Posted on: April 15, 2020
WI 406 | Marketing Tool

 

At this time of economic uncertainty and social distancing, many entrepreneurs have resorted to the best alternative available—doing things virtually. If it’s something you’re not accustomed to, you’d be delighted to know using the right tools can make the transition a lot easier!

Today’s brilliant guest is Matt Hedstrom. Matt is the brains behind Rehab Estimator Pro, an advanced tool that can help you evaluate ON THE SPOT what a property needs to get done and how much the repair (if any) will cost. That means before you leave any property, you’ll be able to provide the seller with an offer AND have the details to back it up!

In this episode, discover who the tool is for, how you can use it, and how your business can benefit from it. With tools like Rehab Estimator Pro, you’ll not only be able to make your transition to the virtual world seamless, you can also ensure the impact of today’s economic downturn on your business stays minimal!

Doing Deals From Home – The Marketing Tool You Can’t Do Without With Matt Hedstrom

Episode Transcription

This is a very important episode because we got a lot going on in the market. We’ve been talking a lot about how we’re more effective in doing things virtually. To do things virtually, you need tools like Zoom, JoinMe, and all that type of stuff. I’ve come across a tool and when Matt showed this to me, we jumped all over it because it was able to come in and help us take our virtual process to another level. What are we talking about? If you’re sticking around, this is what you want to know. This is a tool that’s going to help you do virtual marketing at a whole other level. My guest is Matt Hedstrom with Rehab Estimator Pro. Matt, how are you?

I’m doing well. Thank you for having me.

Let’s talk about this thing that you’ve built. Before we even get into it, I want to know how did you get this idea to build a software that would help us estimate the repairs on a property? As we’ll talk, to be able to do it virtually. Where did you come up with this?

Most of what I produce is usually for me and my team because we’re still doing deals every day. This was developed as something for us to make it simpler. I’ve been a general contractor for over 25 years. It was developed for our team to make this simple. Once people started seeing it, it blew up. We wanted to make it easy for anybody. My goal setting out was, “How can I get my bookkeeper even out to appointments and trust what they’re doing out there as far as getting repair costs and getting our takedown number?” That was the basis of it.

You’ve built this to scratch your itch, which is what I always love when things develop as you look around your operations and go, “I got to fix this.” You realize you built something that everybody can benefit from, which is what you’ve done. The thing I love about Rehab Estimator Pro as I’ve learned and as you say, there are two things you can’t screw up in a deal or you’re in trouble. What are the two things you can’t screw up?

To anybody in this business, there are two things you can’t screw up, your ARV or the After Repair Value and then your repair costs after that. If you screw those up, your deal is gone.

How many investors and wholesalers are frustrated because their repair amounts on a property are not accurate or are not even being done accurately?

That is one of the biggest things in this business that takes you down so fast and earns you a bad reputation as well. Those numbers have to be accurate enough to take that deal down. It is one of the biggest pain points in this business. I tell people all the time, “One of the hardest parts about this business is dealing with contractors.” To even get to that contractor stage, you’ve got to have an accurate way to estimate repairs quickly.

One of the biggest questions that always come up and even with newer investors is deal or no deal? Do I have a deal? Do I not have a deal? You’re right. You know you have a deal if you can figure out two things. What is the after repair value? If this property is fixed up, what is it going to sell for? On top of that, to figure out what profit I can make on it, I need to be able to determine the repair amount. Usually, the ARV is easier to figure out by utilizing the Multiple Listing Service, and then the actual repairs on a property. I get that. You finally have this program that allows you to efficiently get in and determine the repair amount. Give us a philosophical walkthrough of how this thing works.

One of the hardest parts of this business is dealing with contractors.

We all have access in some way or another, whether it’s through apps or other tools that connect to the MLS or using the MLS. Everybody gets highly trained on that, but then we expect people to understand how repairs work. You go and teach people. Here’s the deal, you can attend a three-day training event and learn the basics of real estate. It’s insulting to me to say, “From your cubicle, you can direct the job site and figure out the repair costs and run subs. It was $40,000. That’s all you need for the repairs.” It is insulting in that way and also extremely dangerous. Why do we have a system like the MLS that we trust for our accounts or ARV? When it comes to repairs, we all wing it, pull a number out of our rear end and go, “It will be about $30,000 to $40,000 on this one.”

