Managing Out-of-state Rehabs

[Britt Smith]

i recently bought my first out of state property which needs a major rehab. I've narrowed my GC + crew down to 2 options. 

If you are an out of state investor, what are some lessons learned and advice you can share? Did you hire a GC or Property Management company to oversee the rehab? Did you hire a Runner? 

Much appreciated! 

[Drew Sygit]

@Britt Smith biggest challenges:

1) Hiring trustworthy contractors

2) Finding contractors that are okay with NOT paying them upfront for work they haven't done

3) Confirming work done and its quality, before paying them additional funds

4) Getting them to stay on schedule

5) Finding someone you can trust to monitor them

POSSIBLE SOLUTIONS

1) Odds are against you finding a trustworthy contractor on your own. The best are too busy and don't advertise, so you can only find them by networking. A contractor that can start within days is NOT busy for a reason! A real estate agent or PMC may be able to address this - but only if you screen THEM well.

2) Majority of contractors expect 50% upfront. Why? They claim for materials. So, we tell them we will cover all materials - which they won't agree to and still want 50% upfront. What does that logically tell you? They want control and they are using YOUR money to pay other bills! So, you can either risk the 50% upfront or search high and low for a more resonable contractor. Again, a good agent or PMC may have connections with contractors that won't require 50% upfront.

3) Depending on the Scope Of Work (SOW), you can require contractor to supply pics/videos, maybe try live video, to confirm. But, how will you recognize quality unless you are a contractor? See #5.

4) Have NEVER had a renovation come in on projected time:( Budget 10-20% extra time. If you don't stay on top of them though, a project timeline can easily double or triple. See #5.

5) You need someone local and reliable that can visit the project weekly or as needed, to document:
- What's been done, not done
- Has it been done right/acceptably
- Can meet contractor there to discuss issues
- Wil send you pics/video, etc. consistently to document everything
- Can let you know when to release additional funds
- Can meet city inspectors as needed

The best person for this would be a GC. 2nd best would be a PMC. 3rd RE agent.

What's most important is finding people that can assist with covering the above issues.