Episode 78: [Rehabbing] Rehabbing with Jason Vickery and Peter Ryabikin

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Show Notes

Jason has been in construction over 25 years.  He started out of highschool working with his dad on misc projects and went on to own and operate a cabinet company for 12 years.  After closing the company he started lending to rehabbers for Gap funding and learning about this thing called flipping and started flipping in 2010.  Jason has been flipping ever since and joined up with Peter in 2014 and have flipped or wholesaled 50 + deals together.

Jason is married with a split family of 4 kids. All who are very active in sports, Competitive Dance, Swimming, Gymnastics, and basketball and football.  They just moved into their new home they had built a couple weeks ago.

Jason and his wife Megan who is a Vancouver school Principal enjoy traveling together, are very active in Crossfit at their local Box.  

Share your backgrounds and how you started flipping houses and working together.

Been in construction since 1993 owned a cabinet shop for 12 years build a few houses, Started in 2009 lending gap funding to a rehabber. Started doing all the work on flips in 2010-13 flipping about 15 in that time, Peter’s roofing company did all my roofs and we became friends during that time. We partnered on our first deal July 1st 2014 closed 3 deals that year together 2015 we did 11 deals, 2016 completed 22 deals wholesaled 10 and started a wholesale business we are partners on.

What are your goals for 2017?

Goals are 50 flips we have 25 on the books so far this year Plan is to wholesale 50 also min

Sold 12

Pending 5

Rehabs 4

Closing within 2 weeks 4

What are your favorite and/or most profitable types of houses to rehab where you are?

We love 2/1 800sqft houses we are in an out within 3-4 weeks

What do you do to prepare to start rehabbing before you close on the purchase?

We make sure we are ready to start the rehab the min we record we have a crew there to start and usually have house demod within a few hours.

Walk us through your rehabbing process from determining scope of work to lining up contractors to getting it ready for sale.

My business partner is my GC so he keeps our numbers in line.

What issues have you encountered when trying to sell rehabs?

Squatters homeless

Appraisal issues

Portland is a really hot market so our product sells within 2 weeks max most within the 1st weekend

Links

YouTube.com/FlippingJunkie

We Buy Houses in Portland, OR
Investment Properties and Wholesale Deals in Portland, OR

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Episode Transcription

Danny Johnson: This is Flipping Junkie podcast episode 78. [music] Welcome to the Flipping Junkie podcast. The podcast for flip pilots everywhere. Flip pilots are the house flippers that work more on our business instead of in our business by keeping a 30,000-flip view. You’re now part of a small group of house flippers that considers themselves flip pilots that strive to build the life of financial freedom and time freedom so that we can spend more time doing what we love with who we love. In this podcast, I give you a glimpse of the daily life of a flip pilot so let’s gets started.

Hey, everybody. Welcome back to the Flipping Junkie podcast. I’ve got great guests today for the show. We’re going to talk about rehabbing. My good friends, Jason Vickery and Peter Ryabikin. They’re up in Portland crushing it. I hate saying “crushing it.” I don’t know why I just said that. You guys are doing awesome up in Portland. We just did a couple of episodes with my wife, Melissa, but I wanted a different perspective from other people to share how they’re rehabbing.

So why don’t we start with, I guess, Jason go first and you guys can just talk. I’m not used to having two people either, so this is an interesting dynamic. But I’ll just ask you guys your backgrounds as far as what got you into flipping and then how you guys started working together, and we’ll go from there.

Jason Vickery: All right. I started in construction in ’93 right out of high school and owned a cabinet company for about 12 years. I started funding a rehabber for GAP funding in ’09. That’s how I started seeing what flipping was. I started flipping myself in 2010 to ’13. I did about 15 houses. And that Peter, he was doing all my roofs with his roofing company. We partnered. We started partnering on deals in July 1st of 2014.

Danny Johnson: Nice. So how did you guys start working together though? He was doing the roofs. Who started that conversation about working together?

Jason Vickery:I had a previous partner and we parted ways. That kind of took about 9 months off and we kind of stayed in touch. We actually bumped into each other at Home Depot. He needed some money for one of his flips, so we partnered. I lent him some money on a deal, and we just decided to partner up on everything.

Danny Johnson: Nice. What are you guys on track for this year?

Jason Vickery:The goal was 50, and we have 23 going near done or in the process. So there’s nine that are either pending or rehabbed right now.

Danny Johnson: Yeah, so definitely on track, pretty much. So you’re going to do 50 this year and that’s strictly rehabbing, right? Not wholesaling, just strictly fix and flip?

Jason Vickery:Correct. Yeah.

Danny Johnson: Wow. That’s a lot. So what do each of you do for the business? What are your roles right now?

Jason Vickery:I do a lot of the networking. So we partner and we have another business that we do strictly wholesaling on. The way that we’re structured is I buy all the deals within my business and then we joint venture on every deal. Peter is the general contractor, so it gives us a little bit of separation. He runs all the jobsites and he focuses more on that. We used to both go to the jobs, but I don’t go as often anymore. He’s pretty much running the jobs, and I do all the networking with other wholesalers with realtors.