We all trust the MLS for the ARV and it’s true. If you’re a real estate agent or a lender, it doesn’t matter. If you think about it, there’s no trusted system that allows us to all get on the same page about what the repair of a property should be. That’s why everybody is frustrated about this because nobody is on the same page.

We have so many systems and there are so many great CRM systems out there. They all have some repair estimator in them. You have to do that, but you open them up and there are 4,000 lines that you have to go through and say, “We need to know the lineal footage of crown, the square yards of carpet, and how many squares are on the roof.” Most people have no idea. They’re not going to calculate these things. The basis and philosophy behind this are that you can go through a checkbox system on the screen and check off the things you need and it will automatically calculate your repair costs.

Let me ask you this. How easy is this to use on a scale of 1 to 10? You built it so you’re going to think it’s easy but I’m a newbie investor. I don’t know a lot about repairs. How easy is your system to use to generate a number that I can count on?

I love that because the approach that I started with was how can I send my bookkeeper out to do what I do? How can I trust them to go out and do? With all the experience I have, is my company going to be based on me only? Getting in every single deal, I can’t do that. This forces you as an investor, a newbie or even uneducated. You’ve been doing this for a long time. It’s like a checklist. You pull up to a house.

Most of us as investors, we know. We haven’t even gotten to the front door and we’re already checking out. We’re looking at the roof, the siding, the gutters and the yard. This forces you to look at all of the main components of a house. When you walk in, it’s going to ask you. When you check on the interior, exterior and mechanicals, it’s going to force you to look at the furnace, the AC, the electrical panel, the water heater, the kitchen and the baths. It’s a checklist system as well that you’re being forced to go through so you don’t forget anything.

I’m visualizing it. I’m doing this for the audience as you’re thinking about it. I walk up to the house. I have an app. The app is going to remind me of everything I need to look at because it’s going to require a check or a no check. As I check it, it’s automatically going to start pulling up the repairs. As I’m checking, it’s tallying a total at the bottom of the screen. That’s how you do it. Here’s my question. On average, does it take an hour to go through this process? How long does it take to utilize this on the house?

I want you to be in and out of that house in less than thirteen minutes. That’s average. I don’t even want you to bring in a tape measure or a ladder in the house. Long gone are the days where you think about the advantage you have, where you walk into a house and you are instantly calculating your repair cost based on what you’re seeing, knowing that the kitchen does need to be updated and the flooring needs to be updated. It’s a process that you walk through. You get it done and all of those things are done for you.

I might feel a little bit pigeonholed in checking boxes. What if something in the house is different or unique? How is your software going to help me figure that out?

WI 406 | Marketing Tool

Marketing Tool: You can’t screw up your ARV (After Repair Value) and your repair costs after that. When you screw those up, your deal’s done.

 

On the front end, it’s going to put you through three main elements, exterior, interior and miscellaneous and mechanical. That’s going to be 99% of what you’re going to do. For the experienced investor or those who need to, maybe you see that there’s a certain part of the soffit that needs to be done. You can guess, “There’s 10-feet of this.” On the backend, there are hundreds of line items where you can go in and put exact dimensions.

You have a checkbox system on the front end but on the backend, you can add, “We only need to replace the flooring in the kitchen.” That’s specifically used for more like rental properties too. As a whole, if you’re doing rehab or you’re in a wholesaler coming in to look at the whole house, it’s easy to do but there’s a whole other backend where you can add all miscellaneous items that are already preloaded for you.

You can customize it as needed. The reason I threw that objection to you is that’s the objection that my team threw at you when we were sizing this up for ourselves, “What happens in this scenario?” You’re like, “You can customize it.” For my director’s disposition, as I talked to her, she’s like, “That’s my favorite part. I don’t feel like I’m pigeonholed into this process. It’s flexible to do what I need to do depending on the circumstance.” Another question that is going to come up is like, “Matt, I get it. It’s cool but markets are different. Costs are different around the country. How can you build a software that’s accurate from East Coast to West Coast?”

