How This Investor Flips Houses in Just 24 Hours | Jon Steingraber

Summary

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.

Transcript

[A]

You know, 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.

[B]

That's right.

[A]

I just, you know, reduce your holding time, reduce the amount of stress. And not for nothing, but when you have the plumber, the electrician, the framer and everybody on site on your property, what happens if you have an issue? You're like, hey, you call him. He's in the other room. You're just like, hey, come over here.

[B]

Yeah.

[A]

You're not scheduling him. Yeah, getting them here the next day before the. That guy can move on to his piece of the work.

[B]

Right.

[A]

You get things done.

[B]

What is up? The science flipping family. I am back with an impressive guest. I've actually known this gentleman for well over a decade. He and I kind of grew in the trenches together. He on the east coast, me on the west coast. But this man is a TV star. He is the star of 24 Hour Flip and is an impressive realtor, owns a brokerage and flips properties in 24 hours. John Steingraber is here. What is up, dude?

[A]

What's up, man? Thanks. You're more famous than I am, even though I have a TV show.

[B]

I don't know about all that, dude. You're on Netflix and Hulu. I mean, you're all A and E. You're all over the place. Right? So glad to be on, man. I'm excited because 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. Now, let me just ask a quick thing, like are we talking about you buy it, you paint it, you list it?

[A]

Nope. I mean, it's all documented. It's on A, E, Hulu, YouTube. You guys can check out the episodes. We do full kitchens, we do bathrooms, we do flooring, we paint the exterior, we do roofs, we do windows. We're talking about 24 hours in 24 hours.

[B]

Yeah.

[A]

And. Well, you know, we'll get into why we. We kind of came up with this idea and this business model and how other people can do it. That's why I'm here. I just want to share, you know, kind of reprogram reset people. Totally. We've been kind of taught that it takes three months, four months, six months. And that's not reality.

[B]

So why isn't that reality? As someone that. That basically I adjust for somewhere between four to six months. Yeah. For my underwriting, hard money. So I want to make sure my economics are all Right. Why? That's the reality, Right. It is not obvious is what you're telling me.

[A]

But yeah, I mean, profit destroyers, you have to look at your profit destroyers, right. One of them is holding costs, another one is, you know, over renovating.

[B]

Right.

[A]

So those are two out of the five that I kind of focus on. And you know, I lost money on two big flips where we were doing these huge additions. They were taking forever. You know, multi step permits. Right. Some permits have three or four stages and I looked back at my track record and my history and I said, okay, you know, which are the ones that I've made the most amount of profit, most margin on and were the least stressful and it was the ones that we actually did the quickest. Right. You know, reducing our holding costs. But then also that we were very strategic on what it is that we did for a renovation. Right. There wasn't that, you know, we weren't doing additions. Those are the ones that I've lost money on.

[B]

Yeah.

[A]

So some people are very successful with those. But you know, that's how we came up with this 24 hour flip business model. And you don't have to, you know, go nuts renovating an entire house and knocking down walls and you know, the kitchen's not perfectly placed, the sink is here, it could be over there. All those things are going to add to, you know, the inefficiencies of a project. And most people, the way that they actually do a flip is, you know, they, they get an offer accepted, they go through due diligence, they close on the property, you know, then they go inside the house and they go, okay, you know, let's hire the architect.

[B]

Right, right.

[A]

And he takes two or three weeks. Right. And then, you know, once you have the plans, then you're, you know, having your contractors bid it out, you know, then by the time you actually hire the contractors and have them sign and seal the permits, you submit it to the town, that's another three weeks. Right. Just for them, at least In Jersey it's 21 days by law that they have to get back to you with permits.

[B]

Right.

[A]

That's if they don't want to change. And then before you know it, you're not even starting the job, you know, two and a half to three months out.

[B]

So what? So one of the bigger inefficiencies, what you're saying, and I tend to agree, is like speed of being ready to start 100. Right. Whether it's again, I think in my world I don't do a Lot in the northeast and they're older homes in my own issue. But like the minimum, have your general contractor, who's going to run the project already have walked it, understand what's about to happen. So the day you fund, they can start moving. Yeah.

[A]

So once. So you get a house under contract, what you should do. This is what we do. You get a house under contractor, pass contingencies.

[B]

Right.

[A]

Title's clear. You know you're closing on this damn house. Right. I've never had past due diligence, and I'm never past due diligence. And title is clear. And I don't close.

[B]

Right, Right.

[A]

So I still typically have three or four weeks to close because people don't move out right away. Right. So I schedule my closings typically 45 to 60 days out. So I still have 30 days. So in those 30 days, I put a clause in my contract when I buy it that you're going to allow me access to the property with 24 hours notice for my architects, for my contractors, etc. So we go in there, we start measuring everything. We start, you know, doing a detailed scope of work all the way down to the doorstops, behind the doors.

[B]

Right.

[A]

And we purchase all the materials before we even, you know, close on the house. I'm ordering windows way ahead of time. It takes four or five, six weeks sometimes for Windows. Right. So 100% being ready to rock and roll when you actually close on that property is going to reduce your holding costs significantly. But construction, if you really think about it, there, there is a sequence of construction.

[B]

Right.

[A]

You got a frame before you, you know, put up sheetrock.

[B]

Yeah, Right.

