Discounts on Materials
Here is a tip for any rehabber who is paying retail for their materials. Whether you shop at Home Depot, Lowe’s or any other major hardware outlet, you can likely find programs that are reserved for “professionals.” These programs can save you thousands of dollars on a single rehab, and potentially tens of thousands of dollars per year if you do multiple flips.
As an example, if you shop at Home Depot for your materials, there is a program called the “Pro Bid Desk.”
The Pro Bid Desk is basically a program for those who walk into Home Depot ready to purchase $2500 or more in a single transaction. The store will take your purchase list, send it to the “Bid Desk” up at the corporate office, and within about 12 hours, you’ll get a “bid” on your purchase price. Basically, what this means is that Home Depot will offer you your entire purchase at a discount — generally 15-40% off retail! Obviously, they do this because their competitors (Lowes, for example) do the same thing, and they want to make sure you don’t take your volume business “across the street.”
I learned about the bid desk back when I was just starting out, and one of the guys at the Contractor Desk found out that I was buying $5000+ worth of merchandise a month; he laughed and suggested that I never pay retail again. He had me start bundling my orders into $2500 purchases or more, he’d send them to the Bid Desk and within 8-12 hours, he’d get me a massive discount.
As an example, last week I walked into Home Depot with a $1500 door and window order. To meet the $2500 minimum, I decided to add about $1000 worth of other materials I knew I’d use in the coming weeks (a case of door knobs, a case of deadbolt locks, fans, light fixtures, etc). My total order came to $2792, and Jim (my “guy”) told me he’d call me the next morning with the bid. The next morning, Jim called and told me that he could sell me that $2792 worth of merchandise for exactly $2139, a nearly 24% discount just for putting the order through the Bid Desk!
The next best part was that after I handed Jim my Home Depot credit card to pay for the order, I just walked out of the store. Jim had someone go to gather everything I bought (15 doors, 4 windows, and about 2 dozen boxes of other materials), and stored it away for my contractor to come pick up that afternoon. Not only did I save 24% on my purchase, but I saved about an hour of having to get all the stuff, take it to the register and figure out where to store it for my contractors.
For a typical rehab, you’ll likely spend about $5000 on materials. If you do four of those per year, and save 25% by using the bid desk, that’s $5000 per year extra in your pocket! And, for about $100/month, you can rent a storage unit and really buy materials in bulk — perhaps getting even more than 25% off in some cases.
And this doesn’t include the other special programs you’ll find out about after you’ve become a regular…
😉
Scott:
Thanks a bundle for the info!!
Brock
That just makes me MAD!!
I spent over $18000 at Home Depot last year. They saw me almost everyday for 6 months!! No one offered this advise to me. Applying your 24%, I lost out on $4320. Apparantly even the pros don’t know about this. I noticed a sign over the pro desk last night bragging about saving $84000 since the first of the year. I wonder how many $$millions$$ has been sold through that store since then. Thanks for the tip!!
Don
Hi J,
I’m new to the blog-which is great BTW! Do you buy all your materials yourself for each project? If so are you getting the material list from your GC at the start of the project?
Best,
Jeff
Jeff –
Yes, we buy all the finishing materials for the project. At the beginning of each project, my project manager makes a list of everything we’ll need for the house and gives it to me. I enter the items on a master spreadsheet, which I take to my representative at Home Depot. He gets me a price for everything and then has it all packed and delivered right to the job site.
Wow! Thanks for that info. As a newbie rehabber every bit counts.
Hey J
The information you have on here is great.
How does the Pro Bid Desk work? This is my first time hearing about this. Who is bidding on your materials that you are buying from Home Depot?
How do you put together a purchase list…. Is there a Home Depot item list somewhere, with SKU #?
You mentioned above that you put your items on a master spreadsheet. Is this spreadsheet the purchase list or is this a different spreadsheet? If it is different, what does it look like?
This is a side question, are you buying all of your rehab materials from Home Depot, e.g. kitchen cabinets, etc.
Once again, I would like to thank you for all of the information you have on this site. It’s been very helpful.
Aaron
Just as a heads up, Lowe’s does this exact same thing as the Home Depot, and offers contractors a $20 delivery fee!!! Saves time and money, often, if you deal with the same Lowe’s store time and time again, they will even waive the delivery fee!!!
Hey J,
Amazing blog. How do y’all go about the material ordering process? Does your PM do an initial walk-thru and build a materials list so that everything can be ordered for your contractor team or do the contractors go out and buy the materials using a project card or phone order?
Thanks!
Hey Andrew,
We purchase all finishing materials and we let our contractors provide all building materials (lumber, paint, sheetrock, fasteners, etc). My PM makes a list at the beginning of the project and that list gets sent to our suppliers, who deliver the stuff on-site.
Dear J
Since the building material, which certainly would include lumber, plumbing lines etc, can be substantial, isn’t it better to include it with your finishing order to get the discount on even a larger purchase amount. Of course, not sure how the savings would get passed on to you unless gc can accurately and fairly price the job minus material costs?
How would you handle this to improve margins
gp
Hi GP,
There are three issues with having the rehabber order the building materials:
1. There is no good way for the typical rehabber to estimate how much is needed. I don’t know any rehabbers (or contractors) who are well versed enough in all the trades to be able to figure out how much lumber is needed, how much paint is needed, how much plumbing pipe is needed, how much roofing material is needed, etc. They probably know one or two trades well enough, but not all of them. So, if the rehabber is reasonable for ordering and there is too much or too little ordered, the rehabber will need to deal with getting more or returning some. This process can be a pain in the butt, so having the contractors take care of it saves a good bit of time;
2. One of the big reasons for having the rehabber deal with materials himself is to ensure that too much material isn’t purposefully ordered and stolen by the contractor. But, since the contractors will likely have to give the rehabbers the order amounts (see #1 above), you still have the risk of the contractor providing high numbers and keeping some extra material for himself;
3. Unlike finishing materials, contractors can probably buy building materials cheaper than the rehabber, as it’s their business and they probably have those relationships already set up with suppliers.
Just my take on it!
What about cabinets and appliances? The big boxes are often running various deals on large cabinet orders and on appliance suites — will those also count toward a Pro order/discount, or is that limited to bunches of smaller things? (I can get into the $2500 range just with appliances for one house, and that’s with sale prices!)
Hi acm,
Yes, cabinets and appliances will count towards Bid Desk purchases. That said, these days, many HD stores are requiring $5000 to go through the bid desk, not $2500.
Generally speaking, any time I need to increase an order to get to the minimum, I’ll add a set of appliances to the order to get there. Even if I need to store the appliances until a future project.