Flipping is often taken simplistically as repair and resale. In fact, this is an investment model, where an underestimated object – an apartment or a house – turns into a premium product due to its competent layout, design and workmanship. Then it enters the market at a new price, usually x2 or more.
In premium redevelopment, management error is particularly costly. In the mass market, it can still be compensated by lowering the price, but here the loss of customer confidence directly leads to a drop in margins. Therefore, in flipping, the financial result is not born on the construction site, but in the management model, where the terms, budget and ROI are calculated in advance.
After flipping, the buyer receives not just walls with decoration, but a ready-made solution: functional layout, modern design, high-quality execution and legal purity. All labor-intensive processes – redevelopment, coordination, selection of materials, control of contractors – have already been completed. The client sees the pure result: a product that you can enter today and be sure of its liquidity tomorrow.
Where the market loses money
Over 15 years of work, I have seen many projects that began with chaos: materials are purchased in parts, contractors interfere with each other, quality control is postponed. The result is predictable: budget overruns, disrupted deadlines, falling profits. This chaos is still perceived as the norm.
Since the first project at Flipart, we have built a system based on a Lean approach borrowed from industry. There we are used to eliminate losses that do not create value: downtime, excess stocks, unnecessary movements, duplication of actions, underutilization of personnel.
The same types of losses and with the same consequences are present in redevelopment. The difference is that in industry, such losses have long been digitized and managed, and in repairs, they are still considered the norm. When working with investment objects, especially in the premium segment, such “normality” turns into financial losses. One month of downtime can cost up to a million rubles of potential profit. The scale of the problem becomes critical when there are several projects.
What repairs without Lean look like
| Stage | What happens | Consequences |
| Planning | Minimum analysis, budget and deadlines are set “by hand,” without taking into account risks | Overruns and shifts in deadlines |
| Purchase of materials | Taken in parts, without wholesale discounts, often with surplus ами | Overpayments, stock balances |
| Repair work | Contractors intersect, work in parallel without schedule | Conflicts, alterations, chaos |
| Control | Check only at the end | Rework, cost increase, time loss |
How Lean is changing project management
In a Lean-based system, each operation must either create value or be eliminated. I will share the principles of work from my own practice:
- Standardized procurement. There is a typical “basket” of rough materials. Before purchasing, we hold a mini-tender among 3-5 suppliers. We buy only what is really needed, and at the best price.
- Optimization of deliveries. The project accounts for 4-5 deliveries only tied to the stages of work. This is saving at least 5% of the budget on delivery and lifting only – hundreds of thousands of rubles at the facility.
- Deadline management. Projects are underway at Bitrix24. Each brigade has its own schedule and Kanban board. For failure to meet deadlines, a fine is provided – up to 1% of the cost of work per day. Tough, but the investor does not lose a month of exposure, which is equal to minus a million in potential profits.
- Use of residuals. Materials are not thrown away, but transferred to another object: tiles can become an apron, trimmings become a portal. This is both economy and design technique.
- Craftsmen. Electrics, tiles, engineering units are made by different craftsmen. The quality is higher, the risk of errors is lower.
- Multilevel control. The project has three levels of verification: foreman, project manager, technical supervision. Errors are detected at early stages, rework is excluded.
- Parallel planning. Furniture is ordered 40 days before the end of the repair. As a result, the object is rented out along with the kitchen and cabinets, saving up to a month of exposure.
In premium flipping, design and aesthetics form value for the customer, but capital and projected returns provide a systematic approach to project management. It reduces dependence on random factors, “lucky object” or “strong brigade.” Lean approach makes the result reproducible and is expressed in specific figures: up to 5% budget savings on purchases and deliveries, minus a month of downtime due to parallel planning, predictable ROI and quality that meets the expectations of the premium segment. It is in this logic that flipping ceases to be a repair and becomes a full-fledged investment management tool.
By Tatyana Kulikova, co-founder and strategist of the investment bureau FLIPART, an expert on structuring business processes, a graduate of the Skolkovo management school