How to Hire the Right Contractor for Your Flip (and Stop Losing Money on Bad Rehab Jobs)

Share via:

• Facebook
• X (Twitter)
• LinkedIn
• More

Subscribe via:

Show Summary

In this episode of the Real Estate Pros podcast, host Michelle Kesil interviews Joshua Klein, a general contractor from Alabama, who shares his insights on flipping houses, remodeling, and scaling a real estate business. Joshua discusses strategies for finding profitable properties, working closely with clients, and the importance of education in the contracting industry. He emphasizes tackling challenging properties, understanding local property codes, and the value of hands-on experience. Joshua also explores innovative approaches to business growth, including self-sufficiency by creating his own lumber and custom countertops, staying updated with design trends, and leveraging networking and technology to enhance operations. The conversation concludes with Joshua inviting listeners to connect for further learning and collaboration.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Joshua Klein’s Website
    • Joshua Klein on Tiktok
    • Joshua Klein’s Phone Number: (251) 504-3179

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Joshua Klein (00:00)
  You are, but the sewer is still there. The water is there. The electricity is there. The power pole is there. The land itself has already been surveyed. You already have a footprint to put back, right?

  Just grab the burnt property. You have all of these things that are at your disposal already. The footers are almost 90 % good. They never have to really deal with the footers. Maybe the foundation coming up. But you mitigate a lot of things. And ⁓ it’s been some of my highest profit margins I’ve made. So big dogs, don’t be afraid of that type of stuff. It’s almost more costly to you.

  Michelle Kesil (02:10)
  Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil. And today I’m joined by someone I’m looking forward to chatting with, Joshua Klein, who’s been making serious moves as a general contractor in the Alabama region. So, excited to have you on the show today, Joshua.

  Joshua Klein (02:30)
  Thank you, Michelle. How are you?

  Michelle Kesil (02:32)
  Yes, good, thank you.

  Joshua Klein (02:34)
  Okay, good.

  Michelle Kesil (02:36)
  Yeah, I think our listeners are going to take something away from how you’re approaching flips and remodels. So let’s dive into all of that.

  Joshua Klein (02:47)
  Sure, there’s a couple different ways that my company does it. So it’s Klein’s Cabinets LLC is ⁓ what I have. And then ⁓ I have something else, another different corporation that does a side project that affiliates with Klein’s Cabinets LLC. So how I kind of go about flips is I really kind of take a look at what some of the repair that needs to be. First start for me is, ⁓

  searching around Zulu and searching around other house properties. And I’ve used AI quite a bit to be able to find other properties that are not listed on Zulu, like private sales. It searches Marketplace and Craigslist and others. I found a lot of different kind of deals that I would never ever be able to get if it wasn’t for specific programs and tools that you can download, free most of them.

  for you to be able to find things that are a little bit lucrative. Some of the lucrative stuff I have found personally for maybe you out there, there’s deals that where you could get maybe 20, 80, 70, 30, 60, 40. Well, I guess what I’m saying with that is that the client owns it for X amount of time.

  and then ⁓ you get X amount of the profit. So there’s different deals that I have done in the past for rental agreements, ⁓ partnering with in conjunction, making something stair step down until I own it. And then once I own it, then I can actually ⁓ be able to turn it. And it’s a good way to mitigate ⁓ between I don’t cover all of the costs, the client does. And when we end up doing that, they end up receiving a higher rent.

  ⁓ and then we stair-step it till I own it. So the liability shifts after 50%. So skating the liability in the improvements ⁓ makes the difference, but it’s all in the paperwork. There’s different ways to be able to handle it. That’s one thing, the way I’ve done flips. ⁓ Another one is buying them outright.

  And then if you buy them outright, you gotta have the capital to do it. Not everybody can do that type of thing. ⁓ So some of the other ways are,

  better for those of you who are starting. If you’re watching this and you’re trying to learn, because my guess is most people that do this for a living have already found their niche. When they find their niche, they generally stick to it and they don’t usually have gone through the ebbs and flows to figure out what works for them and they’re kind of doing their thing. You are going to have to find out what works for you ⁓ out there when you’re starting this. That’s why you’re here.