[A]

But there's a lot of things that are also able to be done simultaneously on a property.

[B]

Sure.

[A]

And you see that on the show.

[B]

Right.

[A]

If you're taking down a fence and you're doing the roof and you're painting inside and the plumber is doing his rough and the electricians doing, you know, replacing outlets, they can all be doing that at the same time. Yeah, but that's not how investors work. Right. Investors hire Monday, Tuesday, I'll be done Thursday, and then he comes by himself or maybe with one guy. And construction all comes down to planning. And it also comes down to man hours. Right. And what a lot of people don't realize is that, you know, multiple things could be getting done at the same time. And if you ask the contractor to bring more guys, for example, a painter, instead of having two guys painting, you have ten guys painting. Right. You can get it done faster. It's just on how you plan and how you set it all up.

[B]

Yeah. And then you just. So I would assume if a painter brought 10 guys, he going to be more expensive because he's got to pay all 10 guys now.

[A]

Well, not necessarily. Because if he had two guys, they would just be there longer.

[B]

That's right. Okay, so.

[A]

And he would be paying those guys over five days.

[B]

Right.

[A]

Which is 10 days.

[B]

I'm even thinking about a property that we're in the middle of rehab. Flip. In San Antonio, which has been frustrating me because it's taking too long. And I'm thinking about why it's taking too long as you are talking and I'm like, oh my God, he's hitting it on the head. What the general contractor did is he just started going wide and kind of starting everything, but nothing's really like when you even walk in. Yeah. Like he's kind of just getting everything going and you're like, God, that's a 45 day burn. Which cost me, I think on that property with $22 a day. Yeah. We're at $2200 for that a month. So times another half. So we're. We're just shy of four grand. Yeah. Because he kind of got everything started and his point is, okay, now we're ready to go. And I'm like, brother, I don't know if that was efficient.

[A]

And it's all percentage of profit. Right. If you're making a 200, 000 profit, it's different than if you're making a $50,000.

[B]

No, it's a 50, 000 is 150, 000 home in San Antonio. We're not. This is not so.

[A]

Yeah. I mean if you lose $5,000 in holding costs, 10% of your profit.

[B]

100. Yeah.

[A]

Yeah. I mean it all comes down to pre planning, purchasing. And you know, I don't hire general contractors. I hire a project manager. I typically pay them a percentage of the profit and. Or I do a flat fee.

[B]

Okay.

[A]

Okay. So the project manager is hiring directly the subs, they're organizing everything and I'm doing it with them. And then, you know, but we're choosing everything ahead of time. I think one of the most important things is people get caught up in. I want this to be in a magazine, you know, and I'm dramatic, but like they just want it to be the best thing. It's not necessarily what's the best for profit. It's. It's what's going to look the best on Instagram.

[B]

I think that is such a big thing is people need to think about profit first. Right. And no pun to the book, but like you need to figure out what is going to be the best way to get the most amount of profit out of this home. Some homes you can make an art, you got to go for it. If you want to get the most profit, then you got to go all the way. Most homes, like 85% of the homes, that is not the case. Right. You might have 15 of that market share that you say, I got to go to the ball, to the wall on this one. Yeah. 85% of the time that is not the case.

[A]

You buy a house that need, that has mold all over it, you have to gut it to the studs.

[B]

That's right.

[A]

I mean, you're not going to provide an unsafe property.

[B]

Right.

[A]

For somebody. So not every property will qualify for the 24 hour flip business model. And to clarify, it's two 12 hour days. Right. So the first 24 hour flip that I did was literally 24 hours. And that's, you know, stupid. Yeah, that was, that was.

[B]

I'm glad you said that.

[A]

I mean, we almost, we almost died that day.

[B]

Yeah.

[A]

And it was horrible. So we just do it in two 12 hour days. Can you do it in three eight hour days? Yeah. You know, 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.

[B]

That's right.

[A]

I just, you know, reduce your holding time, reduce the amount of stress. And not for nothing, but when you have the plumber, the electrician, the framer and everybody on site on your property, what happens if you have an issue? You're like, hey, you call him. He's in the other room. You're just like, hey, come over here.

[B]

Yeah.

[A]

You're not scheduling him.

[B]

Yeah.

[A]

Getting them here the next day before the, that guy can move on to his piece of the work.

[B]

Right.

[A]

You get things done. Right. And it's, it's very unique and the contractors freaking love it. Justin.

[B]

Oh, of course.

[A]

They're in and out and they get paid well.

[B]

And a lot of times they blame each other. Right. Like, oh, I gotta wait for the electrician before I can go for the roughs and whatever else. Right. And you just. So I want to kind of maybe highlight like you don't use general contractors. Okay. You do profit share. How does that work?

[A]

So, you know, I always, a lot of people ask me because, you know, I do have a coaching program for New Jersey students. Only, by the way.

[B]

So if you're in Jersey, maybe even New York or only Jersey.

[A]

No, just Jersey.

[B]

Jersey. If you're in Jersey watching or listening to this, I want you to reach out to John. Where can they go to learn more, to connect with you?

[A]

They could go to flipwithjohn.com with J.

[B]

O N with John. J O N.com if you're in Jersey. He can help you. He can get you there whether you do 24 hour flips or at least become more efficient.

[A]

Yeah.