Danny Johnson: Nice. So Peter, do you enjoy thoroughly handling the rehabs?

Peter Ryabikin: No, not as much anymore.

Danny Johnson: But you probably prefer that over dealing with other people in the business? Or—

Peter Ryabikin: Yeah. I’ve been doing it for so long that it’s becoming fairly easy for me. I don’t even really think about what kind of lights to get, what kind of flooring. You’re in and out pretty quick.

Jason Vickery:Each year, we double our production. The first full year, we did 11. Then last year, we did 22 closed deals. So we’ve been doubling in the last two to three years. So there’s a lot more that’s been put on him to coordinate and make sure that they’re all getting done.

Danny Johnson: All right. So how do you handle it with doing that many deals, Peter? Do you have several crews? Or are you solving everything out and you’re GC-ing everything? Or how are you handling?

Peter Ryabikin: I used to have employees. So as of this year, there’s no more employees. I helped some people set up their own licenses. So everybody is 1099 now. It’s all just 1099 subs and we try to keep all of the guys busy. The painter is moving from house to house. The finish guy, the demo guy, tile. Everybody is constantly working which makes it easier. So that’s pretty much how. As long as we could keep on moving from house to house, then the prices stay and they get still done on time.

Danny Johnson: Absolutely. So how did you find the people that you work with?

Peter Ryabikin: Friends. I don’t know. I’ve been doing this since 2010, so a lot of it just acquired over the years.

Danny Johnson: Have you ever had spots where you didn’t have people and you needed to find them pretty quick?

Peter Ryabikin: Yeah, lots of times.

Jason Vickery:Last summer.

Danny Johnson: So what do you do in those cases though? What’s the process for finding somebody?

Peter Ryabikin: Just call some people. I don’t only have like one electrician and one plumber. We have our guy and then there’s the expensive guy that we use if it really needs to be done quick. Mostly, it’s working with the same plumber, electrician, and painters. Everybody just is one contract. But if something happens, if a repair addendum needs to get done quick—last week or a couple of weeks ago, we had to hire a company to change the panel because my guy was on vacation. So there’s always someone you could find. It just might cost a little bit more, but we’re trying to do them so quick that it’s worth spending extra a few hundred bucks and getting the house done quicker.

Jason Vickery:We have several good realtors, too. So a lot them have contacts. So if we’re running short on something, we’ll just ask them, “Hey, you got a referral for any of these because our guy is busy or it’s too expensive.”

Peter Ryabikin: And our realtor does a lot. He helps us out a lot on little stuff, especially repair done to my homes.

Danny Johnson: Nice. So, there’s no like getting online and looking, doing searches for contractors or anything like that or talking to guys at Home Depot. It’s more of just networking and asking around, right?

Jason Vickery:Yeah.

Danny Johnson: I guess that’s good because you kind of get a referral from somebody if they’re willing to recommend them.

Jason Vickery:On our business, it’s pretty much networking because he had contacts with wholesalers, so did I. So we’ve grown that way. We both have our own contacts.

Danny Johnson: It works up pretty good. So what are you guys’ favorite or most profitable? I would think the most profitable ones would be the favorite ones, but types of houses to rehab where you’re at.

Jason Vickery:Right now, we make our most money on the tiny little houses that are two-in-ones, 800-square foot or in and out in three weeks. We’re doing really well on those.

Danny Johnson: So are you adding onto those? Or are you just fixing them up the way they are?

Jason Vickery:No.

Peter Ryabikin: I’d say our average rehab for 800- to 1100-square feet is probably 35,000 or 40,000. So we get quite a lot done for that price. Try not to reframe stuff and do additions. It’s coming and gutting everything and new windows, new roof, siding, painting, kitchen, bathrooms and always using the same stuff. One out of six houses, maybe we’ll do a nicer one where it has a separate design. But for the most part, it’s always the same stuff. And nobody knows exactly what they’re doing on every house.

Danny Johnson: That’s nice. It makes it easier, right? So there’s no changing up every one of them having different materials and problems because they use the wrong stuff. And I’ve seen pictures of the jobs that you guys have done. It’s awesome. It looks awesome.

Jason Vickery:Thanks. And it helps us too with our hard money lender that a lot of houses that we finished are actually our comps when we’re going to buy something else. So usually one or two of them are one of our old deals within the last six months that’s he’s comping against.

Danny Johnson: Wow. So do you tend to focus on a certain area or couple areas? Or are you spread out pretty far?

Peter Ryabikin: Mostly two areas, southeast and northeast. Portland probably is where we like to work. There’s less traffic for me getting in there. It’s a little easier. Because if you’re going a little bit further out North Portland, we have one and it’s a little bit of a drive. So it’s way easier for me if we have them all in one area.

Danny Johnson: All right. What size of area would you say that is, that population? Because doing 50 deals in two areas, I think—my question is: How big is that area? It’s pretty impressive.

Peter Ryabikin: There’s a lot of people.

Jason Vickery:It’s one county, but we’ll do stuff out in Beaverton—that’s another county—and then across the state line in Washington where both of us live. We do a few over here, too.

Peter Ryabikin: So probably a 50-mile radius.