  ⁓ Working out different stuff that where you’re going to get percentages is a good way to start. Once you have a contract in place, now you can put ⁓ funding against it to the percentage in which that you own. So if you’re going to start, if you’re going to kind of take notes, funding and how to fund your flip is important. Not everybody has the capital. There’s ways to get capital and there’s ways to work with people that own the house already. So ⁓

  You can buy it ⁓ and turn it or you can do a certain kind of deal with the investor or with the person owning the property and you as an investor. ⁓ It’s only really good for me because I can do the work myself. So if you have the ability to do the work, I have employees, have trucks, I have things that I do here in the Huntsville area and Chattanooga area and just over the border in Georgia. there’s ⁓

  things that I’m capable of doing that most are not. But if you’re pretty handy and you want to get one, just do one to start. Don’t be afraid. Don’t be too fearful. There’s always people who want to teach you. I’m one of those. So if that’s something that you want to do, you could probably find me on TikTok. I do a lot of TikToks from time to time. It’s #KleinsCabinetsLLC. It has my telephone number on there as well. If you are a beginner and want to have

  have some trouble or whatnot, feel free to reach out and then maybe we can just ⁓ video chat with me for a few minutes and say, how do I fix this Mr. Kwan? And I’ll be able to help you, especially if you’re in my area and you’re doing this and then you bit off more than you can chew. It happens every once in a while. Really, it’s not hard. If you’re in my area, I’ll come over and see if I can’t, me and the guys, fix the small part for you and get you running.

  I want teammates in this place where I’m at. need teams. ⁓ It’s not a one person show. So if I can get you going, then maybe ⁓ later on we could help each other. But that’s how I’ve done flips and that’s how I’ve done ⁓ most of my remodels is in those very same ways.

  Michelle Kesil (08:39)
  Thank you so much for sharing your process and expertise. So is this how you work with clients, like supporting them through the process of them flipping their investments or your own or both?

  Joshua Klein (08:59)
  ⁓ Both. Some of the most fun that I’ve had, some of the more memorable moments is actually having a client and wanting to do the work with me. So they become an apprentice, right? So I’ve built a bunch of bathrooms and some kitchens where the client is just like, ⁓ can I reduce the cost if I…

  If I help you and that makes me smile. The best advertising you could have and the best forgiveness and grace you could have is when you end up having the ability to take on the actual owner of the property to help you. Because after that happens, ⁓ you know, they start to get a good idea what they want to do and what they don’t want to do for their next flip. Hiring a professional that will take you on in your area.

  and just say, can I be an apprentice? Can I ⁓ help you in some way? I’m sure it’ll help me on the back end.

  Even if it doesn’t really profit you that much, what you will learn is that you’ll have your own expertise in some way. You’ll start to gravitate to something. You’ll gravitate to ⁓ siding is something that you might be able to do. Or you’ll gravitate that, you know what, flooring’s not that hard. Or I really am on the artsier sides of stuff, so I want to do this or do that.

  you’ll start to figure out how hard things are by doing it yourself. If the contractor wants to make you happy and you’re actually in control of your project at the very same time as being taught. So you get to see all of it. If you’re gonna start doing some flips and you’re starting from scratch, that’s another good way for me to recommend for all of you out there when you’re doing just your first two or three. And you can weed out the contractors that you wanna keep versus the ones you don’t wanna keep.

  Michelle Kesil (11:30)
  Yeah, I think that’s important. Thank you for sharing that.

  Joshua Klein (11:33)
  Of course!

  Michelle Kesil (11:35)
  What have been some of the main keys that have allowed your business to be able to grow and run smoothly?

