The Science of Flipping: How This Investor Flips Houses in Just 24 Hours | Jon Steingraber

Host: Justin Colby, Bleav
Guest: Jon Steingraber
Release Date: February 21, 2025
Podcast Description: Real Estate Investing: Full-time Real Estate Investor Justin Colby shares the systems to create the business and lifestyle you always dreamed about as a real estate investor. Flip homes while on vacation, flip homes while sitting on your couch. YOU will discover the systems and techniques to use in your real estate investing business. YOU will also hear from a diverse group of very successful real estate investors from across the country. The Science of Flipping podcast will help you become a millionaire real estate investor.

Introduction of the Guest (00:30 - 01:41)

Justin Colby welcomes Jon Steingraber, a renowned realtor and star of the TV show 24 Hour Flip. Jon owns a brokerage and specializes in flipping properties within a mere 24-hour timeframe. Their camaraderie spans over a decade, having grown together on opposite coasts. The episode sets the stage for an in-depth discussion on Jon’s unique flipping strategies.

Justin: "I have flipped a lot of properties in my career. I have no idea how the hell you are able to do it in 24 hours."

Understanding the 24 Hour Flip Model (01:42 - 05:28)

Jon elaborates on the 24 Hour Flip concept, clarifying that the goal isn’t to literally flip a house within 24 hours but to inspire investors to condense a typical three-month renovation into seven days. This drastic reduction aims to minimize holding costs and stress by ensuring all contractors are on-site and readily accessible to address any issues promptly.

Jon: "The idea is not necessarily to do a flip in 24 hours. It's to inspire people to do a three-month renovation in seven days."

He emphasizes the importance of pre-planning, such as having all materials ready before closing on a property. By doing so, Jon reduces delays caused by waiting for permits or ordering supplies, which traditionally extend renovation timelines.

Identifying and Mitigating Profit Destroyers (02:14 - 07:26)

Jon discusses common profit destroyers in house flipping, highlighting holding costs and over-renovation as primary culprits. He shares his experiences of losing money on projects that involved extensive additions and multi-step permits, which prolonged the renovation period and increased costs.

Jon: "Reducing our holding costs... strategic on what it is that we did for a renovation. The ones that we actually did the quickest were the most profitable."

By focusing on efficient, necessary upgrades rather than extensive remodeling, Jon maintains high-profit margins and minimizes stress.

Pre-Planning and Logistics for Efficiency (09:03 - 19:35)

A significant portion of the discussion centers on meticulous pre-planning. Jon outlines his systematic approach:

1. Detailed Scope of Work: Using tools like Matterport for 3D tours to catalog every task needed.
2. Phase-Based Scheduling: Breaking down renovations into 24 one-hour phases to streamline workflow.
3. On-Site Materials Storage: Investing in a 36-foot trailer to store all necessary materials, ensuring they are readily accessible to avoid delays.

Jon: "We put all of our supplies there... you have all the materials there for the whole job."

He also employs dedicated roles such as a project manager and a runner to handle logistics like fetching supplies, ensuring that contractors remain focused and productive.

Contractor Management and Increasing Efficiency (05:37 - 14:02)

Jon critiques the traditional model of hiring general contractors who often become bottlenecks in the renovation process. Instead, he advocates for hiring project managers who oversee subcontractors directly, allowing multiple tasks to be performed simultaneously. This approach significantly accelerates the renovation timeline.

Jon: "You have the plumber, the electrician, the framer and everybody on site... you get things done."

He also highlights the importance of maintaining a harmonious relationship with contractors, ensuring they are motivated and well-compensated, which in turn enhances their efficiency and reliability.

Financial Strategies: Private vs. Hard Money Lending (21:00 - 31:09)

The conversation shifts to financial strategies, where Jon explains his preference for private capital over hard money lending. Unlike hard money lenders, who require monthly payments regardless of the project's success, private lenders are repaid upon the project's completion, reducing financial strain and risk.