Danny Johnson: That’s pretty good. I think that’s pretty much what we—San Antonio for the most part, I think, is probably roughly the same area. It seems like more though when you’re driving all the way across it.

Jason Vickery:When we do our direct mail marketing stuff, it’s more in that close area. But for your pay-per-click stuff that you run for us, then it’s a 50- to 75-mile radius, I think.

Danny Johnson: Cool. All right. So, how do you guys prepare to start rehabbing before you close on the purchase? So I would think that you’re getting ready before you actually close to start, to be ready for that rehab right away. And so, what is the process?

Peter Ryabikin: So either we’re at a point now where both of us don’t have to see the house before we make an agreement. So it’s either Jason goes and looks at it or I go look at it, and we have our little spreadsheet where we plug in our numbers. We don’t get bids from subs because we’re doing the same thing all the time about the same square footage, so we know it’s going to be 35 to 45 grand for the rehab. And then, either he sends me that spreadsheet or I send it to him and say, “Hey, these are the numbers. We’ll buy it, let’s not buy it. Let’s pass. Let’s negotiate the price.” And it takes about five minutes literally probably walking the house, and we know if we wanted or not.

Danny Johnson: And then lining up contractors. So you’re typically closing on properties and then having them sit and wait while you’re finishing up other projects? Or do you guys have people that can start right away?

Peter Ryabikin: The day it closes is when—I like to start sometimes the day before we know the wholesaler and my guys available. I really don’t like them sitting. Literally the day we close either the same day or next, we have a demo crew in there usually the first week. So our demo crew does the demo, flooring, tiles, sheetrock. So that’s all one crew. So during that week, they start demo. I have electricians and plumbers come in, windows, and they start the drywall. So that’s all done in about the first week. Second week is trim cabinets and paint gets started.

Danny Johnson: Cool. So what kind of agreements do you have with everybody? I’m sure like the electrician—well, go ahead.

Peter Ryabikin: I don’t have any agreements. So all of these subs are—and I was just talking to Jason last week. I never get bids. So we have like 20 something houses this year, and I got maybe three or four bids from contractors for certain trades like concrete. We’re doing an addition in the house. But everybody have just known them for so long. They trust me. I trust them. They just come in to do the job and send the invoice.

Danny Johnson: Nice.

Peter Ryabikin: Bigger issue with some of them is getting the invoice.

Jason Vickery:The bigger houses we do try to get some type of scope of work and some bids. We’ve done some historic houses, and we’ll never do them again. They were fun, but they’re just too time consuming. We also take advantage of the Pro Desk at Home Depot a lot. We have one saleslady there. She helps in that a lot. We can call her. She’ll have an order ready for us. We just come in and pick it up and run out the door.

Peter Ryabikin: And let me add. I am general contractor, so I’m required to have an agreement. So it’s just a one-time agreement with the sub and then I get additional and make sure their licensed, but that’s once a year. We don’t have something that’s per job or kind of the scope of work because it’s always the same thing. If someone doesn’t do something right, they’ll come back and fix it. That’s just at a point where we’re at a relationship with them.

Danny Johnson: Yes, I know it’s awesome to hear because I hear a lot of people complaining about contractors and it’s because they don’t have the right contractors. And in our experience, whenever we’ve enjoyed the business is because we had good contractors. And then when we’ve despised the business and are frustrated and stressed out is almost always because we have contractors that aren’t working out well. So it’s good to hear that it’s possible to build relationships. And I think we’re at the same point where we’ve got people we trust, and it’s real easy. Everything is smooth sailing. But for everybody to know that that’s possible to take your time in finding those crews and those people to help you with everything. And then, you probably don’t even have issues with them invoicing too high. Or do you? Do you have to have—?

Peter Ryabikin: You know what? I’ve been doing this for so long that I know approximately the prices. So when I made a deal with my tile guys, so it doesn’t matter if he’s landed on concrete or if he’s installing HardieBacker. It’s always the same price. So we kind of figure out a price that’s it’s always going to be this easy or hard job. It averages out usually. Sometimes, I’ll see something a little bit higher. I’ll be like, “Hey, what’s going on? This same house was $500 cheaper.” And they always have a good excuse that they did something extra.

Jason Vickery:And we keep them busy, too. They’re running from one house to the next.

Peter Ryabikin: Once in a while, you have to tell them, “Hey, don’t be jacking the prices up. I’m keeping you busy.” For the most part, we don’t have those issues.

Danny Johnson: So being aware of what it’s supposed to be because it is tempting to jump to that too soon where you use a new contractor and they do a great job and you feel like you have a good relationship. And so, you’re going to trust them a little bit more on the next one because I’ve done this, right? I’ve trusted them too much. And they said that maybe they’re ready for the next straw when they’re not. I’m like, “Well, they did a great job on the first one. I want to keep them happy.” And you go ahead and pay them when you shouldn’t have. And then all of a sudden, you start having problems because you’ve already paid more than what they’ve done and it’s easier for them to go work another job to get more money than it is to finish up everything for you. So it’s just something to be cautious about for people listening to the podcast.