[B]

So make sure you go there, make sure you follow them.

[A]

Yeah. So I always tell my students when they go, well, how do you do it and what do you pay people? Well, it depends on how many deals you're doing. If you're doing one deal a year, you're going to probably pay a project manager a higher percentage of the profit. If you're doing 10 or 10, 10 or 15 flips a year, then you could do a smaller percentage of the profit. Okay. What I've done recently is just pay a flat fee. Right. So they're actually getting paid to do that job and it depends on the scope of that job. So it'll be anywhere between like 10 to $20,000 flat fee. But then they're managing all the subs and doing all that. Right.

[B]

And is that a percentage of the profit essentially in your own. So you.

[A]

Yeah. I mean, if you're making 100 grand and you're paying them 15, then you're paying them 15, right?

[B]

That's right, yeah. And so I go flat fee, typically based. And it's a 10% typically.

[A]

Now I know center profit.

[B]

Yeah. Okay, so. Well, no 10% of rehab budget. Meaning. So if I do a $50,000 flip, I'm going to give you five to go run that project. Now you need to find the subs, hire the subs, get the lean waivers. I mean, you're running a to Z project. Right. But my model is a lot more on scale than I think yours is. Right. Like we want to try to acquire one to two properties a week. Right. And so we're running at a volume. We're also not localized to one city. I'm not saying you're right or I'm right or you're wrong. What? I'm just saying my model slightly different. And so let's talk about maybe what are three ways as a listener listening to us right now, like what would be the three things that you can say to create efficiencies? We've mentioned some of them. Right. Making sure Pre planning. Right, pre planning. So what does that even look like in terms of pre planning? Like what needs to be pre planned? Is it literally on paperwork? Are you. What does that look like?

[A]

So number one is having the most detailed scope of work you possibly can, and that includes pictures and videos, right? So I do a matterport of the before, and I'll literally sit in my house for a few hours going through the whole entire matterport. And for those of you that don't know matterports, just like a, you know, 3D tour of the property. And I will write down every single little thing that needs to be done. Okay. Everything by room and by trade. I, you know, I categorize it. Then step two is going to, I do 24 phases. Each phase is one hour. So I go, okay, what's going to be done in phase one? Right. Demo cleanup. You know, depending on what you're doing, we're taking down the fence, we're throwing this out. Everything. If you have a flagpole that's rusted, we're taking that out. You take that down, right? That's in this phase one scope or phase two, right. And you just, and then you put who is assigned to that, what trade, Plumber, electrician, H vac, demo, etc, right? And you might have like I hire people just to clean the house the whole time.

[B]

Yeah, they're just cleaning, going around the whole time.

[A]

Yeah, they're just cleaning, cleaning, cleaning. I have one person that's going, hydrating everybody, giving them water, right? And you know, it's a little bit different than your normal job. We get, you know, we get food for everybody. We have a runner to Home Depot or Lowe's or, you know, whatever.

[B]

All day running back and forth. Oh, I need this. I need this.

[A]

He walks around waiting in their van. They're going, you know, they're waiting in the Home Depot parking lot and hey, I need this. And then they go in and then they come to the house. Wow.

[B]

Right?

[A]

So I mean, it's simple. It's simple, simple pre planning stuff. And of course you're gonna, you're gonna plan everything out from lunch, right?

[B]

Like what time is, are we feeding them?

[A]

Who's having lunch? Etc. We typically take a break, everybody. And we have a line. People just line up. I don't know if they show that on, on the, on the episodes. I haven't seen them all, so.

[B]

24 hour flip, guys. This is so cool. Like, I've done a lot of flips, man, so I would tell you, go watch it on Hulu yeah, YouTube. Every, every place you possibly can a E is, is the TV station. So. Yeah. All right. So now the other, the other thing.

[A]

That I want to, you know, before I forget. So a lot of people make the mistake in the, in, in the decision making phase.

[B]

Yeah.

[A]

Right. They're like, you know, my wife will go into a house, no joke, and she'll be like, knock down this wall, knock down that wall. And I'm like, no, we're not knocking down walls because that's going to require, you know, fixing the floors, getting permits, waiting for them to come and take a look at, you know, that we did it and then you can proceed. You can't do that. If you're going to do a really quick flip.

[B]

Sure.

[A]

You just can't. Right. And, and I'm not saying that, you know, you don't get permits. You get permits on things that are, you know, one step permits. But if there's things that are multi step permits where it's like I have to do framing, then insulation, you know, then finish the finish doesn't matter. But the first two are stopping you from moving forward in your sequence.

[B]

Right.

[A]

So they're, you're literally just waiting.

[B]

Yeah.

[A]

And you're wasting money and wasting time. So a lot of times, you know, even though the sink would be better off over here, you know, within three feet, I can move it, you know, and I don't, it doesn't require a permit.

[B]

Right.

[A]

So I'm not going to move it over there.

[B]

Yeah.

[A]

I'm just going to figure it out. And not every house qualifies for this. Some are just functionally obsolete. And you do need to make changes.

[B]

Yeah.

[A]

You know, but you know, for example, a lot of times before I used to knock down the wall between two bedrooms in a four bedroom house and make it a three bedroom and put a master bath and a walk in closet. I don't do that anymore. Yeah, yeah, I don't. I just, I go, no, I'm going to get in and I'm going to get out. And not for nothing, but people count your money.

