4 Things I wish I knew – Part 3

Last week, I mentioned that I wish I had started flipping houses with the mentality of a business owner.  Instead of focusing on high-value activities and leveraging the knowledge and time of others to achieve my goals, I ran around doing everything.  I wasted countless hours looking at bad properties, making multiple trips to a home to estimate repair costs, meeting contractors, running to Lowes, and doing dozens of other time-wasting tasks.  There are a few reasons why this occurred, but the primary one is that I didn’t have systems in place. 

If you have read The E-Myth Revisited, you know the best way to act like a business is to systematize everything.  If there is something you are going to do more than once, write down exactly how to do it so that 1) you aren’t relying on memory to complete tasks and 2) you can assign the task to someone else.  If you develop your own systems, make sure they are as thorough as possible.

For example, here are 3 ways to approach the very basic task of getting water turned on at a house you are buying.

1)       Poor: I’ll call the water company at some point

2)       Okay: I have a Contract to Close Checklist that says “Call utility companies 3 days before closing to have them transferred into my company’s name”

3)       Correct: 3 days before closing, call Water Company at 555-555-5555 and provide the following information

Property Address __________________________

Company Name ___________________________

EIN ____________________________________

Mailing Address __________________________

Transfer Date ____________________________

Activation Date ___________________________

The last version is clearly something you can give to a random neighborhood kid to take care of.  The ability to create systems at this level is the reason Ray Kroc succeeded in turning McDonald’s into a global behemoth.  His ability to create Big Macs had little to do with it.

When you are flipping homes, every house is different.  Unexpected things are going to happen.  Some of them will be a little more extreme such as your painter being arrested for growing pot, a homeless family sleeping in your living room, an unscrupulous SOB borrowing your air-conditioner or raccoons crawling down your chimney, but most will be more mundane.  That being said, the process you go through is exactly the same! Whether you are flipping starter homes or mansions, whether you are in Las Vegas or Omaha, everything you need to do can be documented and replicated.  This will save you a tremendous amount of time and money.

I really wish I knew that 7 years ago!!

Erik Hitzelberger has been Real Estate Investor since 2007. While learning the ropes in the market down-cycle, he now teaches others how to use his systems and leverage other people’s expertise to achieve their own goals.

Erik Hitzelberger – who has written 194 posts on Part Time REI.

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