Peter Ryabikin: Maybe in a general contractor, that’s what makes it a little bit easier on that end where I need to deposit because we’re using our own money. So usually, all the trades are separate and they don’t really require a down payment. So if you’re hiring a general contractor, then he’s going to want, you know, 25% or 50% down. So we kind of avoid that, and we’re paying directly to the subcontractors for every trade which kind of cuts out that risk of having them run away with the money.

Danny Johnson: And it sounds like you guys have it set up really well.

Jason Vickery:It’s a nice setup when we have it. And basically, I usually use my money to do the down payment from the 10% on the loans. I cover the monthly payments and things like that through my business. He’s fronting the money on the rehabs until either we pull a draw or he’s using part of his money for that rehab depending on what our funds are. So it’s a good split of our funds and split of our time.

Peter Ryabikin: And I don’t want people thinking that it’s easy because we’re making it sound like this is easy. Every day I have problems. The subs, they’re all good guys but they don’t write stuff down. I got to call them every day and make sure they’re on top of stuff. I got to drive by the jobsites to point everything out, and it’s constantly an issue and I’m always complaining to issue and I’m stressed out.

Jason Vickery:We have a lot of issues in Portland with homeless. In one weekend, four break-ins. We bought one house. They moved back in. We finally got them out the next week. And he goes to start work, and there’s a dude in the shower. He’s one of their friends. So it’s every day there’s something different with homeless, squatters.

Danny Johnson: Yeah because I was just about to ask Peter. What exactly do you do? It sounds like it’s all set up, and it’s like you’re telling Peter that you’re going to check these jobsites but you’re just going down to the bar or something.

Jason Vickery:He complains that he wants to dress nice like me.

Peter Ryabikin: Well, that’s another thing. I say that, but I do it on—I don’t do the dirty work anymore but I’ve been connecting since I still have my roofing company and I deal with subs. I understand how it is when you have someone. The boss coming by in a nice car dressed up nice and telling you what to do. So I connect more with the subs when I dress as a contractor. And I feel strongly about that because people feel like they connect more. They trust you more. They know how you feel basically, right?

Jason Vickery:And we don’t pull up in sports cars to the jobsites.

Danny Johnson: Why not?

Peter Ryabikin: Because we don’t have sports cars yet.

Danny Johnson: I’m just kidding.

Jason Vickery:We don’t have TV shows.

Danny Johnson: Not yet at least, right? Let’s go through some of the rehabbing process though. And there was a question on the Flip Pilot Facebook group about the order of rehab. And so, obviously when you’ve got a full rehab, you need to do things in certain order so they’re not going back and fixing stuff that had already been done because it was done in the wrong order. Do you want to walk through basically like a full rehab where you’re doing a gut job or at least gutting the kitchen and bathrooms or something and the rest of the house, in the roof, in the foundation? Where would—?

Peter Ryabikin: We [crosstalk 00:20:04] much with foundations. So basically, the first thing is demo obviously. As soon as the house is demoed, the first steps for us is the plumber and electrician. If we’re moving a wall or adding something, closing it up, we’ll get that done with the demo. And electrician comes in right away. Plumber changes the tub and make sure the plumbing is good. The electrician adds lights or removes stuff, closes off wiring. So that’s kind of the first few days. That’s the steps.

Danny Johnson: Now if there’s a roof, you do the roof before demo or during demo?

Peter Ryabikin: No. It kind of depends. Roof can be done whenever. It could be done right away. It could be done in the very end. Sometimes we’ll leave it. We know it’s bad and we know it’s going to get called out, but we don’t have guys available. So we’re just going to leave it until home inspection and then we’ll just do it then because that’s kind of a bigger job. And over here in Portland, it was raining for like six months.

Danny Johnson: Yes. See that will be my concern, right? If it starts pouring down. You said you have the roofing business so you know how quickly you can get it done and get it covered and when to do it.

Peter Ryabikin: Roofing is probably not a big concern, I think, for people to try to schedule right away. Just make sure the contractor is available. My company is out two months right now for roofing and I still need to squeeze in our houses. So that, roof. Same week we’ll do windows. That’s probably right away. A lot of the times, the same guys could do it that are doing demo, windows, siding. That’s all done first week.

Jason Vickery:We try and make some changes to the house if we need to so we can use Home Depot’s stock windows; otherwise, it’s 10 days to order stuff. So we need to do a wider piece of molding or do a little bit of siding. It’s cheaper for us to do that than to wait 10 days and stop everything.

Peter Ryabikin: I’ve heard about that, and that’s probably been our biggest thing this year. Last year is the windows. So it takes two weeks to order a window. So we know all the stock sizes and we’ll buy the closest stock size from Home Depot and then our guys will frame it in a little smaller, frame it in a little bigger but it gets done the first week.

Danny Johnson: That’s a good idea.

Peter Ryabikin: It’s huge. It’s been helping us a lot. In nicer houses and bigger ones, we’ll order them when we have time and custom windows but we get away with the stock ones. They’re nice windows.

Danny Johnson: So after the plumbing, electrical, and the windows and everything, then you sheetrock.

