Automating House Flipping

Discover how automating your house flipping business can make you more money with less of your own time and effort. Too many real estate investors are chained to their business of flipping houses and never experience true freedom. Meanwhile, most of the tasks required to flip houses can be automated and this video is going to show you how.

If you look at my personal life, I not only have an enormous mentoring and coaching operation, but I also flip my own houses and own a large portfolio of real estate and several other businesses. I’m also married and have four kids. How do I get it all done and still have time to go fishing and have a life?

That's what I'm going to share with you. The secrets of how the most successful real estate investors automate their house flipping business so they can produce more results with less effort. This can apply not just to real estate, but any business. I’m going to focus on house flipping, because it doesn't need to be something that consumes your entire life. You can automate many aspects of house flipping.

Steps to Automating House Flipping

1. Change our Mindset from DIY to Delegation

The foundation of improving the automation of your house flipping business is in your mindset. Way too many people have a do-it-yourself mentality, and it needs to move to delegation. What does this look like? It's contained in this simple phrase, “If you want it done right, you got to do it yourself”. Well that is hogwash. You need to remove that attitude immediately and replace it with something that Paul Orfalea, who is the founder of Kinko's, now FedEx Office, used to say, "Someone else can always do it better".

Learn to Hire Well

Think of yourself as a CEO, and not the one doing all the individual tasks. This may be necessary as you are getting started, but you need to begin to work yourself into a position where you're delegating and getting other people to do the work. Some of you may be thinking that if you delegate, they won’t do the job as well as you because as a business owner you care more. My attitude is, you're going to have to learn how to hire well.

There are great people out there with impressive individual skills. They have unique talents and gifts, and you as a business owner need to lead them and begin drawing those gifts out. It starts with a mindset. When you change your mindset from DIY to delegation, you now look at yourself as a CEO of an operation and start putting people in place to do certain things for you. This is the fundamental key in automation; it's going to take other people's efforts.

What’s interesting about real estate is that each individual deal has several different outside parties. Buyer's agents might represent a buyer. You have an inspector, an appraiser, and a seller. Maybe the seller has an agent in the middle, and you have a title company or closing attorney. All these different parties are involved and are getting paid, in many cases, when the deal closes. They all have their individual tasks or jobs that they do. So often I see beginners in real estate investing timid and scared to direct and instruct people on what they're supposed to be doing, reluctant to hold them accountable.

Creating Jobs is Good

Instead, what they often do is they take this DIY mindset and they pick up the slack for the incompetence or the laziness of the other parties in a deal. However, they're getting paid almost on the coattails of that investor's work. Drive them to do their responsibilities and their work. That's what they're getting paid to do. You don’t need to feel bad about telling these people what they're supposed to be doing.

You're creating jobs and opportunity, and that's a good thing. So often I see people are so scared of being a leader and telling people what they need to be doing. However, you need to look at that as a noble pursuit. Somebody needs to be the driver in the deal and be giving these people opportunity, jobs, and tasks to accomplish.

Something specific to house flipping is that sometimes it's not an employee or assistant that you have that's doing the work. Often it's other people in the deal and you're just holding them accountable. Again, the key is this idea that you are now the CEO and so you need to delegate rather than think in terms of always doing everything yourself.

My Testimonial

For me, the idea of automating occurred after I had my business going and I was doing very well. My mentor had opened an office in Las Vegas, and I was in Nashville, Tennessee. He flew me out there to help train some people to get that office going. It was interesting because I ended up staying out there much longer than I had anticipated. While I was out there, my house flipping business in Nashville was operating in full force. I came to the realization that I had to start learning how to do things when I wasn't there, forcing me into delegation.

I was so used to doing everything myself and now, suddenly, I'm in Las Vegas, Nevada, and I still have a lot of deals going on in Nashville. Who's going to go look at the property or going to go meet this person? It was revolutionary for me, changing the way I looked at the business.

It forced me to start thinking in terms of who else does the work? I could pick up a phone, I could do that part, but I couldn’t always be driving over there. I'm not saying that you suddenly stop driving over to a property, but I am saying to move yourself away from DIY and into delegation. It's fundamental to automating your house flipping business.

2. Systems in Automating House Flipping

This is the idea that you have written, video, or audio instructions showing the people you delegate, exactly what to do and how to do it. This is how you begin automating now that you have good people running the business.

