For every successful rehab that you see on TV, there are handfuls that don’t go the way they are planned. All it takes is one oversight or scheduling conflict to turn a good deal into a bad one very quickly. Most investors have a basic idea of what goes into rehabbing a new property. Where they get into trouble, however, is when they start to overlook the little tasks and assume things will go a certain way. Before you start working on a new property, you should have a plan of attack and be ready to go as soon as you get the keys. Here are five things to help your next rehab project go as smoothly as possible:
1. Secure the property: If you have ever had a break in or items stolen from a property, you know how important this step can be. Bank-owned properties and foreclosures are targets for local criminals. In most cases, the house has been on the market for months, just waiting for a new owner to come in. Before you start any work, you need to change all the locks, secure all entry ways, and board the windows. This may seem like an extreme step, but consider the alternative. Instead of getting going on a new property, you could find that the copper and appliances are gone. Right off the bat you start behind the eight ball. Securing the property needs to be factored into your budget. The first thing you should do with every new rehab property is to make sure it is secure.
2. Develop a game plan: In the time after you make an offer and before you take ownership, you should map out a game plan. If the closing process was difficult, you may not have been able to put your full focus on the rehab schedule. Before you get going with any work, you need to have a plan in place. Sit down with your general contractor and discuss what work you are going to do, when you are going to do it, and how much it will cost. You may think you are being efficient by having multiple people at the house at once, but you may just be clogging things up. The most successful rehabs have a steady work flow. The more precise you are with your schedule and budget, the more successful the rehab will be. In your excitement to get things started and finished as quickly as possible, you may be tempted to dive right in and get going. This is the worst thing you can do. Spend the extra time to come up with a game plan that you are comfortable with.
3. Major items first: If you are an inexperienced rehabber, you may be tempted to start with the low hanging fruit. You think that if you can knock off the easier items such as painting, you are making progress. What most successful rehabbers do is start with the major items first and work around them. HVAC, electrical, plumbing and roofing concerns should be done first, and by licensed professionals. You should try to work from the inside of the property out. It is easier and more cost effective to fix electrical or plumbing issues when they are exposed rather than after new sheetrock is up. Also, these are the items that will eat up most of your budget. Other things will certainly add up, but they are typically much less expensive. Dealing with cosmetic repairs and upgrades will not cause the guts of the house to be exposed again. If you are going to spend money it any areas, it should be with the major items. This is what buyers look for, and where you money will be made.
4. Keep things moving: There is a fine line in any business as to when you should let the people around you work and when you should spur action. Rehabbing a property is no different. If you have made the decision to let your general contractor run the project, you can’t be down their throat every day. Not only will this frustrate them, but it defeats the purpose of you giving them the authority to work. You need to trust your contractor, but you also need to make sure things are getting done. Instead of calling your contractor when they are working, ask for a progress report at the end of the day. If you feel you need to go to the property and push people along, you should be selective in doing so. Doing this every day may be counterproductive. There should be a balance in how you keep the project moving forward. The more deals you work on, the better you will be at figuring this out.
5. Don’t forget the finishing touches: As much as the major work you do attracts interest, the finishing touches typically get the property sold. The right finishing touches don’t need to be expensive, but they should fit the property and the neighborhood. They can be as small as minor landscaping upgrades or even choosing the right living room fixtures. You may be in a rush to get the property finished and on the market, but you could be leaving money on the table. When you are finished, walk the property again and put yourself in a buyers shoes. Make note of any small upgrades or additions you would make. Even if these add to your budget, they are worth it. The finishing touches can make all the difference.
By making note of these steps, you put yourself in the best position possible to be successful. With so much competition on the market, you can use every advantage that comes your way.