Peter Ryabikin: Yup, sheetrock. And one thing we do—some people might not agree—is we get all the tile, cabinet, install laminate flooring, tile. Everything done before paint. So all of that gets completed and then the painters come in and they’ll just mask everything. They’re painting our houses probably four or five days total.

Danny Johnson: And the benefit of that is you don’t have all the damage done to the painted walls, right?

Peter Ryabikin: Yeah, exactly. And it seems to work a little quicker. As soon as the painters are done, the house is pretty much done. It just needs final plumbing, final electrical, and we put staging in every single house. That’s been—

Jason Vickery:Refrigerators.

Peter Ryabikin: The what?

Jason Vickery:Refrigerators. We’ve been putting those in pretty much all of the houses because these houses are small.

Peter Ryabikin: We’re trying to make up for the kind of weird layouts. And if it’s a bigger kitchen, we probably won’t do a fridge. If it’s a smaller weird layout in the kitchen, we’ll add a fridge to make it feel nicer and I guess feel bigger.

Danny Johnson: Do you guys use granite in all the rehabs? What do you use for countertops and cabinets?

Jason Vickery:We’re selling these 800-square foot houses for 275 to 300 in Portland. So anything that’s under range, we’re putting in butcher block that we get from Ikea. So our countertops are like 300 bucks.

Danny Johnson: Melissa, I think, told me something about that. How many linear feet is that for a countertop?

Peter Ryabikin: There are 8-foot and 6-foot pieces. They’re, I think, around $140 a piece.

Danny Johnson: Wow.

Peter Ryabikin: So it’s kind of like the preformed Formica stuff. Laminated countertops you’d get at Home Depot, but it looks a little nicer. You’ve seen the pictures. It’s kind of always the same thing. White cabinets, the butcher block, and subway tile backsplash.

Danny Johnson: Are you getting the cabinets from Home Depot?

Peter Ryabikin: Lowe’s. We get those at Lowe’s because Home Depot, one of the stores just started carrying those cabinets because of us because we’ve been telling them, “You need to get these in because I have to go to Lowe’s all the time.” Good cabinets, and I’m not a big fan of Lowe’s.

Danny Johnson: So are you getting the prefinished ones?

Peter Ryabikin: Yeah.

Jason Vickery:White checkered.

Danny Johnson: Yeah, looked nice. Would you guys mind posting some pictures on the Flip Pilot group, on the Facebook group so people can see the rehab? Just like do one post with a bunch of pictures or something.

Jason Vickery:Yeah.

Danny Johnson: That’ll be awesome. And then anybody listening that’s not already a member of the Flip Pilot group, if you go to flippilot.com, you can get an invitation to that closed Facebook group. And it’s been growing like crazy. A lot of people are interacting. The main point of the group is just for people to focus more on their business instead of in the business and trying to get everybody that’s interested in doing that, setting up their business that way to be a part of it. So Jason and Peter. I think you’re in there, Peter. Are you?

Peter Ryabikin: Yeah. You guys finally added me. Jason always gets all the credit, and I get to do the dirty work.

Danny Johnson: So flippilot.com. You get an invitation in there so you can get invited into that group. It’s pretty cool. And then Jason and Peter will post those pictures of the beautiful rehabs. You finished the flooring, painting, all that kind of stuff, get the cabinets and countertops and then light fixtures. I guess after all that and finishing touches.

Peter Ryabikin: After painting, I usually have an order for the very end where it’s plumbing, fixtures, light fixtures, doorknobs, and stuff like that. And the guys come in after the paint is done. It takes one day for a plumber, one day electrical, and finish guy and then we get it cleaned and staged the same day.

Jason Vickery:He also does volume orders through the Pro Desk, too. So he’ll walk through the house the day we get it or before we even close on it. He’ll have a list of all the materials that he’s going to get. He’ll go ahead and do one large order and either have it delivered or kind of pick it up.

Danny Johnson: Nice. So, what kind of discounts do you guys get? Or is it a special one because of relationship? Or is it a standard thing that people could ask for?

Peter Ryabikin: Home Depot has a volume bid if you’re spending over—I think we’re down with a thousand. But when you’re starting out, it’s 1500. You run it through the Pro Desk. It’s probably usually about 10% off at least.

Danny Johnson: Not bad.

Peter Ryabikin: So we’re getting that and they have a fuel rewards program. So for the past year, I’ve been filling up for 38 cents for Jason’s and my truck because we’re doing so much orders. You get 10 cents for every $1000 that you spend.

Danny Johnson: That’s awesome.

Peter Ryabikin: It’s kind of nice to have that. They’ll text us sometimes if they have something on sale or something discontinued, some nice appliances that have a little dent.

Jason Vickery:We bought a whole set of windows that were custom windows for 100 bucks because they were going to throw them in the garbage.

Danny Johnson: Nice. That’s awesome.

Jason Vickery:So everything is just at Home Depot.

Danny Johnson: You know what I used to do is—I don’t know if I should say it or not. But whenever we were still buying materials and stuff at Home Depot, there used to be this 20% off coupons that you could get from Home Depot and I would buy them on eBay, I think.

Peter Ryabikin: Yup. I did that, too.

Jason Vickery:We used to do that.