I’m prepared for that question because this is the number one objection that we get all the time. My first response to that was I had to play around with this a little because I went around the country first meeting with investors all over. Most markets were shocked at how close everyone’s pricing was. I asked, “Does a can of paint cost any different if you buy it in LA, Columbus, Ohio or New York?” It’s the same price. If a painter charges $25 an hour, which we don’t base it on that but in dealing with contractors all over the country and with hedge fund pricing, a painter charges $25 an hour. They don’t charge $800 an hour in California. It’s just that the houses are 10,000 square feet versus 1,200 square feet. That’s what it’s basing it on. The prices are very accurate.

What you’re saying is, “It doesn’t matter the state I’m in. This system is going to work for me.” That’s important. How can you create a universal system that doesn’t work universally? What I understand from your vision for this thing is just like the MLS is the trusted system for ARV, Rehab Estimator Pro becomes the national trusted system for repairs. It’s got to work in every state to be able to do that. I got another question. Who is this system for? Is it for the newbie or the seasoned person? Who did you build this for? Who should be using it?

What we’ve found, and this is the best, is it really is the latter. It covers everyone. Number one is the wholesaler. It’s a low barrier to entry. You got all this education out there. People come in. What is the number one thing that wholesalers get ridiculed for all the time? It’s repair cost. They’ll show pictures and a tree is sticking out of the middle of the living room. They’ll say, “$5,000 in repairs only.” Everybody laughs but it’s true. This is for the wholesaler to get out of the gate and charge. Next is for that end investor that’s buying this property from that wholesaler. They can trust the wholesaler’s numbers.

Next, you have your contractors in line. Your contractor has to trust what you’re doing. You’re not bringing your general contractor to every single deal you’re looking at. That doesn’t work. What about your private money lender or hard money lender? If you’re using a system that everybody trusts, even your contractor, your lender doesn’t have to go figure out if your repairs are on or off. It is for everybody.

What you said is important. It’s that ability to generate trust. Let’s go the lender route because that’s an important one. If I want to rehab a property, unless I’ve got the cash to do that, I’m going to need to go get private lending or a hard money lender. How am I going to walk in there and present that potential deal?

The lender is going to do their due diligence but if I’ve got a nice software system that looks sophisticated, which it is and shows this level of professionalism, that lender is going to take me a bit more seriously than the other person that submits the regular type of paperwork. I can tell you with a private lender because I’ve raised a lot of private money, that’s a different person. They want a better presentation in the beginning before they build that relationship to trust you.

An accurate repair amount is one of the biggest things in this business that takes you down so fast and earns you a bad reputation.

You nailed it because here’s what we do when we get into our private money lenders. There’s so much money around. Even with comps, you’re trying to tell a story. You’re trying to give them something and get them to lend to you. You can even do live Zoom on the MLS and show them instead of giving them the comps you want them to see. It’s the same thing for the repair cost. This breaks down an entire scope of work besides just giving you a number, plus it gives you a one-page contract. You’re able to deliver an entire scope of work with numbers beside each itemized line to your lender. It’s a great word, which is trust.

You were talking about some advantages of utilizing this program along with your contractors. Will you talk a little bit about that?

Here’s the thing, I love using this as a tool. Let’s take the newbie who is even nervous about meeting with contractors. Contractors are always trying to take advantage of us. What a great way to sit down, take them out to lunch and say, “I’ve got this national pricing tool. I need to go over this with you. Maybe you can bring a couple of houses you did. We can go through the numbers and see if we’re close.” It works all the time. It helps you develop a relationship and it takes seconds to change that pricing as well.

Let’s say your guy says, “Your paint says $3,500 on here. You’re at about $2.50 a square foot. I get it done for about $2.40 a square foot. My numbers are a little low.” You can go and change your parameters, which changes it for your entire system and take the numbers that maybe you and your contractor decide on.

I love what you said about that, particularly for someone new because I know that feeling when I was first walking through deals myself in the beginning. You sit with that contractor. You know you’re outgunned. That guy has been doing contracting work for 15 or 20 years. He knows how to manipulate it. I love what you said. In my opinion, this is a little bit of a guard for yourself to make sure that I’m not being taken advantage of. It gains the respect of the contractor as well. I’m sure they get frustrated with investors going, “This guy doesn’t know what he’s talking about.”