[B]

Yeah.

[A]

So when I get in and I get out and typically I'm on the market within seven days of buying it. Wow. So I'm on the market within seven days in New Jersey. I don't know how it works in other states, but it takes about six weeks typically to, for the price to show up what you bought it for.

[B]

Okay.

[A]

So when I'm on the market, nobody knows what I bought it for.

[B]

That's right.

[A]

If I renovate a house over two months, three months, and then I put on the market. They're like, well, you just bought this house for 500, right. And now you're asking 800.

[B]

Right.

[A]

It's like, yeah, but when I bought it, it was, you know, they're counting your money.

[B]

That's right.

[A]

I could have inherited it for a dollar. Who gives a shit? Yeah, yeah, but they care about what you bought it.

[B]

Yeah, well, I don't want them to make that much money. So I'm exactly, you know, I'm going to give them a low offer.

[A]

Exactly. So it avoids that. Okay. It avoids that whole, you know, oh, well, he bought it for this. You know, it's. It's renovated. And a lot of people ask me, well, what about permits? Yeah, well, in New Jersey, I don't know how it works in your state. You can, you can look it up per municipality, whatever. Direct replacement is allowed, right? No permits. I can take all the cabinets down, put new cabinets in and countertops and everything, have brand new kitchen, new appliances, everything. And it doesn't require permits.

[B]

I don't know any state that I'm in that would require that for direct replacement.

[A]

Same thing with bathrooms, vanities here. Okay. I'm not adding. I'm not changing it. I'm not putting the vanity on this wall. I'm putting it over here. No, I'm leaving it there.

[B]

Yeah.

[A]

Direct replacement toilet. Direct replacement, everything. Direct replacement. And you know, if it's a water heater, you got to get a permit. But that's one step permit. Yeah, you can put in the permit for that. Replace a water heater, get the guy to come out. It doesn't stop you from doing anything. Right. Roofing, windows, siding. Doesn't require permits.

[B]

That's right.

[A]

Unless you're doing the sheathing on the roof. You know, then it's emergency work and you could get the guy out there. But you just have to understand the rules of the game. Right? We're playing a game.

[B]

Yeah.

[A]

So the better you know the rules, the more that you could take advantage of how it works. And then you have to be smart enough to say and disciplined enough to say, all right, I'm not going to knock down that wall.

[B]

Right.

[A]

Even though open layout concepts, the thing you know, I'm not going to do that because I want to make money. And guess what? I've never not sold the house because I didn't knock down that wall. No, it sells. You just have to price it accordingly and purchase.

[B]

I was just going to say, so you adjust for the price. Right. So you create an open layout. You create the modern look that people want. You might get your 800, but if you're not going to, you're going to leave the wall up. You just replace what's already there, make it new, go white cabinets or whatever, you know. Yeah. You might sell for 749.

[A]

Yeah.

[B]

I mean that a 799 or you.

[A]

Might sell for, you know, a ten thousand dollar difference.

[B]

Okay.

[A]

I mean it's a lot of times it really doesn't make that big of a difference. It's more a matter of there's inventory. Wow. There's a renovated home. How many houses in your area are actually renovated? And you know, they're not at the top of the market priced. Well, that's what we do. We have a renovated home that's not at the top of the market. And that's what people love. People love that. Because there's not a lot of inventory out there.

[B]

No, that's not your area.

[A]

Right?

[B]

Yeah, there's not a lot of inventory in any market.

[A]

Yeah.

[B]

Right. And for you to be able to provide a like new property, maybe it doesn't have all the bells and whistles, but it's like new, it's renovated, they have the updates they want. I really believe. I'm literally thinking about we just bought a home in Georgia. Right. That I, I'm like, man, do we change kind of our game plan? Game plan on that. You're making me think as I'm sitting here, this is, this is fun. Okay, so first is the planning phase. Like make sure you have an actual plan. What would be the next thing someone can take away from this episode of like if I'm trying to speed up and create more efficiencies.

[A]

Speed up. So logistics. Right. So we bought a 36 foot trailer. You know, if you're in the business, it's not a bad idea to do this. And we put all of our supplies there. Now look, I didn't have a 36 foot trailer when I first started doing 24 hour flips. I rented a 24 foot U haul.

[B]

Okay.

[A]

Right. So we would literally put everything there and then the U hauls in front of the house, you open it like it's a storage facility. You can even do a pod. Yeah, right. And you have all the materials there for the whole job. So you have an inventory list.

[B]

Smart.

[A]

Right. And you have everything there and you, you have some extras of stuff.

[B]

Right? Yeah. Right.

[A]

So just so you're not constantly running back and forth, you're always going to have to go to the supply house store. That's why we have our runner. You know. But the idea is that you think through everything, right. And you plan it and then when you're, a lot of people are waiting on material. So, you know, if I know that my windows are five weeks out, I'm going to order them before I, you know, when I know I'm going to buy the house, I'm going to order it ahead of time. A lot of times people tend to close on a property and then they're ordering stuff and then they find out.

[B]

95% of people are this, you know.

[A]

This specific cabinet is six weeks out. It's like, okay, but what is the, what is the cost of that whole time? And market risk? Because it's not just the holding costs. You know, interest rates go up, things change. Right. If, if some sort of, you know, global event happened, it's going to affect you negatively.

