Last year, I flipped 26 houses. Flipping houses is fun, and it was a huge accomplishment to complete that many flips. In order to repair that many houses, it took a lot of money! in fact, I spent $439,235.51 at Home Depot last year. I also bought 4 rentals, so not all of that money went to my house flips. However, three of my rentals needed almost no work, and I am confident more than $400,000 was spent at Home Depot on just my flips. We have a managed Home Depot Pro account, and almost all of our materials are bought from Home Depot because of that. We pay for all of the materials on our flips, which makes it easier for our contractors.
Why do we have a Home Depot Pro account?
In the past, we bought our materials from a number of places. We bought things from Lowes. We allowed our contractors to buy materials at lumber yards, and we even tried Menards, even though it was an hour away. One reason I started to use Home Depot more was one of my good friends worked there and kept bugging me to talk to him about their programs for contractors. I am not a contractor, but we spend more money than most contractors at our local store. I am not sure where we ended up, but for most of the year, we were the highest spender at my local Home Depot.
I knew Home Depot had some great programs, but for some reason, I had never looked into them closely. Here is what my friend told me Home Depot could do for our business:
- Save us about 10% on materials with a pro account.
- Get us .5% cash back on all purchases with a managed pro account.
- Save us 2% on all purchases with a membership to our local REIA.
In order to get a “managed” pro account, we had to spend at least $125,000 per year at the store, which we were barely able to do. We probably saved $50,000 or more by using Home Depot materials. I also use a Capital One business card, which also gives me 2% cash back on everything I buy.
What was another advantage of making our contractors use Home Depot?
When we worked with contractors in the past, we often let them buy materials wherever they wanted. After analyzing how much we were spending on materials, we noticed something. Some of the contractors did not care how much the materials cost since we were paying for them. They would use a local lumber yard to buy materials because they knew the people who worked there. The contractors would claim they had better materials that were cheaper. When we compared costs, those materials were much more expensive than Home Depot after our discounts. When we use Home Depot materials, we know that Home Depot is getting us the lowest price possible. When our contractors buy materials from others places, we have no idea how hard those places are trying to get the price down.
How much work does it take to buy $400,000 in materials from Home Depot?
There is no way I could manage 26 flips on my own. I have a great team, including my project manager Nikki. She is the one that deals with Home Depot and manages all the material purchases. When a contractor goes to Home Depot, they can pick up all their supplies, go to checkout, and Home Depot sends Nikki a text. It is called text to confirm. She can hit one button and approve the purchase to go on our credit card. We also get an email that says exactly what was bought and by who. Along with the email, we can log into our Home Depot account and see what was bought and by who. Nikki has to respond to a lot of texts but tells our contractors to be as efficient as possible when going to Home Depot. Don’t take 3 trips a day to buy three different $15 items.
How can you improve your relationship with stores?
Nikki is smart and has a great relationship with Home Depot. She is there quite a bit to pick out materials, and the staff at Home Depot knows her well. I have been to Home Depot a few times in the last year, and they do not even know who I am! To keep on their good side, she even brings them cookies and other treats on special occasions. if Home Depot has closeouts or items that go on clearance, guess who gets told about them first? We bought something like 12 vanities the others day because they were closing them out, and it was a smoking deal. It helps to have a shop to store all these materials in as well.
What can Home Depot improve upon?
We get frustrated with Home Depot on occasion, but usually over minor problems. We had appliances delivered from their special appliance program last week. They are supposed to use the lockbox we have on houses to leave the appliances inside. On one house, they left the appliances outside because no one was there, but they left me a message saying they left them outside. First off, they should not be calling me because I do not answer my phone. They should be calling Nikki. Then I went to another flip to check on it, and more appliances were sitting outside for who knows how long. They never called us to let us know they had arrived. Home Depot was quick to say they would fix the issue, but we have had a few issues with their deliveries.
The pro desk is where our contractors have to check out, and that can be a zoo. There are often super long lines, and it wastes our contractors’ time to wait an hour for service. Hopefully, they will be adding more staff to take care of this problem.
The last complaint I have that is not really valid is they will not sponsor my podcast. I thought it would be a great fit considering how much money we spend, but I guess they do not feel the same. If anyone has some pull at the company, put in a good word for me!
While it is a bit scary spending over $400,000 on just materials at one place for my flips, it is cool to know I am in a position to do that. Nikki has done a great job improving the flip business and setting goals for us. In fact, one of her goals last year was to spend $1,000 per day at Home Depot. We have talked about better goals to set than spending money, like profit, but we will see how that goes.
To get more information on how I flip houses, including how I finance them, find them, repair them, and sell them. Check out Fix and Flip Your Way to Financial Freedom.