Buy It or Make It

You are either going to have to buy that system or make it yourself. With my apprentice program Freedom Mentor, I have what I would consider the most sophisticated system ever invented in the history of this industry. I've been building it over fifteen years. It's so enormous and detailed, it's hard to fathom how much is in there. Some of the apprentices that have been with me a year still haven't gone through everything, it's so thick and detailed. That said, you either must buy it from someone like me, or you're going to have to make it yourself. If you're going to make it, you're going to need to document in detail everything you do and how you do it. Then you must make it dummy proof, because the people that you work with aren’t always going to understand how you communicate what you communicate. Either way, you must have a documented system that you can plug people into.

Use Tools to Simplify

Some of you may be wondering about software and how that can play a role in automating house flipping. Software simplifies certain tasks within the system you have. I call them tools, because it's not always software that are tools. Other things can be tools as well. For example, if you have great contractors that you never have to babysit and that have worked with you for so many years that they already know what you want and how you want it. I don’t even need to communicate that much with my contractors anymore. It's amazing how much they accomplished without even talking to me because we've worked together for so many years.

An example of a software that I absolutely love is called PropStream, and I have another video on it. This is a software that is a data aggregator. It simplifies and speeds up the process of getting a lot of information about a property. It has some other tools in it as well, but that's the one that I use most frequently.

Focus Your Energy

This is the next key point as we talk about systems, because you can build a great system but then still fail in this area. Have you ever seen the movie The Founder with Michael Keaton? The movie shows how the McDonald's brothers, those are the two gentlemen that started the first McDonald's, invented the fast food model. One of the most amazing parts of the story is when they tell Ray Croc how it happened. They had a long list of items on their menu, and upon studying the results, they discovered that over 80% of their sales came from just a few menu items. Burgers, french fries, and milkshakes.

With these results in mind, they asked themselves, "What if we simplify our menu?" This was very rare at that time in the restaurant industry when everybody else was adding more items. The idea was to only serve a few things, be so much better at those few things and serve them faster. They got to the point where they were serving a burger and french fries in thirty seconds, which is monumental for the time.

The same thing holds true with you and house flipping. You realize that real estate is a vast ocean of various tasks you could be doing. What do you do when someone calls you looking for buyers for 70 acres of raw commercial land at a busy intersection across the street from Walmart? Do you start making phone calls for the next five weeks to try to make something happen because it's a big deal? I know plenty of investors do that, but that's not concentrating your efforts.

Which Deals Make the Most Money?

Single family homes are the most liquid. They have the most buyers, both investors and retail buyers. There's so much you can do with a single family home versus a high rise condo or vacant land. Or as someone who had never flipped a house in their life emailed recently, a 500 unit apartment building. See that's the thing, you need to focus your energies because when you do that, you apply so much more power to that which makes the most money.

When I talk about focusing, I'm not just referring to the bread and butter. I'm talking about looking and seeing which deals make you the most money, and concentrating on more of those. Focus on the hot knife through butter kind of deals, not the ones that are going to be a complete train wreck. You can still make money on the stuff that you don't do by referring it to somebody else and making a referral fee. That’s key, get the right system in place, get the right tools to simplify things as much as you can, then concentrate your efforts and don't be chasing rainbows. Stay focused.

Hire Slowly, Fire Quickly

Within your system you're going to need a system for hiring and firing. You will probably have an assistant or two, and maybe even more people in your organization at some point. This will require you to have a policy, a way in which you bring people in. I'm going to give you this important tip, hire slowly. Meaning, you bring them in, maybe they work a couple of hours a week, test them out on one thing at a time. Don't give them too much responsibility yet. Just really tread lightly in the beginning.

If they impress you, give him a little bit more. If they continue to impress you, give even more. If there's a problem, fire quickly, as quickly as you can. You say, "Whoa, Phil, firing. I thought you were a Christian! I don't do this firing thing." The truth is you will need to. If you are going to be a delegator, then you will need to fire some people sometimes. There are bad seeds out there and you need to get them out of your organization as quickly as you can because a good seed is just around the corner.

3. Aspects of Automating House Flipping

Now that we’ve covered having the right mindset and the right system in place, I'm going to break down the actual aspects of house flipping. I will also give you some tips on how to automate every one of those aspects and break down what I do to make these more efficient.

Lead Generation:

So many of you are on such a tight budget when you first start off in real estate investing, that you're doing lead generation the most manual way possible. You are outbound calling, knocking on doors and those sorts of things. Eventually, you need to get to a point where you are paying for certain advertising platforms to do the lead generation for you.

