Should I hire a project manager or trust the general contractor?

[Azita S.]

My local market is very expensive and out of my price range for investment, so I've been investing in other markets. I bought my first two investment properties in Phoenix AZ two years ago.  Both needed only minor work which the property manager took care of and everything went very smooth.

Last year I started looking into Milwaukee  WI market, made a visit in September, have made offers on foreclosure properties since late September and finally got a property in Shorewood under contract.  This will be my first rehab.  I've been listening to the Podcast and reading threads on BP, but still feel a bit nervous since I won't be on site to oversee the rehab and hope to find a mentor on BP or get advice on the forum to get my first rehab done.

My agent has recommended XX general contractors LLC stating that he's done a lot of high end rehabs for his clients and I googled the company and found city council minutes for licence renewal meetings both in 2012 and 2014 to find the real estate agent is listed as the agent for the XX general contractors LLC. He'd already told me he and his team do rehabs and rental management for out of state investors, but was not transparent about his involvement with XX general contractors LLC which makes me not trust him. Am I being paranoid? or would you not trust the agent and the contractor?

Should I hire a project manager ( ideally a local investor colleague) and a general contractor to do the rehab?  I can visit the site once or twice at the most.  or should I just find a general contractor (hopefully a referral from BP colleagues) and manage the project via phone and emails? 

I should say I'm very excited and anxious about this project.  Obviously it's keeping me up late.  It's 1:20 am and I have to be at work at 7:00 am!

I'm looking forward to all your advice and hopefully making  more colleague connections in Milwaukee WI metro area.   I know I'll be learning a lot in the next couple of months!

[Robert Taylor]

Yep, I got it thanks @Bill S. !

Azita, obviously you're dealing with the same type of rules there, so you're on the same page then and as long as you play by their rules, you shouldn't have any problems but don't be shocked if they want you to do some extra work here or there, depending on just how "deep" your rehab work goes. As I think I said before, I've never personally done anything in Shorewood just by chance, but from multiple people who I think are pretty credible, yes they are tight there and can be tough about meeting their standards, but as long as they know someone's not trying to cut corners or pull any fast ones, they're fine to work with on things and Shorewood always has buyers looking!

Good luck Azita!

[Dan C.]

@Azita S. I have a rental in Shorewood - sounds like Portland is pretty similar in how much they scrutinize things, so it won't be anything you're not accustomed to.  Like @Robert Taylor stated, it really is a hot area.  Put it this way - the absolute easiest task for me of all I do as a landlord is renting out a vacant apartment in Shorewood.  And the pool of potential tenants is first rate - you can have the highest standards when screening tenants.  

[Azita S.]

@Dan C. 

 I plan on rehabbing and selling this house to raise capital to hopefully buy a multifamily in Shorewood next.  

[J South]

Two ideas, but hopefully this is sold by now:

1) This might be like finding a needle in a haystack, but what if you partnered with a GC who will fund the rehab in exchange for splitting the profits?  Finding a GC who will do this would require one with decent financial resources to carry those expenses until sale and lights a fire under them to get the project finished quickly.  You could even offer a bonus structure that gives them a larger cut the quicker the project sells, giving them a greater incentive to make improvements buyers will want and to get it done.  You could still have a pre-construction meeting to agree on estimated repairs, costs, timeline, profit split, etc. and an agreement that they keep a mechanic's lien to cover their costs regardless if they do or don't finish the job.

2) If Shorewood is a hot market, buyers might be willing to do some DIY for a discount.  If this project suits itself to the following, fund the major repairs with licensed specialists (roof, plumbing, electrical, heating), then sell to a DIY couple looking for a "fixer-upper" for 85-90% of "after repair value".  They can make the finishes their own, they won't value their time spent managing the cosmetics (they'll only consider their material costs), and they'll think they got a deal.  The potential reduced holding time & cost and aggravation to get the final product just right, might generate same or higher profit for your time invested.

[Lelith Walker]

I am doing a remote rehab in Georgia, and if I were you I would get out of the deal or find people who you trust.  Its better to get a good team before you take the deal.  Listen to your guts.  I didn't listen to mine and I am paying for it dearly.  A lot of things did not go as planned at all.  If 35th is what they told you know that it can turn into 70th.  Dates to complete can be pushed back into the next year.  I am dealing with this now. 

If you are going to have a realtor sell or rent the house out for you then you do not need a project manager.  If you are going to try and rent or sell it yourself remotely, then I would get an experienced project manager that is going to be available to assist you and has good reliable contacts.