  Joshua Klein (11:48)
  Growth is not smooth. So let’s get this out of the way real fast. There is no smooth in that. So when you grow, you’re going to be stepping out into something that you haven’t done before. As you grow, it’s always an unknown. You know what you’re comfortable with. So ⁓ you can hire a bunch of people, but when you hire a bunch of people to do different jobs for you, you’re delegating in what you need to do. But if you don’t have

  at least 10 or 20 percent of their knowledge, how are you going to know whether what they are doing is within your best benefit? You might hire somebody to do something for you, but it’s best for you to know a little bit about everything. Educating yourself instead of just hiring everything else out to other people is something I would do. You don’t have to be a professional at everything, but understand contract law, understand ⁓ how to read a contract when you hire somebody, expectations,

  ⁓ Some things are really good as just as a handshake. If you can find somebody with an old beat up truck that ⁓ you can just do a handshake and pay as you go, sometimes that’s the best route than getting a big box contractor. Big box contractor comes with big box prices and they’ve kind of been through the mill, I guess you could say, of all different ways in life in people. So some of the big contracts you can hold them to contracts and sometimes

  ⁓ They can hold you to stuff if you don’t know what you’re doing and how to read all of that You need to educate yourself get yourself a good old couple a good old boy with some old-school trucks now I’m in Alabama here So if you get yourself some good old boys with some old-school trucks and shake of the hand and some folks that are trying to help you They’re gonna lead you in ways that are be best Probably down the road it might be some heartbreak there, but it would be good for you to learn first big box

  after.

  Michelle Kesil (13:49)
  Yeah, I think that’s great advice for people that are dealing with contractors and the different nuances of it.

  Joshua Klein (13:59)
  Yeah, we don’t want you to lose your money. As an investor, you do not want to lose your money. ⁓ You want to find somebody that ⁓ has the skills and capability to be able to deal with what you’re doing and has the there are people that are really skilled that will not necessarily match your personality. So some of the real old school skilled folks, you either get the nice guy that wants to help you or you get the guy that’s been doing it for so long and they don’t want to deal with your shit.

  Michelle Kesil (14:02)
  Definitely.

  Joshua Klein (14:29)
  Forgive my SHIT. for starting out, you need to find somebody that will deal with the ebbs and flows ⁓ of who you are and what your expectations is. And ⁓ you kind of want somebody stern enough, but you really want somebody with enough grace to be able to help you. So now I’m dealing, what I’m speaking with is for all of you starting, for some of you guys that are on my level,

  ⁓ Let’s switch gears just a little bit. So let’s talk about other people that are like me so if you are like me and you know you guys Guys and girls want to talk a little bit how to make this work.

  ⁓ I tend to think for all of you, you don’t need to be scared of the mold. You don’t need to be scared of foundational issues. You don’t need to be scared of these things. Most people lean away from them. I kind of think they’re the ones you should hit. The reason why I think you should hit them is because ⁓ they’re often easy to do, but they’re time consuming. You can find stuff that’s been almost burnt down to the ground or half of the house is basically

  in disarray and that’s some of my most profitable when ⁓ it’s absolutely inhabitable it’s going to cost the most amount of money for demo and demoing the property itself the house that sits on the property is almost ⁓ more expensive than the property itself you have a lot of leeway ⁓ since you have the cruise and you’re like me to be able to do that ⁓ don’t be afraid of that

  It does take more time and some more overhead. You do have the capital if you’re like me to be able to produce. So you’re to be able to do some of those and those are some of those profitable flips. I know it looks daunting. Okay, because you’re always trying to find some of the old school houses that are like from the 60s or 70s and redo this, this and pad it up and send it out. And that’s part of it. But if you can get it for next to nothing because of the condition that it’s in and now you’re worried that you’re going to start from scratch.

  You are, but the sewer is still there. The water is there. The electricity is there. The power pole is there. The land itself has already been surveyed. You already have a footprint to put back, right?

  Joshua Klein (00:00)
  Just grab the burnt property. You have all of these things that are at your disposal already. The footers are almost 90 % good. They never have to really deal with the footers. Maybe the foundation coming up. But you mitigate a lot of things. And ⁓ it’s been some of my highest profit margins I’ve made. So big dogs, don’t be afraid of that type of stuff. It’s almost more costly to you.

  to be able to get some stuff that you think is like a $50,000 flip or $60,000 you got to put in there, you open up the wall only to find the stuff you got to update. Anything more than a certain percentage, you actually have to update to all codes and all things with all places. It’s different for each state and county. But if you get the stuff that’s already down to basically, you’re going to have to take it apart anyways. By the time you do your balance sheet,

  for what you have to do to bring it up to code, it would almost be within your best interest to get the stuff that’s really scary to look at. ⁓ If you have the cruise, the time and the money, and typical flip will be about 60 to 90 days, depending on what you got. So if that’s something that you wanna do or willing to do, I suggest you try it one time for those guys kinda like me. ⁓ So.

