Did you know that it’s possible to run a successful real estate company all from the comfort of your couch? Brian Elwood completes over 75 rehabs a year and owns 25 rentals without having to leave his home.
In our recent conversation, he outlined his business model and how he is able to remotely manage his 10-person team.
Brian’s Rehab Business Model
Since Brian is investing remotely, he’s kept his investment strategy simple. “75 rehabs sounds really intense, but we don’t do expensive rehabs,” Brian said. “We’ve decided that $10,000 or less is the sweet spot for us.”
“A lot of times, we’ll just do five or seven thousand dollars. [We’re] just trying to get properties in rent-ready condition, put it back on the market, and either a landlord would buy it or someone who wants to move in and finish the renovation will buy it.”
In other words, Brian and his team buy a property, and no matter what the condition, they will put in a maximum of $10,000 before putting it back on the market. That doesn’t mean that he avoids the largely distressed properties. He just doesn’t perform complete rehabs. “It’s not that we wouldn’t buy a big-time distressed property, as long as there’s equity in it when we buy it,” Brian said, “as long as we can get it for a discount. It’s just that we’re only going to put the first ten grand or so that it needs into it, and then just put it back on the market.”
“If it was really distressed and needed to be torn down, we wouldn’t do anything to it. We would just buy it and list it as is. Sometimes it doesn’t make sense to put any money into a property, but in our experience, running a business virtually is tough when you’re putting $110,000 into a rehab and they’re opening walls and finding all kinds of different stuff.”
Brian said that typical renovations include things like paint, carpet, minor demo, cleaning the property up (taking out all the trash and doing some landscaping), and installing new windows if they are broken. All of which are very minor and inexpensive rehabs. “If a property is going to be listed and it’s going to be sold to a homeowner – someone who’s going to live there – then we’re going to just do the first $10,000 worth of work that’s going to make it livable for someone to buy. But if an investor’s going to buy it and do a rehab on it, then we may just clean it up and not do much to it.”
Brian’s business goal is to become outstanding in a narrowly focused niche. “I always hear the mantra that focus makes you rich, so we’re not trying to be great at everything.”
Brian’s Team Structure
Brian lives in Denver, CO, while his 10-person team is stationed in his investment market – Nashville. He and his partner sit at the top of the organizational chart. “I have a 50/50 business partner, so the work is divided up between the two of us,” Brian said. “I am over marketing and financing and operations, and he is over sales and renovations, so we kind of divided it down the middle.” Brian’s day is spent on the phone working with the marketing director, CFO, and COO.
In order to track performance, Brian said, “Each team member has their own dashboard where they have all their KPIs (key performance indicators) clearly displayed, that we look at on our call each week.”
The following are the KPIs that Brian said he tracks for each of his team members:
- Marketing Director – “Our marketing director’s key [performance] indicator of whether or not he’s doing a good job is how many leads he generated each week… He has goals for each quarter to get to a certain point.”
- CFO – “Our CFO is responsible for maintaining a certain profit margin – net profit margin – in our business and forecasting the revenue that we’re going to make against the expenses and saying, ‘Hey, the next quarter does not look good, so we need to make this or that budget cut of this amount to maintain our health margin where we want to be.’”
- Sales – “There’s would be appointments attended and contracts signed”
- CRO – “Another position we call our CRO, which would be chief revenue officer. He is responsible for pipeline revenue added.”
- COO – “We have one other [KPI] that we call our brand commitment score, and that is something that our COO [has]. He calls every customer after the property has closed and surveys them on how good of a job we did creating a certain experience for the customers, and it’s on a scale of 1 to 10.”
Brian has an assistant who is responsible for keeping track of all the different team members KPIs and creating a report each week. This report is posted for all team members to see so they know how everyone else is doing in terms of hitting their numbers.
Best Ever Advice
After learning about Brian’s remote and narrow focused business model, he said that most people ask him, “How do you do this virtually and you seem like you sit at home and you must be laying on the couch watching soap operas?” While Brian said this isn’t true, he also said that he doesn’t do a lot of stuff that he doesn’t enjoy because when he sets goals, he sets lifestyle goals rather than financial goals.
“Start with lifestyle as your number one goal when you’re going into business.” This includes performing an exercise he got from the book Four Hour Work Week, which has you write out your perfect day, keeping in mind the following questions:
- Where are you?
- Who are you with?
- What are you doing?
- How much time are you working?
After writing out his perfect day, he figured out what that lifestyle will cost, what type of business model would allow him to live that lifestyle, and worked backwards from there to build his business.
“In Four Hour Work Week, [Tim Ferriss] talks about the difference between being a CEO that makes $500,000/year working 80 hours a week and he’s gone all the time, or a dude who makes $50,000/year working ten hours a week from a coffee shop doing something that he loves,” Brian said. “Two extreme ends on the spectrum, and there’s no wrong answer as to where you should be on that spectrum, but it’s just a really important question to ask because there’s way too many stressed out, unhappy billionaire out there in the world.”
I’ve personally performed this exercise, so I can attest to its power. I advise you to stop what you’re doing right now and take the time to write out your perfect day. Then ask yourself, “Does that lifestyle align with my current trajectory? Or do I need to make some changes?”
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