[B]

Yeah.

[A]

And you're putting yourself at risk.

[B]

Well, so one of the things I believe and tell me, you know, you're a coach in Jersey and I coach across the nation, but I think part of the reason why that happens is raising the capital to go buy the materials and pre order and do down payments of things of that nature. Now I'm guessing some of that's the cheapest.

[A]

Right. You could get a Home Depot line of credit. You can, you can put stuff on your credit card. You have a 28 day grace period.

[B]

Yeah.

[A]

If you're a new business owner, you can get a 0% credit card for 12 months.

[B]

I mean, I agree with you. Right.

[A]

That's the least, that's the materials are the least of your, of your capital raise.

[B]

Right? Yeah. Is most mostly through the work and labor component, plus debt servicing. Right. So again, if you have a $50,000 rehab, you're probably going into it with 15 grand of materials.

[A]

Yeah, 15 or 20 grand. Yeah.

[B]

Right. And so, but I think that's a mindset shift that I think people need to understand. Hear you again. Rewind. What we're just talking about is I believe most people don't do what you're doing because the outlay of money out of the gate. Right. It's going to take me five weeks to get the product I need to spend it. Now I don't see anything for five weeks. But it's the same thing when you buy the home, you're gonna have to wait five weeks. So now you're spending more money by closing on the home.

[A]

Right.

[B]

You're still waiting five weeks. It's just inefficient.

[A]

Yeah. And our margin. Here's the thing. If you divide your after renovation value by your profit, you know, when I do my numbers, when I buy a house, it's a minimum of 10%. You know, if I'm gonna resell a house for 800 grand, I need to make a minimum of $80,000.

[B]

That's right.

[A]

Because God forbid anything were to happen. Right. You know, and you might go over on construction a little bit, the market might shift a little.

[B]

You might go over. It's almost always in my world.

[A]

Yeah. I mean, it depends.

[B]

I account for a 5%. Like the, the contractor didn't see the thing.

[A]

Yeah.

[B]

Or the thing broke or whatever.

[A]

Or you add something or you change something because you're like, oh, I'm gonna get a good ROI on this.

[B]

That's right.

[A]

Right. So you're gonna do it.

[B]

You know. So what would be one third? So logistics. I really love that. I really love having, whether it's a U Haul or you have a trailer or whatever parked in front of the home with the materials in it. A question before I get to the third thing, that maybe they could have a takeaway, but maybe this might be one. Do you house because you rehab in one specific city? Do you has house like five properties worth of flooring? And if everything is cookie cutter everything, you're, you're an open door version. Everything's the same.

[A]

No, it's not. And I don't, I don't renovate just in one city, you know, it's one state, you know, but a few different counties. And you know, New Jersey is the most densely populated state in the country and it's very different from town to town. Right. So the way that I make decisions on stuff is not necessarily systematic.

[B]

Yeah.

[A]

It's what has sold in that geographic area over asking price. And, you know, what is the trend in that area? What do people want in that geographic area? And then I make my decisions by just looking at what the data is.

[B]

Yeah.

[A]

And then I make the decisions on what we're going to do in that house based on that. So I don't go and buy, you know, 20 toilets, even though most of the time I use the same toilets. I don't do that and warehouse it because the discount that I'm getting, you know, for that is, first of all, there's logistics, there's headaches, there's stress, this breaks that you're past the refund period, etc. It's not worth it. Right. And then the cost of warehousing it. Yeah, it's, you know, makes no sense. The only thing that I've done a little bit is I'll buy like five appliance packages or something on the 4th of July sale. So it was like a really good sale. And I'm like, all right, I'm saving 10 grand if I do this and then Home Depot store it for me for three months and within three months, I'll do it.

[B]

That's a huge takeaway.

[A]

Yes. So, you know, things, little things like that. But I don't. I don't store everything or buy anything from China or, you know, import it. I don't do that.

[B]

So you're trying to skimp, per se. What you are trying to do is create efficiencies. I mean, this is in a. This isn't a TV show or a strategy of like, here's how you can skimp and still profit. This is like, here's how you become efficient and still profit. And profit more, most likely, because think about your holding costs. You go and flip for in a seven days turn, right? Let's just say it took you seven days to put it on the market. Right. Takes you 45 days, 60 days to close. The end buyer, if you find a good property. Right. You just cut out three to six months of what I would underwrite towards of holding costs and market risk and market risk and volatility and whatever, you know, interest rates and all this other stuff. Like, it is so much smarter. So I think the third takeaway, which I really liked, what you were just mentioning, really comes down to being able to understand the value of the materials and to be able to pre plan around the materials. Yeah, I like that. Right. Is to just understand the market. Know what county does what type of remodel, what are the color schemes that are popular. What's moving? Understanding the market creates efficiency to, you know, I can go after this type of material. Yeah, we can move faster. Let's go.

[A]

And the reason why I have a project manager not, you know, just do subs or not just do a GC is because we all have to understand that contractors are inefficient. So by actually having all the materials, you're making them more efficient because they typically will send a guide or two to like help to Home Depot for hours out of the day, multiple times.

[B]

Right.

[A]

Just think about how much is lost during that.

