Is my Lack of construction Experience a Negative?

Question

Thank you BP world for this amazing resource. I have been soaking in all the wealth of information available here on BP.

I am looking at some potential rehab deals but my fear is my lack of Construction experience. When I say lack of experience, I mean I don't have a clue of what a shingle is  :D  (although I think it's that thing nailed on the roof)

However, I have a project management experience from corporate America where I manage multi-million dollar IT Projects. I even have a certificate in Engineering Project Management.

So I feel on the long run and with some experience in rehabbing I could be a very successful rehabber but I just don't know how to start.

Should I sub my projects to a GC for a start and be the project manager for the projects?

Doing the work myself is out of it as I can't even put a curtain on a wall. 
My fear with using a GC is that I won't know if I'm over paying for labor ( I can get material costs at the depot). Also, im of the opinion that I won't be able to control the project cost and timelines.

Please, does anyone have a suggestion on how to tie my project management skills with my lack of construction experience?

Thank you all!

Bill Gulley · Answer

There is a big difference between knowing and doing. With your knowledge and experience there is no reason for you not to understand what needs to be done, cost the job, manage the work and get to a finished product.

You do not need to be able to saw a straight line, you need to know how a straight line is sawed. Construction skills are acquired with practice. BTW, it's harder than you think to saw a straight cut, especially with a hand saw!

Skills are for those who intend to do the work themselves and save money (or earn more money). You're go to go!

Ayo F. · Answer

Thank you Will..I will keep that in mind.

Ayo F. · Answer

Thank you all. What strategies have worked for you in the past in keeping the contractors on schedule?

Chris Calabrese · Answer

My opinion differs from most on here, but to answer your original question, yes, your lack of construction experience (knowledge) is a negative, but not a deterrent to being successful.  You need to keep learning as you go, or it will hurt you in the long run.

You don't need to be able to do repairs yourself, but you should know the basics of each trade, cost of materials, basics of building codes, etc., so you can evaluate properties properly.  Also, contractors will treat you more fairly if you can "talk the talk".

I'm very handy and do a lot of my own repairs, but when I need to call in an expert, I always do a little research first so I can turn on my "BS meter".  The more invloved you are, the more you can control your flip and save money in the end.  Have your contractors break down materials and labor, and you'll often find they're upcharging for materials.  I order my own HVAC systems and roofing materials, and let my crew just show up and work.

Make sure you have the time to commit to this.  I know a lot of people flip on the side, but I think you really have to know what you're doing to manage a flip without being around all the time.

Best of luck and keep reading up on this site and others.  J Scott's blog at 123flip.com is awesome and has some great real-world advice.  Some good forums are diychatroom and contractor-talk.

Will Barnard · Answer

One way to know that you are getting good pricing is by getting 3 quotes for the repair item from 3 different contractors.

As far as knowing what needs to be fixed or not, yoy may be making this a bit more ccomplicated than you need to.

I suggest you start going to some REO homes, have the list agent give you a showing and do a walkthrough of the home. Take some pen and paper and jot down what you see. The more you do, the better you will get at knwoing what homes will need and how much the costs are.

Pay attention to kitchens and bathrooms as they can often be the largest cost factors along with AC, roofs, foundations, etc.

Account Closed · Answer

A few things with dealing with contractors, since you are new.

1) Never tell them what your budget is. If you do, there estimates are right at (surprise)

2) Always get a minimum of three quotes. I recently dealt with a contractor that gave me a quote on marble countertops. He asked if he could do the job and I said I had to wait until I got all my quotes in. He asked, surprisingly, you're getting other quotes? I said yes, and he immediately said that to let him know before I decided and he might be able to drop the price. Seems he wasn't giving me his best deal until he found out I was also looking elsewhere.

3) I like to buy my own materials. I know a lot of rehabbers don't like to waste time with this, but I have a full time job and am only doing this part time for now. I shop the best deals around town. There are many ways to cost cut when buying materials, so I would ask the contractor to give a breakdown of material costs and labor separately, so if you can get material for cheaper, you only pay for his labor to do the work.

4) Do not pay the contractors in full upfront. At most, you should give them 25% of the full amount to buy materials (if you are letting the contractors buy materials) or as a deposit to start the job. Then 50% when they are half done and 90% after completion. Always keep a bit at the end after you check their work. If there is anything that they forgot or did subpar, you have some leverage to have them complete it in a timely manner.

There are other things you should know, but I'm getting long winded. Do a search on the articles section on rehabbing.

Many rehabbers do the penalties thing. It's legitimate

Ayo F. · Answer

Thank you all for your advice.

Bill - When I started managing IT Projects, I was told that to be a good project manager, I had to learn how to do the job. Reason being that, when you know how to do it, then its easy to know what a realistic time frame is for each task, the precedence of tasks, and you are able to understand what challenges are being faced by your contractors. For example, It seems to me (from talking to a lot of investors and even reading the BP posts) that, it should be expected that contractors will finish jobs behind schedule, way over budget and at times, under the desired quality. Also, if we as investors want the job done right,, then we have to compromise on duration and/or cost. If I, as a project manager finished my projects behind schedule and above budget, then I would fired! If I finished behind schedule then my company starts to loose money and upper management sure hates that  :wink:

So, How do I know what needs to be fixed? Do I get a GC to get me the break down and the precedence of tasks? I am also guessing that I can get a detailed inspection from an inspector and pull in my a sub crew, but then how would I know what needs to be done first (sequence of events)?

Simon - your idea of getting multiple bids on a job is a great one. I was thinking I would get 3 bids with a detailed work scope. I mean, I expect the contractors to tell me the precedence of tasks, how long each work package will take and cost. I am thinking of getting an average time and worst case scenario time and cost for each task.(I will go with the worst case scenario in building my budget).

I am thinking of imposing a penalty for everyday the job goes beyond our agreed date except for things that happens due to my fault. I expect that materials will be broken, their will be delay in ordering, one of his subs might have a sick child to attend to some days, but how does one realistically factor these into the project duration if you don't have any experience?

In general, Is this a reasonable approach from your experience?

Thank you

Aaron McGinnis · Answer

Be real careful about home inspectors. As Simon has pointed out, requirements vary.

For example - in Georgia, there is NO requirement and NO licensing of home inspectors. A guy just prints a business card and he's in business.

Places like NACHI, NAHI, ect. are all just blood money... Like buying into NAR as a Real Estate agent. All it means is that you swiped your credit card for membership into a large organization.

Account Closed · Answer

Steve,

It's called a Better School of Building Inspection. Each state has its own licensing requirements. Texas, where I am, does not require an apprenticeship. Texas requires 448 hours of class time and the course requires us to do home inspections on our own home and homes of friends for practice.

The only reason I am doing to course is to make myself a better rehabber, not to do home inspections. I figure 1000 will save me a lot more in the future by passing on homes in worse shape than they seem to be on the surface.

Is my Lack of construction Experience a Negative?

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