Danny Johnson: You get the whole packs over, right? And you just go use them.

Peter Ryabikin: The Lowe’s ones and then Depot matched them.

Danny Johnson: They don’t do that anymore, do they? I don’t think. They were like the employee ones or something, right?

Peter Ryabikin: Yeah. People started printing them and selling the fake ones on eBay, and I think they stopped that.

Danny Johnson: Yeah, because I think a couple of times they just say, “This isn’t valid,” or something but they would still honor it. It’s kind of crazy. So anyway. So, a bunch of people are going to go out and start searching eBay right now for Home Depot 20% off. If it says like 50% off, it’s probably fake, right?

Jason Vickery:Just do a change of address every couple of months and they send you all kinds of them. I got about 15 of them from Lowe’s right now.

Danny Johnson: Nice. How much off though?

Jason Vickery:It says 10%, so Home Depot will take $50 off.

Danny Johnson: So they do still do it and it’s valid from Home Depot.

Jason Vickery:Yeah.

Danny Johnson: Nice.

Jason Vickery:You have to pick a valid card and it’s printed out properly.

Danny Johnson: That’s cool. Let’s see. So what else? So I guess we talked a little bit about some of the issues that you guys have encountered when you’re trying to work on a house. But when you’re trying to sell the rehabs, have you guys run into any issues selling them that other people might run into with appraisals or people breaking in, vandalism? Anything?

Jason Vickery:We’ve had a lot of theft. We had appraisal issues last year towards the end of the summer where they were just taking forever. That seems to have gotten a little bit better. We haven’t had any of those issues lately. Most of the stuff goes pretty quick. We’ve got one right now that had a deed restriction so we got to hold that. It’s been done. We have that done in three and a half weeks. We got a buyer. We can’t close on it until 4th of July.

Danny Johnson: Oh, man. So what do you do in cases like that?

Jason Vickery:It just sits there. We’ve got the repair addendum to get done. We can’t close on it because there’s a restriction.

Danny Johnson: So when the appraisals take a long time to get done, is there anything that you can do to request. It’s just that you can’t find a good appraiser to go out and—

Peter Ryabikin: The buyers are the ones that are ordering it. Last year, they were so backed up that it was taking five to six weeks for appraisals. So last probably 10 houses have been fine and the values are coming in good. We haven’t had a volume not come in good. I can even remember last time they’re always coming in good.

Danny Johnson: Awesome. So what about—?

Jason Vickery: We would get them to order the appraisal as soon as the offer is accepted, too. So that’s probably helped a little bit, too.

Danny Johnson: So you’re not waiting until and having to push everything. So you’ve had squatters, right? And then like vandalism and everything like that. Is there anything that you do to try to prevent that from happening?

Peter Ryabikin: Simplisafe.com just started that so we got those cameras. We haven’t connected with the one we’re testing. It has a nice alarm like it’ll scare them up. I think two weeks ago, a realtor came and the doors were open. Someone broke in, but I think the alarm went off and scared them off.

Danny Johnson: So what does SimpliSafe have? What are the features?

Jason Vickery:It’s just a basic security system. It’s got the horn. You can put on, I think, three sensors for your doors. You’re supposed to link it and get a permit. I haven’t actually done that yet. So the cops do come then we’ll probably get fined, but that’s what I got to do here.

Danny Johnson: Because it dials out to the police?

Jason Vickery:It doesn’t dial out, but I didn’t realize you needed to get a permit until I moved in to my house and I was getting this security system put in and they—

Danny Johnson: I think if it communicates to the police is when you need the permit, I think.

Peter Ryabikin: But it does communicate if you sign up for the service.

Jason Vickery:There is a service for it.

Danny Johnson: Because we use Lowe’s Iris one, I think, and it just goes to my cellphone and then I have to call the police.

Peter Ryabikin: We had one like last week where someone broke in and just took a shower and left. They didn’t touch anything. So a lot of them are pretty weird. We’re trying to change the locks out.

Jason Vickery:We try and talk to the neighbors too when we first buy it. We used to take them letters, but we don’t do it anymore. I’ll give them business card if I’m there so they’ll watch out. They know we’re remodeling the house. If somebody is in there in the middle of the night, call the police.

Danny Johnson: That’s a good idea. And to give them your contact info. Because if they see something happening but they don’t want to call the police, they would probably call you if they have your contact info. They can do that so you can take care of it.

Jason Vickery:The last time, she called me every night because we’ve got broken into, I think, four nights in a row.

Danny Johnson: Oh, man. That sounds like a house—

Peter Ryabikin: This is fairly new. There has not been an issue like this. I’ve been doing this for eight years. This year is really bad. Last year was not as bad, but it seems like it’s becoming a bigger issue with break-ins. They’re not super bad areas. This is $300,000 houses that are 800 square feet in Southeast Portland. They have not enough houses, I guess, or there’s—

Jason Vickery:It’s because we’re a sanctuary city and the mayor doesn’t do anything about it.

