Regardless of what type of investor you are, you will find yourself working on or at least contemplating a rehab project sometime in your career. The joy of negotiating a good deal and getting the property will soon be erased by looking at the rehab task you have in front of you. Ideally, your preparation will start long before you take ownership. However, if you were too focused on the purchase, you may be left scrambling. Fortunately, there is a blueprint that you can follow to help guide you to the best bottom line. Where you start on a rehab can make all of the difference in the world.
If you think you can simply hire a contractor and wait for them to finish, you may be in for a rude awakening. You are the owner of the property. Whether you know what you are doing or not, all decisions will end with you. Your contractor can certainly be your guide, but you are responsible for everything that happens on the property. If you do not have a contractor that you can call or they are too booked, the first step is to vet out a new contractor. This means relying on your network and local resources to find someone that can do the job. By all means, you should talk to a least three contractors who can give you a quote. From there you can see who is the best fit. It is important that they understand what is expected and what your role will be. Price is always important, but it is far from the most important thing to look for. Make sure they can work on your schedule and you are comfortable working with them. You will be talking to each other quite frequently for at least the next 30 days, so you had better be able to get along. You should feel supremely confident that they can do the job.
Before they begin any work, you need to make sure you are both on the same page. This means ironing out a schedule, payment arrangements and the budget. Things will change on almost every rehab, but as long as you have a vision of what you want it is a good starting point. You will find that a good contractor is worth their weight in gold, but if you are slow on payment or indecisive on what you want, they will become unmotivated. A 30 day rehab will turn into 60 or 90 days. Get as much out of the way as possible before any work is done.
After you have your contractor in place, you may think that you are out of the woods. Things will come up every day that you will need to be available for. Between unforeseen plumbing issues, delays with materials and just about everything else, the rehab process is almost never a smooth one. How you handle these issues, will separate you from your fellow investors. You need to budget accordingly and leave some room for the inevitable surprises. You also need to be patient when things don’t go your way. Even though you have a schedule and a plan, things can happen that will cause delays. Instead of screaming and yelling, find out what the causes are and see how you can fix them. This sounds simplistic, but people that work on your property will remember you. You never know if you will work with them in the future. Push when you need to push, but not every task can be an emergency. Sooner or later it starts to lose its effect. Things happen on every rehab and you need to learn to deal with them.
A common mistake that new rehab investors make is rushing to get the job done instead of doing it right. Buyers will look at every nook and cranny of the house and evaluate every inch of the property. Getting the work done just to finish by a certain deadline can hurt your bottom line. While it is important to get the property back on the market in a timely fashion, your goal is to maximize the resale value – not just finish by a designated date. If this means spending a little more than you thought, it is OK. Even when you are done, the finishing touches can make all the difference. It is at this point that you may need to bring in someone not associated with the property to give you some honest feedback. It may be too late to change the design of the house, but the last minute fixtures and finishing touches can be the small steps that will get the house sold quickly.
Rehabbing a property is something that you will get better at the more times you do it. It is not a difficult process, but not everyone can do it. Talk to as many people as you can and learn something with every new rehab you are involved in. Regardless if this is your first rehab or your 100th , there is a possibility for setbacks. The more prepared you are for anything, the better rehabber you will be.
