Are you looking to scale your fix and flip business from a small home builder to a multi family developer? Here are four tips that help you achieve the goal.
As a real estate investor, you would have thought of what would be the best strategy to scale your business from a small home builder to a multi-family developer. How do I widen my investor base and expand my projects and clientele? Well, the key is for you to focus on targeting the right market with the intent to spread your message through the right platform.
Josh was taking a bus back home after a meeting with an investor. He sat down disappointed as he couldn’t convince the investor to invest in his fix and flip project. As an emerging small home builder, Josh had gained a decent amount of credibility with investors in the fix and flip business. However, he tried his best to upscale his business and become a multi-family developer but fell short each time.
Josh was unable to strike the right chord to upscale his business and was about to lose hope when he met Carl in a real estate investors club. Just like Josh, Carl started his career as a small home builder, but he gained credibility over the years and became a spec home builder. As an experienced real estate fix and flipper, Carl gave four quick guidelines that helped Josh become a multi-family developer.
Carl began by incorporating a simple routine and mastered it. He believed that a jack of all trades is a master of none, so he simplified a complex world into a single organizing idea that unified and guided everything rather than focusing on various aspects.
Josh met Carl at a local cafe and sought his guidance. Carl advised Josh shared his experience through a mistake that he committed back in the day.
“Josh, back when I was an emerging fix and flipper, I focussed on fixing and flipping in middle-class areas and then moved to low-income housing and luxury housing.”
“That’s when I realized that I made a grave mistake as I was unable to achieve the desired results or focus on middle-class areas.”
“So what went wrong?” asked Josh.
“I focused on various audiences in the business and lost track of the area where I was a master; this resulted in myself having to re-prioritize my objectives and start again.”
“Oh I see,” said Josh
“Yes that’s right Josh, great multi-family and real estate entrepreneurs focus on certain key aspects to make their business shine like a bright star on a no moon night.”
Carl told Josh that multi-family developers identify their passion and evaluate whether it is suitable for generating revenue. They set priorities accordingly and strengthen themselves with these key aspects. Josh took Carl’s advice seriously and experimented on different methods to target investors and expand his business. He mastered one method that made a crucial positive impact on his business.
Josh thought of changing the marketing strategy for better turnover, so he called Carl for help. Carl asked Josh
“When you proceed to find a house to flip, what comes to your mind?”
“I think of maximum returns with minimal costs for rehab?”
“That’s great,” said Carl
“While selling the refurbished property, I think of increasing ad spending to attract buyers.”
“You took the words right out of my mouth Josh; you need to understand increased ad spending and additional resources while growing a small business.”
Carl told Josh that he had to keep the clientele in mind before brandishing the market message, and this would differ whether you are dabbling, wholesaling, flipping, or a bit of each.
“Josh, it’s time that you gather data from social media reports, website analytics, surveys, etc., As this would help you narrow down your search with demographics and the psyche of your ideal client.”
“ All right, now coming to the point, how can I modify the marketing message, Carl?”
“ Cool, once you are done choosing your marketing channel with the best ROI, you need to convey the message in the form of a story as it would help investors resonate with your brand values better.”
“Wow, thanks, Carl.”
“My pleasure Josh, and hey! Don’t forget to outsource your marketing to a third-party vendor as running and monitoring marketing campaigns is very time-consuming.”
Josh’s new marketing strategy proved to be a great hit as he was able to expand his business to a nearby town. However, with a larger investor base, he found it difficult to monitor his employees as he was held up with meetings. He turned to Carl for advice in measuring employee performance and keeping them motivated.
Carl asked Josh to compare the expense to the budget for every rehab and create key performance indicators that help in measuring the performance of employees. This would drive employees to remain responsible and take objectives seriously and complete them. Carl told Josh to introduce KPIs on maintenance techs, leasing agents, property managers, and construction managers.
Josh incorporated metrics such as call back percentage, work orders completed per day, and number of complaints for maintenance techs. He introduced metrics such as leases per showing and applications per showing as KPIs for leasing agents. For property managers, Josh introduced metrics such as occupancy percentage and new leases versus move-outs.
With Carl’s guidance and the newly introduced KPIs, Josh was overwhelmed to see that employees began performing better due to the fear of falling short of their objectives or not meeting the recommended KPI.
Josh was impressed with the growth of the business as a new multi-family developer. He wanted to take it a step further and decided to go with automating some operations and investing in a platform that helped him achieve goals easier.
Josh knew that it was hard to get assistance for commercial real estate lending, multi-family investing, and finding a house to flip. With increasing projects, he found it hard to keep tabs on project documents, reply to emails, monitor investment, maintain accounts, and acquire investors. He found that employees found it hard to perform cumbersome excel calculations.
Josh began looking for third-party tools and online platforms to simplify operations and build better connections. He stumbled upon Mast, a real estate management platform that provided a dashboard to create a profile, manage documents, and showcase projects. He was also thrilled that Mast enabled him to connect with investors or organizations that deal with commercial real estate lending.
With Mast, Josh was able to customize his profile to appear credible to investors, and communicate with investors much easier. He was able to make better decisions by checking the credibility of other investors and monitoring the investment flow. He found Mast’s user interface simple and could access it from any device such as mobile, tablet, or desktop/laptop.
Josh gained a good reputation in the state with a strong rapport with senior investors. With these four simple steps and Carl’s guidance, he upscaled from a small home builder to a multi-family developer. What are you waiting for? Follow these four tips and become a multi-family developer, just like our protagonist – Josh.