Danny Johnson: They could have something to do with it. We had a house one time that was a nightmare. It had an in-ground pool too, and the kids just love it. There was a street behind it and you had to go way around to get into one neighborhood from the other. And so they knew the house was vacant so they just love going through the fence and saw that was vacant. We got the pool filled up and looking great, so they decided to hang out there at night. I guess the neighbor was saying that they would jump from the roof into the pool and spray painted up the exterior of the house and all kinds of stuff and even the interior, too. So it was like a safety thing too, right? Because if somebody gets hurt doing that, then they sue you for it and all that kind of stuff. We put TVs on and stuff and put curtains up on the windows so they couldn’t tell if it was vacant or wondered if somebody was in there watching TV, but that only worked for a little while, I think, before they realized. It’s like all night long the same.

Jason Vickery:You could put a manikin on a record player that goes—

Danny Johnson: I should’ve, yeah. That whole stuff. Keep playing that one movie over and over again. Awesome. Are you guys going to be trying to do more wholesaling? Or are you sticking with the rehabbing just because it’s so much more profitable and it’s harder to find enough deals to be able to crank up the wholesaling?

Jason Vickery:We’ve been trying to do more wholesaling. That was kind of my focus the beginning of this year. It’s just hard finding people that really want to do the sales and things like that. So recently 45 days ago, we agreed to bring on somebody that were splitting. So he does all the sales end of it. So they answer all our calls. They go to all the appointments. They do all that frontend stuff. We pay for the marketing. We gave them all of our dead leads so they can convert those. He gets 60% of the dead leads. We split 50/50. Percentage-wise and the numbers that we ran, it will make the same amount of money and we won’t have to do as much work.

Danny Johnson: It’s awesome.

Jason Vickery: Not manage as many people. He manages the wholesales thing which she’s good at. We can work on the flips and networking and do the marketing.

Danny Johnson: Great.

Jason Vickery:Your pay-per-click will start bringing us more leads.

Danny Johnson: It’s awesome. Let me see. Peter, do you enjoy the rehabbing so much that you’re going to say managing the rehabs? What do you want to do if you don’t mind my asking?

Peter Ryabikin: I want to retire.

Jason Vickery:He’s like 22.

Peter Ryabikin: I was going to talk about it if you would ask me about my background but you only asked about Jason’s.

Danny Johnson: No, I asked about both of you guys. You didn’t say anything though. So go ahead and share your background.

Peter Ryabikin: So I started doing this. I dropped out of school and did some construction, opened up a roofing company with a friend in 2006 and then we split up about a year later. So I was generally working on my own. And then late 2009 or early 2010, I was posting Craigslist ads for roofing. I guy reached out. I gave him a bid. And he asked me if I do remodeling. And 2009 and 2010 was kind of slow for everybody so I told him, “Sure. Why not?” I didn’t know what I was doing. I just called up people, googled what an egress window is and pretty much everything. And did the first flip for him. Lost money. Basically, managing it. I was doing a lot of stuff myself. So probably 15 to 20 houses I did as a GC, maybe 30. And then, I started talking to people and pondering with them on flips. They buy the house. I run the projects. Split 50/50.

Danny Johnson: How did you find those investors? When you started partnering with them, how are you finding them? Was it on forums online? Or was it just meetups?

Peter Ryabikin: No. This one guy I met from Craigslist. I’m not a hard money lender. Back then, he used to actually come to the jobsites and bring the checks and I met the realtor. They had a little network already. So I kind of started talking to the people. And eventually, I started doing stuff on my own until I partnered up with Jason. So that’s how. And after eight years, I’m getting a little tired of being the general contractor.

Danny Johnson: So you’re making plans to replace yourself in that position?

Peter Ryabikin: Yeah, kind of. I have a guy in mind.

Jason Vickery:He has a hard time letting go control of things though.

Peter Ryabikin: I have a hard time believing that someone could do what I do this quick. I’ve probably done 140 houses by now, maybe more. I don’t even think about it when I do this stuff now. So to train someone, it’s going to take me as much work as just doing it myself at this point. I have been watching on someone that’s going to be doing most of this stuff so I could just manage it. Our goal is to kind of do more wholesaling and pick the good deals to flip and maybe not do as many. So we’ll see.

Danny Johnson: That’s a good way to do. Because to keep going, you’ve got to keep doing every one of them like putting in that work. You already know, right? But I think believing that somebody else can do just as good as you is important too because I had the same things about acquisitions people and finding somebody. And it was really hard for me to let go, but I’m glad I did.

Peter Ryabikin: But it’s getting better. Even when we partnered three years ago, we did a bit of some build the deck and someone bids it too high. We were like 1000 bucks, we could do it ourselves in four hours. So we just do it with them.

Jason Vickery:They don’t show up to finish the hardwood floors we put in. We don’t do that anymore.

Peter Ryabikin: So we have better subs now. And eventually one of them is going to hopefully become the main guy. I could just kind of maybe meet him a few times at the house and tell him, “Let’s move this wall here. Let’s do this.” It also depends on how the marketing goes. It’s been pretty hot for a while here.

Danny Johnson: I hope that continues, right? What do you guys think the market is going to do? Positive.