[B]

That's right.

[A]

Right. So and over and over again, compounded over the job. And you're paying for that, that's right. You know, even if you're not paying people per day, you're still paying for that.

[B]

For debt, hard money cost. I mean, I think people don't estimate how much. I mean, they understand the number, what the monthly number is, but like how much they would be savings, saving, everything adds up.

[A]

And you have to reduce your profit destroyers. Like my business model is a little bit different than yours. And you know, my goal is to do 10 to 15 flips that net a hundred thousand dollars or more per year or per deal.

[B]

Yeah, right.

[A]

So if I can do, I'd rather do one $100,000 profit deal than three $35,000 deals.

[B]

That's right.

[A]

You know, it's just an efficiency thing. Right. And I go after more affluent areas. Why? Because less people are marketing to those areas. Because most people are buying in the lower priced areas. So I have less competition. I buy in the higher end areas. And private lenders, which is what I use, like to invest in high end areas because they're like, oh, I know that town, that's a great town. I'm like, yeah. And they're like, yeah, let's go.

[B]

Yeah, right.

[A]

It's just all around, it's different. So you have to decide on your business model, on how you want to do it. And I don't leverage the fact that I'm on a show and all that stuff. And that's why people lend me money. I've been borrowing private capital since 2007. Yeah, right. When I was 21 years old. So anybody can do it. And if you need to start out with a hard money lender, putting 10 down and taking the construction draws, whatever, you get a couple deals under your belt. But if you show that this, this level of efficiency, even if it's a 30 day Renault, that's better than what most people are doing.

[B]

That's right.

[A]

And the model makes more sense.

[B]

I think there's a takeaway. So my model, we just do separate things. And I'm not saying one's right or one's wrong. I try to stick under 300,000. The reason being is I like the idea in the concept that if something does go wrong and there is volunteer, I can rent it.

[A]

I always had that same concept too. And then, you know, I, you know, when inflation started getting crazy, this is just my, my opinion. Sure. Affluent people are less affected by inflation. There's no doubt, you know, and people that are in the 2, 3, $400,000 range and in New Jersey, that, that looks like a 500, $600,000 range because the prices are so high.

[B]

Yeah.

[A]

At least in my area of New Jersey, they're a lot more affected by inflation, so. And the interest rates being at 7%, which they are right now. Right. So that was always, you know, the idea. Because I don't see a slowdown in the $1.5 million, $1.2 million, $2 million homes.

[B]

No, because you and I and the people that can afford it, can afford it. And we say, okay, so the interest rates at 6.75 is not ideal, but not the worst.

[A]

Yeah. Most people are buying cash.

[B]

Right. And I was going to say I put more down. So that way.

[A]

Right. 50% down or something like that. Yeah. So, you know, and look, they all work. You can, it's not, you know, this is the only way to do it. There's a million ways to make money. It's just, what do you want, what are you excited about and what's your skill set?

[B]

Right. You and I are. I'm 18 years into this and I think you're about the same. Right. We started the same trajectory. Think we met in San Diego in 2007. Right. Like, it's been a long time. We know each other, so.

[A]

Yeah.

[B]

But most people listening to this are not us. And so that's where the people need to decide. What do you want your business to look like? Right. Like, start with the end of mind. Do you want to become a John or, or Justin or vice versa.

[A]

Yeah.

[B]

Well, for them, they're going to have to learn how to raise money. You do 100% P private? Private. I do 50% private. Right. So I still like using hard money because then I don't have as much need for the private. Neither is wrong. No.

[A]

And I used hard money. Like, Even on the 24 hour flip, there was a, you know, one of my private lenders was like, hey, I'm actually buying a property. I'm not lending money on this deal. And he had earmarked that money for my deal. So I went to my local hard money lender.

[B]

Right.

[A]

Alpha Funding. They're awesome. And you know, they closed that deal in less than 10 days.

[B]

That's great.

[A]

Right? So, you know, hard money is another form of capital. Right. What I, what I dislike about hard money is the monthly payments. There was a time I had 26 properties at once and my bills were 65,000amonth. So I flip a house, make money, and then that would pay next month's bills.

[B]

That's right.

[A]

Right. So, you know, the chokehold Is really that monthly payment. 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. That's where there's no monthly payments.

[B]

That's the deals. Because if you're at volume on any scale.

[A]

Right.

[B]

Those monthly payments, I did the same thing. And forget what year it was. 2012, maybe I'd like 96 flips that I bought and completed the chokeholds, cash. I mean, you literally go like, I'm not paying myself. I'm paying debt service the whole time. Right.

[A]

Like, you have to stop flipping in order to get your money.

[B]

That's basically it.

[A]

Right.

[B]

And that's the shittiest part, is you basically have to stop buying so you can finally actually have the profit to be able to pay yourself.

[A]

And God forbid that you're in a market where things go sideways and then you're stuck holding the bag and you're like, shit. All the profit that I just worked for.

[B]

That's right.

[A]

You know, is in these deals. And now they just all went down. So.

[B]

And we know. And then the other part of this is you got to stop marketing, stop buying. And we know then the cycle of that trajectory, what happens is that means the next quarter, once you finally is a tough quarter too.

[A]

Right.

