc. Anyway, he said he has 1 “girl” who does his bookeeping, and 2 “sales guys” that handle selling the houses, and the rest he does himself. He bragged about taking 7 or 8 vacations per year and definitely didn’t make it sound like he’s working 80 hours a week LOL.