I want to transition to this last part, which is important. The reason that we got so excited about it outside of all the reasons we said, those were strong enough for us to pull the trigger but this was the cherry on top, is the fact that based on what’s happening, everything needs to be done virtually. I’ve talked and done some videos on how you can deal directly with the seller virtually and maintain social distancing with the backside cash investor, and then we looked at this tool. We said, “This is prime time. The environment we’re in is for the best use of this tool.” If I’m listening and I’m like, “How can this tool help me with the situation that’s going on and the need to stay virtual?” Walk us through some of those applications.

It’s funny you bring that up because as everybody’s shifting and focusing on that, we’ve been doing that for a couple of years. Picture this, imagine having a dual-screen up. Let’s say all you have access to is Zillow. You pull up a Zillow listing and got all these pictures. It’s For Sale By Owner. You can take on your other screen, have REP up, go through and hit the checkboxes. “It looks like it needs a roof, landscaping and painted flooring.”

As you’re going through that, you come up with an entire scope of work and a cash offer, two other offers as seller finance. You’re able to push that contract and email it right from the system to either the homeowner or the agent. You can send offers all day long right from your office. We did this. We had a seller send us a video of them since nobody wants you to come to their house. They went through and took a live video. They walked through the entire house, showed us every room, and we sent an offer immediately by email.

You’re saying you can pull the video up, pull up Rehab Estimator Pro, watch the video and fill it out in real-time. You know what the repair amount is going to be, and then shoot an offer from the system. That’s about as virtual as it gets right there. That’s why we’re all over it because it’s speeding up our process. We’re doing everything via video.

WI 406 | Marketing Tool

Marketing Tool: One thing that wholesalers get ridiculed for all the time is the repair costs.

 

Our in-house inspector cannot go into the house like he normally does. He can do the same process utilizing the software. That’s why we got so excited about it because we’re like, “This is extremely applicable for us.” I know a question everybody is asking is about cost and so forth and, “Where do I go to find more?” One of the things you did was cool when I was talking to you about this.

If you don’t know Matt Hedstrom, he has the biggest heart. I’m not even going to embarrass you with everything I know about your giving but you’re one of the most generous guys I know. With what you’ve got set up, you’re doing a promo where you can get 70% off of the monthly cost. This isn’t just for one month. This is long-term. If somebody wants to find out more like, “What’s the promo code? I’m all over this. Give me my 70% discount. I’m in,” where do they go? How does that work?

You can go to Rehab Estimator Pro or REIEstimatorPro.com. Make sure that when you hit register, put in the coupon code REIRADIO and that will get you down for your audience to less than $30 a month.

As he said, the promo code is REIRADIO. He did this for REI Radio, which we appreciate. He first shared it with our community and our students. I love it. Matt, I do this as well. You’ve been processing the idea of advertising on the radio. I want to tell you one thing before we drop you off. The radio stations have more than softened. They are losing advertisers. Before you would go in, they might be a little bit cocky about their inventory or maybe try to play like, “We don’t need your advertising dollars.” I’m talking to our students and they’re like, “I called the same rat back from weeks ago that ignored me. He agreed right on the phone to my pricing.”

This is the time to get rock bottom pricing on radio, plus, they’re throwing at our students free stuff. We had one student who was like, “I’ll give you that price and I’ll tell you what else I’ll do. I’ll give you free spots on another radio station that we have.” They’re giving away free stuff because honestly, they’re in trouble because the inventory’s low.

If you’ve been reading, you know we coach on radio. In all my years, I’ve never seen radio stations respond like this. If you’re interested in that, go to WholesalingInc.com/REIRadio and book a call. Make sure your market is open. More markets are starting to go faster because people realize it’s a great time to do radio.

Matt, thank you so much from my team and me. I was talking with my COO and I’m on a group text about additions and things that we’re using your app for. I appreciate it. It’s a great tool for us.

Thanks for having me on.

We’ll talk to you later.

 

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About Chris Arnold

Chris Arnold is a 15-year Real Estate veteran who has closed over 2500 single-family real estate transactions in the DFW metroplex. Chris is the founder of multiple companies that are managed by a US virtual team, which allows Chris to run his organizations while living in Tulum, Mexico full time. His passion for leaders has led to the creation of Multipliersbrotherhood which serves the top 5% of real estate entrepreneurs out of the US. Most recently Chris has launched his REI Radio coaching program. This program is designed to teach real estate investors the marketing stream that everyone knows about but NO ONE is doing!

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