How to Organize a Rehab Project
While it is well known that rehabbing real estate may be a highly profitable and exciting way to build your wealth, it is also a form of business venture that requires a lot of knowledge and experience in order to do well in the profession.
Preparing/Creating an Action Plan
If you want to begin your rehab project, you have to go beyond simply looking at the renovations that the property requires and hiring the contractor that will carry them out. Rather, you will be in charge of numerous other things on top of that.
Firstly, you will have to carefully assess the property at hand so that you can ensure that every part of the real estate construction phase is on track. While forming an action plan, there are a couple of things that you will have to determine:
- Repairs needed: While you are visiting the property, be sure to bring with you a camera, measuring tools and graph paper. These things will be used to enable you to create a more detailed assessment of the property. For example, later on, you will be able to determine from photos what repairs need to be done and make the necessary measurements. In addition, a before-and-after shot of the house will give you something to show potential clients and help bring up the value of your house!
- The improvements that will actually add value: It is important to do the research to know what kinds of renovations will actually add value to your property and which ones will just up as either a liability or an empty investment.
Creating the Scope of Work
Your scope of work is heavily dependent on the planning you carried out prior to the rehab. This is where you will have to detail the extent of the project for your contractors and to oversee every single large scale and small scale renovation. In order to accomplish this successfully…
- List all the renovations down
- Prioritize each renovation as MUST and WANT in order to budget better
- Estimate the cost of each individual project and the overall cost
- Write down all the things that has to be done for every repair or renovation i.e. research, materials, process etc.
- Create your final scope of work after analyzing all of the above – and be sure to always keep some room in your budget for unanticipated issues!
Hire the Contractor
Do your research in order to choose the best contractor for your real estate rehab project. From the internet, job boards, word of mouth etc. there are a lot of outlets from which you can select for yourself the best contractor for the job.
Some pre-screening interview questions that you should ask in order to gauge the suitability of a contractor includes…
- Experience
- Licences and permits
- Insurances
- Subcontractors
- Equipment they own
- Bankruptcy history
- Workers in the team
After pre-screening, invite the contractors still remaining on your list to send in their bids and from there, evaluate each bid that you receive.
Once you’ve picked the contractor that best suits your particular project, be sure that you have all the formalities done and dusted. Absolutely no project should begin before everyone involved have agreed on terms and signed the following documents…
- Independent Contractor Agreement
- Scope of Work
- Payment Details
- Insurance Indemnification Form
- W-9 Tax Form
- Final Lien Waiver
The Walk Through Inspection
After all the renovations and repairs are over. No matter how much you trust the contractor or how meticulous of an overseer you were, there are bound to be certain things that went unnoticed and in order to compensate for this, it is important to conduct a second walk through of the property (preferably with a professional inspector).
If you are a contractor in the Orange County or Los Angeles area and are interested in working with us on one of our upcoming projects, please visit the “Contractors” page and fill out an application.