Jason Vickery:I hope it’s going to be good for a couple more years. We’re going to probably push as hard as we can and buy as many as we can until about August. And then, we’ll finish those up. I don’t know how many we’re going to buy towards the end of the year just to see how things are selling and how the market is going. We are ready this year. We started buying a lot in December and January. So we had quite a few already going. Most people take that time off, and they’re not doing a lot. A lot of wholesalers quit marketing in December. So I don’t know. It’s hard to predict. We just want to be careful. We don’t have too much out there. And it gets stuck with 12 to 15 houses. Our margin is pretty good where we could cut our price and we could sell them and we wouldn’t lose money on majority of them.

Danny Johnson: And so, what kind of margins are you guys typically going for?

Jason Vickery:We try and shoot for the 20% to 25% return on investment. We usually don’t look real close at the percentage until the end. Usually, our calculator we look at. If we’re going to be doing a $30,000 to $40,000 rehab, we want to make 30 to 40 after paying everything. All our hard money, holding cost, closing cost. All of that is in our calculator.

Peter Ryabikin: So probably on the deals we do we’re averaging, let’s say, between 15% and 20% return on investment.

Danny Johnson: Nice.

Peter Ryabikin: So it just kind of depends. Sometimes we’ll go a little less if it’s a deal that we know. We could do it in two weeks in and out. And at summer, it’ll sell quick. So sometimes we’ll take more riskier deals. We will stop doing that in August.

Danny Johnson: That’s cool. What’s the days on market typically for typical deals that you guys are doing?

Peter Ryabikin: Twelve hours.

Danny Johnson: What’s that? Twelve hours?

Peter Ryabikin: No, the worst one probably two weeks. Two weeks we’re kind of start panicking. Not panicking where like, “Should we drop the price a little bit?” Usually, it’s first week we have an offer.

Danny Johnson: Do you price it at the top of the market? Or do you always price it just slightly lower to help move it that fast?

Jason Vickery:Too low. They’ve been pretty close to what they’re actually worth.

Peter Ryabikin: We don’t put price. It’s probably right market value, maybe slightly more but we’re not trying to go 15 to 20 grand over and drop the price two weeks later.

Danny Johnson: It sells really quick. So do you think it’s more of just like the product? Like the houses that you’re selling are nicer than the other ones available that’s why they move so fast?

Peter Ryabikin: I think everything is selling. And obviously, it’s a remodeled house. I see a lot of people are doing just paint and carpet. Every house, we’re changing all the doors, trim. It’s almost like a new house.

Jason Vickery:And the median price range in Portland, I think, is 370 so we’re under the median. So anything that we put up is going to sell pretty quick because in the market there’s only 1.3 months in the market right now with inventory. So stuff still grow.

Danny Johnson: I’m always impressed when people know that number, how many months of inventory.

Jason Vickery:We now work with a lot of realtors so—

Danny Johnson: So that’s why. I always feel bad that I don’t know. I have no idea. I don’t know. It’s probably something like that here. I could probably just make something up and everybody would think it was right.

Jason Vickery:We have two main realtors in Oregon, and we have one in Washington. And then, we’d network with other realtors to where if they bring us a deal, then they get the list back. We didn’t do a year and a half ago. We were very committed to one realtor and we started losing wholesale deals and losing things because we weren’t getting the list back.

Danny Johnson: You mean you talk with them and build a relationship before you bring up doing that? Or is that just whenever you make the offers you say, “When we go to sell this, we’ll list it back.”? How are you—?

Jason Vickery:Most of that is like referrals from other people. In Washington, our realtor, she’s found us I think three deals in Portland. I was like, “Hey, this realtor is out of my office but she’s not licensed in Oregon so she’ll refer. If these guys will be able to close her deal, I’ll cash.” So she’ll put us in touch and she gets the list back.

Danny Johnson: Nice. That’s awesome. Well, this has been a great episode. I really do appreciate you guys both sharing your stories and process of rehabbing and all that kind of stuff. For anybody listening that wants to get a hold of you guys or in contact with you, what’s the best way for them to do that?

Jason Vickery:Probably by email. My email is jason—can I just include it?

Danny Johnson: Yeah. Go ahead though.

Jason Vickery:It’s jason@nwpropertyinvestmentsllc.com.

Danny Johnson: So jason@nwpropertyinvestmentsllc.com. And Peter, yours is peter at the same?

Peter Ryabikin: Yup.

Danny Johnson: Awesome. You’re going to get a bunch of spam now. Watch. I’m just kidding. You have a bunch of magazine subscriptions, right? I get a bunch of emails from Williams-Sonoma with receipts. It’s like somebody is putting my email address whenever they buy something. I’m getting all these receipts. It’s weird.

Anyway, so I appreciate it. And I’ll include that in the show notes. It’s flippingjunkie.com/78. And then Jason and Peter are going to include images of their finished product—the rehab is really awesome—on the Flip Pilot group. So joint the Flip Pilot Facebook group if you haven’t. And Jason and Peter also love our PPC managed AdWords that we do for them through LeadPropeller. It’s highly recommend, but not if you’re in Portland. If you’re Portland, you’re going to have to go elsewhere. Anyway, thanks again [music] guys. I appreciate it.

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