by David Whisnant
One of the most common questions new investors have is — Once I have a property, and once you have found and identified the subs you want to use (covered in my course), how should I go about scheduling the job?
We’ve probably all seen rehab jobs that seem to take forever. I pride myself in getting my jobs done faster than just about any other local investor I can think of. This takes no special abilities, only some solid planning before you begin work.
If you take a year to get each house done, and I’ve seen some take as long as a year and a half, your profit will fly out the window in the form of payments and holding costs.
The purpose of this article is to give you a structure and method for organizing your rehabs. The goal here is to do these steps in a certain order so that workers will not tear up what the workers before them accomplished. Scheduling is the key to making sure that Worker B does not destroy what Worker A did.
I am assuming for this article that you are not required to permit this job. If you were required to permit, you would need a list of repairs you plan to make to the property, and the projected total cost. Take these down to your local permit office, and you will receive a permit. The price you pay for the permit is usually a flat fee plus a percentage of the value of the repairs you intend to make. If you are adding a bathroom, or addition to the house, you will need a plan. It doesn’t have to be pretty, or by an architect (at least here in Georgia), but it needs to be drawn to scale.
Starting Your Rehab
To start a project, the first thing to do is get at least a 30 yard dumpster, and probably a 40 yard dumpster. Dumpster prices don’t increase much to get a bigger one, and you’ll be amazed by how much waste each job generates. Hire some day workers, or dependable labor to go in and get out all of the prior occupant’s junk. (Many of the properties we buy have couches, clothing and general junk left by the prior owners. I like to get that out first). If anything is good, you can donate it to the Salvation Army. You get a tax write off and someone else can put it to use.
Street-Wise Tip: If you are in an area that has low-income residents (perhaps an area that middle class residents are moving back into), do not put bags of trash by the street. The other residents will dump them out looking for items of value, and destroy all the clean up work you have done. We’ve learned this the hard way SEVERAL times.
Your cleanup will take a day or two at most. If any sheetrock is in terrible condition, where you cannot cover it with thin 1/4 sheetrock on the walls, or 1/2 on the ceilings, rip it out now while you have your labor. The prime example of the wall that should be torn out (gutted) is one that has suffered heavy water damage and is bowed or not solid anymore. If the kitchen is going to be replaced, rip out the cabinets as well. Tip: See how the cabinets are attached. If they are screwed into studs, provide screwdrivers or a drill with a screw bit for your laborers to use. If the cabinets are nailed in place, provide a pry-bar. Make sure to tell them to be careful with the kitchen walls. You don’t want to tear up anything that you don’t have to tear up. If the yard is a wreck, have the guys spend an hour or so mowing, trimming overgrown hedges etc. The neighbors will be VERY thankful, will probably come over to thank you, and will be a good future source of referrals. You presumably have your general plan by this point. You may be planning on adding a bathroom, or just simply repainting and putting in new trim or doors.
At the start of the job, and after the old cabinets are removed, invite your kitchen designer out to look at your kitchen. You should be down to bare walls in your kitchen at this point. I use a company to install my kitchens that does nothing but kitchens. They primarily cater to builders, and are priced 40% less than you would pay at Home Depot or another superstore for cabinets. As part of their service, they send out a designer to measure and design my kitchen. I cover the brand and style of cabinets that I use in my course. Also, make sure to find out how long it will take between when you actually order your kitchen and when they install it.
You will next want to have your electrical rough work and your plumbing rough work done. I’ll give the electrician (or plumber) a seven day head start, starting the plumber (or electrician) seven days later. We are only worried about large repairs here, i.e. running new wiring, replacing a fuse box with a breaker box, replacing bad plumbing/fixing leaks, installing water lines for new bathrooms. We want to do all of the rough stuff that would tear the house and walls up if we did them at the end of the process. If there is an area where both electrician and plumber will have to work together, make the first contractor finish his job in that area as the first thing they do. That way, the second contractor will not have anyone in his way if they overlap. I am not installing new sinks in bathrooms, new outlets, or anything that could be damaged by the painters/carpenters at this stage!
Repairing rotten wood on the exterior of the house can be done either before or after the electrician. The electrician will probably need to turn off the power to the house, so carpenters should be scheduled before or after the electrician comes for the rough in work. (Carpenters need their power tools!) Place them under strict orders to not work inside where they’ll get in the electrician’s/plumber’s way. Replace all rotten siding at this point, check for rotted fascia board, and make repairs to porches or decks. This is also a good time to work under the house, addressing any structural repairs.
Once the plumber and electrician are gone, make sure to complete all carpentry items on the exterior of the house, structural work that involves jacking up any floors, and any new framing inside that you plan on doing. (For example, we often have bedrooms in older homes that have 2 entry doors, one to a hallway and one to the kitchen. We usually close the kitchen door off to give more usable wall space, and sell the room as a bedroom and not a den.)
Dave Whisnant is an Atlanta investor/attorney who is dedicated to helping people land their first deals and create whatever level of success in real estate that they desire. After successfully building a real estate law practice, Dave walked away from it to focus on real estate when he saw the profits that his clients were making. Jumping in with both feet, he created a proprietary model that rocketed him to the top of Atlanta investors almost from day one.Dave is different than other investors in his single-minded quest to perfect a series of cutting-edge prospecting tactics to locate and then land motivated sellers who other investors are not even aware of. A master investor AND teacher, Dave’s precise and easily duplicated systems have been successfully implemented by his students around the country in competitive markets of ALL kinds. He believes in freely sharing his expertise and information for the benefit of anyone who is serious about succeeding, and believes that his techniques will create more success stories per student than any other real estate investing coach in the world in 2006. Real estate investing has enabled Dave to have the freedom that enables him to spend time with his two young daughters, wife, and herd of golden retrievers.
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