Philadelphia Business Journal reports on an innovative tool to help developers – “This new app could solve house flipping headaches in Philadelphia.”

Posted on 2/25/2018 by in News

After 15 years in the industry, CJ Koch knew there had to be a better way to find reliable subcontractors.

House flippers know, it can take longer than you'd expect to get the job done and the home sold.

It was a problem CJ Koch faced over and over again.

Throughout 15-plus years of buying and renovating homes in and around Philadelphia, Koch kept running into the same issue — trying to find reliable subcontractors and keep projects on schedule.

The Manayunk resident had trusted go-tos, but if other projects were in the works at the same time or scheduling conflicts came up, he would have to get on the phone with industry contacts, collect recommendations and call around to find out about pricing and line up availability.

“It could take hours, it could take days, by the time you get someone that’s ready and willing and able to do the job, it could be three or four days,” he said. “It’s a strenuous processes, and time is money in this industry.”

So he came up with a fix. Koch enlisted Conshohocken-based mobile and web app development company Curotec and got to work building his solution —

Currently a web-based app, with plans to roll out a mobile app in the future, DirectSubs is designed to match project owners — home flippers, small real estate developers, property managers, builders, etc. — with subcontractors whose expertise matches the project owners’ needs.

Availability, skills and location are all taken into account when matching subcontractors with project owners, and Koch plans to add in an aggregated review option. Both parties win out, he said, as owners can keep projects on schedule and on budget, and subcontractors can find work more easily in areas they like to work in.

“It cuts out a lot of the unnecessary back and forth,” he said.

It’s a product that’s sorely needed, especially as home buying and renovating activity is continuing to heat up in the city, said Realtor Stephanie Somers. As co-CEO of The Somers Team, a Philadelphia real estate agency, and home renovator, Somers said finding the right people to get jobs done can be time-intensive and often a shot in the dark that can leave you wondering if you’ve made the right choice.

“If you streamline something for me, that makes me very happy,” Somers said when asked about what kind of value an app like DirectSubs could bring real estate professionals. “I love the concept.”

While she isn’t one of the 50 or so users signed onto DirectSubs’ early product yet, Somers said she could see it being attractive to seasoned developers though it seems especially beneficial to people starting out in the business who don’t have a deep bench of subcontractors to tap.

Registration is free for the next four months or so as Koch builds up the user base but registration will cost $4.99 a month for either subcontractors or project owners. If a user wants to register as both, such as a large plumbing company that might have its own projects completed, the cost is $7.99 a month.

“I wanted to make it a no-brainer and as affordable as possible for everyone,” he said.

Koch's self-funded the app development so far and plans to grow it in Philadelphia first — a prime spot as younger people want to buy and fix up homes in still-affordable sections of the city. Data shows the region is still profitable for flippers. The Greater Philadelphia metro had the fourth highest gross return on investment for flipping in the country in 2016, with a 107.1 percent average gross ROI, coming in just after East Stroudsburg, Pittsburgh and Cleveland according to a March 2017 report from ATTOM Data Solutions.

Once he scales it locally, Koch wants to expand to nearby cities like Baltimore — which had a 96.6 percent gross flipping ROI in 2016 — and go city-to-city from there. Other monetization options are in the works, including advertising options for businesses on the app, and, if DirectSubs continues to grow, the real-time data it has on home buying and renovating activity in metropolitan areas could have significant value as well.

“The data this is going to be collected is kind of unique I feel. Even if you’re a real estate professional or participate either way in one of these roles, I would pay $7.99 a month to have access to what type of job descriptions are in different locations, what’s going on in certain ZIP codes,” he said. “There’s a lot of opportunity there.”

Michelle Caffrey
Philadelphia Business Journal