  Two different modes here. You have somebody who’s brand new starting out, how to start, how to get started. And then you have somebody like myself that might be a little leery of some of the things they see that are on the table for them to be able to, I’m not gonna do that. Look at that, I’m not doing that. Those are the ones actually I would pick up if I were you sitting in your situation.

  Michelle Kesil (01:44)
  Yeah, most definitely that is helpful. What are you most focused on solving or scaling to next in your business?

  Joshua Klein (01:47)
  Okay.

  we’re almost focused on is I’ve, ⁓ me and the boys have welded up a mill. So we welded up a wood mill. some of the best profits that I have seen is to be able to take care of my own lumber. So my, my next thing of scaling honestly is to get my, ⁓ my mill to start producing in a volume that I can start kind of billing.

  this corporation over here ⁓ for the materials that they’re making. So I can build them and now they’re making a profit and then I can also put that inside of a house. So I can use this to balance one balance sheet to balance the other and I own both. So when I do something like that I can even make arrangements or contracts from one corporation to another fulfilling one from the other.

  So one fulfills this one, this one fulfills this one, both of these report to credit bureaus. ⁓ Both for Dun & Bradstreet and otherwise, they’re not saying you’re padding your books. is P.A. Patting your books is illegal, but what you can do is create contracts with each other, fulfilling those, enriching your ability to fund, your ability to ⁓ get loans, your ability to get banks to approve your status.

  Those things are where I’m at right now trying to do this. And if you guys have seen or can see some of these, I’m not sure if you can. ⁓ This is, okay, so this is like my spalted maple. With the mill, I have used some of these things to be able to create my countertops, my bathroom tops. Used the mill for wood that would be ultimately free.

  for me to go harvest from places to come back to turn a really good profit. So I’m leaning away in my business right now from ⁓ most of the tile ⁓ countertops and whatnot and backsplashes to going back to more traditional looks. And I’m leaning away from more of the ⁓ marble.

  that everybody likes to do, the stone tops. And that seems to be a place I’m starting to venture in ⁓ far more for more on the custom ⁓ countertops and backsplashes and using a lot of epoxy with light now. So I’m experimenting in doing things that I can put lighting underneath the epoxy with countertops being able to change colors, change moods. It looks really nice and clients can ⁓

  kind of create a new feeling with a new light. So you end up putting a red light underneath the epoxy gives this hue ⁓ or you put a blue light under epoxy and it gives hue. So there are all different LED options that you can do ⁓ with your phone at a whim. So those are things I’m starting to expand out into ⁓ using the mill for profit and using the mill to be able to create some interesting aspects.

  Michelle Kesil (05:14)
  Awesome! That’s exciting!

  So before we wrap up here, if somebody wants to reach out, connect, learn more, where can people reach you?

  Joshua Klein (05:26)
  Well, 251-504-3179. Start with a phone call and talk to me and then we’ll bridge the gap to an email if we’re a good fit. And then after we’re good fit, ⁓ you’ll all, pending the project, I’ll just give you direct stuff, direct lines, and we can start. ⁓ TikTok is a good place for you to see some of the things that I’ve done, like I’ve said, but in the past. ⁓

  I find that that seems to be where I teach people the most. So if you’re going to want other things to learn, that’s probably where I would suggest you to go. ⁓ But ⁓ is there any other hot points that you want to discuss before we leave?

  Michelle Kesil (06:13)
  No, thank you so much. appreciate your time and your perspective on everything that you’ve shared.

  Joshua Klein (06:20)
  Well, thank you very much. do appreciate it. I appreciate your time.

  Michelle Kesil (06:24)
  Awesome. And for the listeners tuning into the show, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Joshua who are building real businesses, and we’ll see you on our next episode.