I'm a big fan of paying for lead generation in all the different businesses I own. This idea that building a business is about referrals, word of mouth, and organic rankings is just not correct. If you are going to be in business, then you will be paying for marketing. That’s a good thing because it's an automation piece. I'm not out there or hiring people to put out signs or licking stamps on postcards. This is all very automated, however I do keep an eye on it to making sure everything is in line and making adjustments over time, but otherwise it’s pretty much automated.

Qualifying Leads:

You have an assistant do all the qualifying and talking to the sellers. These responsibilities are square in line with what an assistant should be doing, and it is what my assistant does.

Deal Creation:

This is where I step in, meet with the sellers, look at the property, and get it under contract. Although, that might be the last time they ever see me. I learned this tip one time when I was getting started in real estate.

I was trying to flip a house, had listed it on MLS and it didn’t sell. I was going to hire an agent and I reached out to the top agent in the area. She had lots of employees in her office and I remember I kept talking to assistants and was never able to speak to her. Eventually, I was able to talk to Karen and she met me to do the listing agreement. I remember meeting at the property and showing her what was going on. We signed a listing agreement and I never heard from her again.

I strategize based on all the research that my assistant has gathered. Then I put together exactly what the deal is going to be. I talk with the seller, meet them at the house and get it under contract. That's really the most important role I play in the entire transaction.

Due Diligence:

This is when you do a title search to get your title company or do a search on the inspector you're hiring. I have my assistant reaching down on different things, whether it be with public records if there are code violations and such. I've taught her exactly how to pull comps. My assistant is good at determining what a house is going to sell for, as good as anybody in America.

Exit Strategy:

We flip all our properties by listing them on the MLS. I don't go through this whole business of signs, and on Craigslist and all that mess. I automate it by putting it on the MLS. It’s true that when a property goes on the MLS, you must pay a buyer's agent upwards of two or three percent. However, that's part of my automating house flipping strategy. Just like I'm paying for leads, I'm paying a little bit more to find the buyer, but it's automated. I need it to be more like a machine.

A lot of you are thinking, "If I do the lead work myself, and a lot of the leg work and sell the deal myself, I'm going to make more money on a per deal basis." You're right, but you won't have automation, which means you won't have as much time. That extra time gives you the ability to make more money. By giving up a little bit of money in each of these steps, like hiring assistant, what you're doing is creating automation.

Closing:

Over the years I have worked with several title companies personally, and literally hundreds with my apprentices. It is key that you find a great title company or a great closing attorney. There's a lot of title companies that are good with retail agents but aren’t good working with investors. You need to find the right closing team because that will make this job insanely easy, it won't even be worked for you.

My closing people are great and the closing office is ten minutes from my house. I don't even go into it to sign. I have my assistant come to my office. She is the notary, then I sign, and then it gets brought to the closing office. I can’t say it enough, automate, automate, automate.

How to Automate Admin

You can get bookkeepers to use QuickBooks to automate some of the finances. Although I don't automate bill paying, I pay my own bills. It does take up quite a bit of time each week for me to pay people. That’s because I like to keep myself as the only one in the operation who can send thousands of dollars to other people. I like to hold onto certain things. I go through all my QuickBooks with my bookkeepers every month for all my different businesses. They often say I know more about my books than anyone they work with. I stay close to the money, because if you watch the pennies, the dollars will take care of themselves. That said, you can automate that as well and have bookkeepers do all that for you.

You might be wondering what to do if you are renovating houses, and not just selling them as is. That is part of the exit strategy and I have a video on how to find great contractors, solving all your rehab problems pretty much instantly. You need a great contracting team. Great electrician, plumber, HVAC, and great overall kind of general handyman. I have all those people and I've worked with them for many years. They say I’m their best client because I pay them the same day they send the invoice. They’ve never worked with anybody who does that.

I keep my people happy and pay them well. You know, I could probably be more cutthroat and find some other contractors, really cut them to the bone. But that's the thing, I want automation, so I pay a little bit more for better contractors I don't have to babysit.

Make More Money with Less Time and Energy

Just to clarify, I'm not saying that you can completely automate house flipping. In fact, I have a great video that I recommend you watch called Flipping vs Renting Houses. In it I talk about the pros and cons of both. You can automate house flipping to about the level of the amount of work you would do with rentals, because rentals have a little bit of work to be done to them on a consistent basis as well. There’s a little bit of work to be done here, but when you get every aspect of this operation dialed in as I’ve described here, you end up having more free time and you're making more money. Some of you are going to use that free time, not by going on vacation, but to do more deals, and that's when you start making $1, $2, and $5 million a year.