Jon: "If you can do it with private capital, you know, I do it where you invest the money and then you get the money back, plus your interest at the end of the deal when we close."

Justin and Jon discuss the advantages of this model, especially in high-volume flipping scenarios, as it eliminates the burden of continuous debt servicing and allows for greater flexibility and scalability.

Market Strategy and Geographic Focus (23:10 - 36:36)

Jon advises investors to focus on specific geographic areas to gain deep market insights, which enhances decision-making and efficiency. By concentrating on regions like New Jersey, he can better understand local trends, preferences, and regulations, ensuring that renovations align with market demands.

Jon: "I make decisions on what we're going to do in that house based on... what the data is."

He contrasts this with Justin’s approach of operating across multiple states, noting the benefits of specialization versus scalability. Both agree that understanding the local market is crucial for successful flipping.

Adapting to Future Trends in Construction (37:08 - 40:43)

The discussion touches on the future of construction, particularly the impact of technology like 3D printing. While Jon acknowledges these advancements for new construction projects, he emphasizes that existing home renovations will still heavily rely on skilled tradespeople.

Jon: "You still need to build out the internal... the home services industry... it's going to be one of the last things."

Both speakers agree that despite technological disruptions, the demand for skilled labor in renovations remains steadfast, highlighting the enduring importance of effective contractor management.

Closing Remarks and Key Takeaways (40:43 - 41:38)

Jon and Justin conclude the episode by reinforcing the importance of efficiency and strategic planning in house flipping. They encourage listeners to adopt systems that minimize holding costs and streamline operations, ultimately enhancing profitability.

Justin: "If this helped you guys, even with the three points of efficiencies, make sure you share it with some people that need to watch this."

They also promote Jon’s resources and coaching programs, inviting interested investors to explore opportunities to learn from Jon’s proven methodologies.

Key Takeaways

1. Reduce Holding Time: Aim to condense renovations from months to weeks by ensuring all contractors are on-site and materials are pre-arranged.

   “The idea is not necessarily to do a flip in 24 hours. It's to inspire people to do a three-month renovation in seven days.” (00:00)

2. Meticulous Pre-Planning: Develop a detailed scope of work, organize tasks into phases, and maintain on-site storage for materials to prevent delays.

   “We put all of our supplies there and then the U hauls in front of the house, you open it like it's a storage facility.” (19:20)

3. Efficient Contractor Management: Hire project managers instead of general contractors to oversee subcontractors directly, allowing multiple tasks to be performed simultaneously.

   “You get things done. Right. And it’s very unique and the contractors freaking love it.” (09:50)

4. Financial Flexibility: Utilize private capital to avoid the pitfalls of hard money lending, such as mandatory monthly payments, thereby reducing financial risk.

   “If you can do it with private capital, you know, I do it where you invest the money and then you get the money back, plus your interest at the end of the deal when we close.” (30:12)

5. Market Specialization: Focus on specific geographic areas to gain comprehensive market knowledge, enhancing renovation decisions and aligning with local buyer preferences.

   “I make decisions on what we're going to do in that house based on that geographic area.” (23:41)

6. Adapt to Industry Trends: Stay informed about technological advancements and labor market changes to maintain efficiency and profitability in renovations.

   “Home services industry... it's going to be one of the last things.” (40:32)

Connect with Jon Steingraber:
For those interested in learning more or seeking coaching, Jon Steingraber can be reached at flipwithjohn.com.

Final Thoughts

This episode offers a wealth of strategies for real estate investors aiming to maximize efficiency and profitability in house flipping. Jon Steingraber's innovative approach, combined with Justin Colby’s insightful questioning, provides listeners with actionable techniques to revolutionize their flipping business. From reducing renovation timelines and pre-planning logistics to smart financial management and market specialization, this conversation is a treasure trove for both novice and seasoned investors striving to achieve millionaire status in real estate.