Flip Factory App Helps Keep Your House-
Flipping From Flopping
The process of flipping a house is already convoluted because it typically involves managing transactions between five different parties: homeowners, lenders, contractors, subcontractors and material providers. It becomes even more convoluted for someone flipping multiple houses. That’s why Jake Harris and Juan Huerta founded Cary-based Flip Factory App, a fintech app that manages all of the financial transactions that go into a project.
After spending nearly two decades flipping houses themselves, Harris (CEO) and Huerta (COO) wanted to build an app that would help them flip more houses. They decided to focus on helping flippers manage their cash flow with more transparency and faster payments. Instead of contractors, for instance, showing up at a job site to receive their check, they can be paid much faster and securely on the Flip Factory App, Harris said.
“By having the financial transactions and everything all in one place for a project, there’s less ambiguity because it’s helping people see what money they actually have,” Harris said. “A lot of these guys don’t know if they made money until tax time.”
Flip Factory App launched on April 20—coinciding with the National Private Lenders Association Annual Convention in Miami—and currently has over 250 customers on the app in 10 different states, Harris said. The Durham-based technical development firm Fugitive Labs developed the MVP, Harris said.
Rather than the lender giving the investor or the owner the money, the lender puts the money in a dedicated FDIC-insured bank account on the app called the project wallet. Each flipping project has its own project wallet with its funds separated from other wallets, which prevents people from overspending on a project and mixing between projects, Harris said.
“Most people want to throw everything into one big pot and gumbo and stew it all together, and that way they have plenty of money to do whatever they want,” Harris said. “But if they had financial discipline to separate out and isolate their money, then they could make smarter decisions. They would end up with profit on every project because they wouldn’t be making poor decisions.”
Owners pay a one-time fee of $300 for each project they use the app for, which is minute in the grand scheme of flipping a $300,000 house, Harris said. The material providers and subcontractors who are paid through the platform are charged a 3% transaction fee, the same business model that a credit card company or Stripe (which is often integrated with QuickBooks) would charge.
HomeVestors, one of the largest buyers of single-family homes in the U.S.—its motto is “we buy ugly houses”—is a customer of Flip Factory App, Harris said.
A new version—and name—on the way
Sometime later in Q4, Harris and Huerta will rename the startup “BuildWallet,” after they release a new, broader version of the fintech platform that helps with construction investing as well as house flips. Their goal is for BuildWallet to be “the Amazon for construction,” Harris said.
“I’ve been in the construction space for 15 years and it’s been extremely frustrating because we have the technology to track our pizza with our phone, but nobody has technology to track their projects,” Harris said. “So that’s what we’re doing.”
Another core component of their vision is setting up a charity where 10% of their profits will go toward flipping houses to donate to low-income families, said Harris. While flipping these houses, they will hold open houses for anyone interested in learning how to flip houses, he said.
America has a critical home shortage—the gap between how many habitable homes exist and how many people want or need—that is currently five million according to realtor.com, and only keeps widening as homebuilders struggle to keep up with the surging demand. Thankfully, there are many old and decrepit homes that can be turned into something new, which is why it’s crucial to educate people on how to do it, Harris said.
“I’ve renovated houses In Durham that were literally 100 years old and falling apart, but we were able to turn it into a livable, four-bedroom home,” Harris said. “A lot of people don’t know how to do that and there’s too much fear and worry around it. Now, they have a platform that safely and securely carries them from buying a property across the chasm of construction and renovation and delivers them to the other side of sale profit.”