[B]

Because you didn't buy anything for a quarter because you had to slow down. And so there's that. I love that where you go, you know, private financing, no debt servicing. It accrues pay off over potential equity share if. If. Maybe. Maybe not. But like, it's a beautiful model. Right in. I would tell people to your point, figure out what you want your model to. There's no wrong.

[A]

Yeah.

[B]

No, you just need to adjust for what you. Your model. You want to look like. Now you're specific to. To Jersey. I. I'm asking everyone right now because it's obvious. The obvious. Trump's here. Yeah. Interest rates.

[A]

Go Trump.

[B]

Go Trump. We are. We already see. And I see Jason's here. So he's an economist by trade, and so he's all over. But I say. I say that because where do you see, like, Northeast. I don't play much in the Northeast. Price being one of them, winters being another. So I just, you know.

[A]

Yeah.

[B]

If I found something in Jersey, at least I could call you and have a relationship that I'd feel comfortable. But in a general sense. Now, where do you see Jersey? A state like Jersey, Everything's very expensive. Miami's Very expensive. You live in some of the most expensive areas you can. Where do you see the Jersey market going for yourself?

[A]

I mean, the inventory is very low. I think that has a lot to do with New York City. Even though New York City's bouncing back, I think the Trump administration has definitely helped from a perspective of hope. And, you know, the areas that had high crime and stuff like that, like some of the areas in New York City, people feel a little bit different now. Okay, Meaning in a more optimistic way.

[B]

Sure.

[A]

So, you know, we might see a little bit lower of an influx in New York, but then it'll bounce right back and we get kind of the overflow. Why? Because when New York is doing well, their prices go up, and when their prices go up, people seek to find other, you know, properties and they go to New Jersey.

[B]

That's right.

[A]

Right. And if you are. If you're selling like a 1.5 to 2 million dollar house in New Jersey, 90 of your buyers are Jersey City, Hoboken. Right. Which are people that work in Manhattan or. People in Manhattan.

[B]

Okay.

[A]

Or Brooklyn. Right. In the nice areas of Brooklyn.

[B]

Yeah.

[A]

They're buying in the suburbs. They want good schools and they have, you know, their wife is pregnant, they already have a kid, and they want more space.

[B]

Yeah.

[A]

Right. So we have that kind of benefit in Jersey that we get the overflow from New York and Miami is like, you know, it's like New York, but with nice weather and more expensive real estate.

[B]

Very expensive.

[A]

It's crazy.

[B]

Yeah. It's out of.

[A]

I mean, I'm blown away by Miami and. And there's a lot of opportunity here as well. I just, I've always been the type of person that you can track the space. If you can hit your goals in one geographic area, your life will be easier if you focus and know everything there is to know and you know that area like the back of your hand.

[B]

Yeah.

[A]

That's just, you know, and that's why, like, my coaching programs, only in Jersey.

[B]

Yeah, right.

[A]

I have. People are like, oh, in California, can you coach me? I'm like, look, I. I give my coaching students contractor resources. You know, we go to people's properties. It's very intimate.

[B]

It's very.

[A]

It's not like a scaled program. Yeah, right. So it's. That's why we just focus in on that geographic area.

[B]

Yeah. No, I think there's a lot of validity. I mean, I know there is. Right. As someone that runs a company that fix and flips in nine states, I buy and hold in Nine states. I coach throughout the United States. I know the pros and cons to my side. Right. And I think the cons lean into why you do what you do. Right. You, you basically, you know the numbers, you know the neighborhoods, you know the people. You know, you have so many more controllables. Right. When you stick to one state, it's.

[A]

Very localized real estate, of course, and if you. But you have people on the ground too, in those geographic areas that you're typically like partnering with. So it's a little bit different that.

[B]

The upside for me is because of how even my coaching program is, is national. So I have, I'm one call away from anyone in any city, any state. Right.

[A]

It's different. I don't like to partner with people.

[B]

No. Yeah.

[A]

Because I don't know if they did their tax returns or not exactly. We go to sell the house and now we got to pay their tax bill.

[B]

There you go. That's right.

[A]

Which is actually happening.

[B]

Maybe I was just going to say it sounds like you've done that before. Yeah, yeah.

[A]

So I try to keep it as simple as possible, but you know, from, you know, when you're, when you're doing business, you just need to decide on, you know, you can make money in any area. It doesn't matter if it's low end, if it's high end, if it's one area or nationwide. Like I'll look at anything nationwide if it's commercial, because it's strictly based on cap rate, which is easy to find and it's based on the numbers of the income and the expenses of the property.

[B]

Right.

[A]

You're just coming up with the noi and dividing it by cap rate. That's the value. And you want to get it cheaper than that and see if there's any value add or upside to it. So, you know, with, with those type of properties, it's different in single family construction and flips. You know, I feel like you definitely need somebody, boots on the ground that's going to understand that municipality and all the little, you know, quirks from that area across the street. It could be a totally different school district. Right. And that school district is less desirable. You know, there could be negative stigmas in that area, external factors that you really can't control that you wouldn't know if you weren't there locally.

[B]

I wouldn't ever suggest any of my students, your student, anyone, to fix and flip in a market that they don't personally either live in or have very strong ties to. Because everything you Just said, like, even when I coach national, I say great. If you're at a market wholesaler. Right, Right. If you have very strong ties and, or live in there and you're looking at flipping, then, then I will give some justification.

