Managing an out of state rehab

[Kristin Riker]

Hello all,

I am attempting to purchase an out of state BRRRR. A lot of what I read said to attempt to manage rehab yourself, but I don't even know where to begin considering this will be out of state. Pending me finding a contractor, do most investors use remote door locks to allow access to home? What if I wanted to order some supplies myself and have them shipped to the house (IE: light fixtures, bathroom vanities, flooring etc). While vetting contractors I want to ensure that I will have a weekly facetime call to be updated on progress. I have already established a PM I am hoping to enlist for help. I have read David Green/Brandon Turner's books but am having trouble figuring out the logistics of managing a an oos rehab. Any insight would be greatly appreciated.

Thanks,

Kristin Riker 

[Crystal Smith]

Quote from @Kristin Riker:

Hello all,

I am attempting to purchase an out of state BRRRR. A lot of what I read said to attempt to manage rehab yourself, but I don't even know where to begin considering this will be out of state. Pending me finding a contractor, do most investors use remote door locks to allow access to home? What if I wanted to order some supplies myself and have them shipped to the house (IE: light fixtures, bathroom vanities, flooring etc). While vetting contractors I want to ensure that I will have a weekly facetime call to be updated on progress. I have already established a PM I am hoping to enlist for help. I have read David Green/Brandon Turner's books but am having trouble figuring out the logistics of managing a an oos rehab. Any insight would be greatly appreciated.

Thanks,

Kristin Riker 

Since you used the word attempting I'm going to assume you haven't closed on the deal yet.  Here's how we managed our OOS rehabs:

1.  We included in our budget a boots-on-the-ground PM. Sometimes we paid them per. hour.  Sometimes we gave them a part of the deal when closed; i.e. made them a partner

2. We established a draw schedule with the PM that was coordinated with the Contractor up front.  Using that schedule we escrowed all the funds for the renovation with either a local lawyer or title company.  We've even used online escrow services.  It's important that the contractor know that all the funds for the job are already in place.  The contractor gets a copy of the escrow docs as evidence that the $ is ready

3. Either our PM or a 3rd party inspector checks the job before each contractor draw.  We'll include in our budget the cost of a 3rd party inspector. We'll use the same inspectors as the HMLs. For 4 draws it adds about $1K to the budget.  Once we've used a GC a few times on jobs & he's proven himself we may drop this. $ is released to the GC based on the result of the 3rd party inspection

4. Lien waivers- After each draw, we insist the GC sign a lien waiver and any subs he may have used. 

5. We're not big fans of purchasing materials ourselves. We may on occasion purchase the finish materials but we will generally give the GC the finish list with a Not To Exceed Price & let him pick it up himself.  

That's how we have managed OOS projects.  Depending on how long the project is we'll also schedule a drop into town.