[A]

Right.

[B]

But even then, you just run too much risk for all the things that we're aware of. Right. And number one on that risk list is contractors. In my opinion, bad contractors will bankrupt you very, very fast. Yep.

[A]

Two people could buy the same house and one guy hires the wrong contractor, the other guy hires the right one. One guy makes money, the other guy loses money.

[B]

That's exactly right. That is the number one risk I see when, when remodel. And at 18 years in, I'm still dealing with bad contractors. It's not, it's not totally avoidable. Right. Yeah. But in your case, because you're, you're, you know, the people you. Right.

[A]

And I feel like construction is going to go up in price now for sure. Because a lot of people that are, you know, undocumented are in the construction business, at least in New Jersey.

[B]

Sure.

[A]

I speak fluent Spanish. My mom was born in Uruguay. You know, she immigrated here. So, you know, I kind of have an advantage that I speak fluent Spanish. And, you know, but a lot of our guys, you know, that are our contractors, you know, they're licensed, they're insured, etc. But then for them to get the laborers that work, I mean, you know, I don't ask if they're documented, but I don't think a lot of them are.

[B]

That's right.

[A]

Right. So, you know, is that going to put pressure on the construction industry, making it even more expensive?

[B]

I'm going to say yes.

[A]

It's things that people need to think about.

[B]

That's right.

[A]

Right. And you need to, you know, you need to know that trades people, there's less and less of them. And the, the ones that have been around for a long time, they're not being replaced. Right. They say if you want to make a, if you want to become a millionaire, don't, you know, don't go to college, become a plumber.

[B]

Right.

[A]

Become an electrician. Why? Because there's going to be so much demand for trades and I don't know if AI and robotics and everything is gonna. That's not the first place that, you know, all that stuff's gonna disrupt.

[B]

That's right.

[A]

You know, it's going to be everything behind a computer and maybe like menial tasks, but not, not necessarily plumbing and.

[B]

Electricians not to take us too Far off the course here as we're wrapping up. But, like, what about all these cement homes and blanking on the word with you? The machines are really building.

[A]

Like the 3D printing.

[B]

Yeah, yeah.

[A]

I mean, that's great. But you still need to.

[B]

You still, you still need to build out the internal. Yeah, absolutely. But you're still like, I mean, think about four year, five year. Was this even a concept that you and I would think about? Right. Like, holy hell. I think about all the framers.

[A]

I think it's great. I mean, look, if you're an entrepreneur and you could cut costs and that's a profit destroyer, then you'll be good. There's always going to be people in situations that need to sell their home, and that's what's important. If you're going to get good at one thing, if you're going to get good at one thing, get good at finding deals, get good at marketing, get good at negotiation, get good at presenting your offer. This is what we kind of focus on because, you know, if, you know, if that does get disrupted through different things, then awesome. But if you're in densely populated areas like New Jersey, I mean, you're not knocking down the house and building a new one.

[B]

Right.

[A]

You know, most of the time you're not doing that. Maybe in other states where there's a lot of land and, you know, there's a lot of development, then that could be a huge opportunity to provide affordable housing, which is definitely needed and wanted and, you know, hopefully that will help solve that issue.

[B]

It's interesting. I. I watched a. I don't know if it was on cnbc, but I watched something about this. I just said, man, between the framing, the need. No need for framers anymore, right? Roofing. Right. We go, they're really building the external and there, there's two trades, at least I'm aware of that. All of a sudden, just got essentially disrupted, right? It got disrupted. Right.

[A]

I know, but it's disrupted only on new construction.

[B]

That's right.

[A]

So. So on existing homes, you need them. It's not going anywhere.

[B]

That's right.

[A]

Throw a robot in there, try to see what happens.

[B]

See, put a robot, make this floor, see what has.

[A]

So, I mean, you know, home services industry, I, I feel like it's going to be one of the last things.

[B]

To get disrupted, which is for entrepreneurs, which is another show that we like. That's where I want to lean into in my next decade. Yeah. I want to lean into home services.

[A]

Yeah.

[B]

Wearing HB roofing. I mean, It's.

[A]

We have a brokerage, right. We sold 1600 homes in 2024.

[B]

Okay. Congratulations.

[A]

Thanks. You know, we have a few hundred agents, we have four offices, and it's an. It's an unbelievable ancillary service. Home services. You know, somebody buys a house, they want to do stuff, right? They need ongoing services. H VAC maintenance, power washing, landscaping. You know, there's so many avenues to. To make money there. But a lot of people don't want to put in that grit and that hard work. There's no doubt people need to get paid if you're going to hire employees. People aren't okay with making minimum wage and, you know, just making 150 bucks. You can't live on that anymore.

[B]

Oh, my God. Hell no. You know, thank you for coming. TV star, 24 hour flip. You can see it on a. E. Hulu YouTube.

[A]

Just Google it.

[B]

Yeah, just google it. And if you're in Jersey, make sure you reach out to him. I tagged him all over my social media. John steingraber is here. Thank you for showing up, dude. Appreciate you.

[A]

All right, guys, have fun.

[B]

All right, if this helped you guys, even with the three points of efficiencies, make sure you share it with some people, you know, that need to watch this. I'll see you guys on the next episode. Peace.