Is it possible to do rehab remotely?

Question

In my BRRRR journey, i'm plannig to expand my strategy from buy and hold, to also rehab. I'm looking at a remote market in GA, while i'm in CA.  Now i plan to buy a house that need renovation to force the appreciation,then resell shortly.  Is it possible to do rehab remotely by working with contractor directly without property manager? my property manager asks 10% of total rehab cost, her team will look through the project end to end, without much of my involvement.  any suggestions here ? thanks

Kevin Sobilo · Answer

@Yixiong Pan, do you have experience managing rehab projects that are local to you?

You already realize that trying to handle this remotely is adding complexity and risk. So, if you don't have experience managing rehabs, it doesn't sound like it would make sense.

A contractor has different interests from you. So, you can't simply trust them to handle things on your behalf and often communication is challenging especially if they choose to make it that way.

If you want to rehab in that market, perhaps spend some time networking there and maybe you will find someone whom you can partner up with who has experience in the local market and with rehabs. Having someone local who has skin in the game and experience would be valuable. This also allows you to be involved and gain experience for the future.

John Ma · Answer

Everything can be done remotely, its a matter of if youhave your process in place, and how you execute it.  When it comes to construction remotely, the challenege is how to verify and validate effectively of what the deliverable should be. If your boots on the ground is on the same page, there shouldn't be any reason why you cannot.

Refer to the Systems Engineering V model.  This applies to everything.

Marcus Auerbach · Answer

If I can be straight with you @Yixiong Pan I think there is a 90% chance this will not go well for you. A lot of things can be "done" remotely, but the better question is to what level of quality. How do you manage cost, unexpected surprises and keep the project on time. 10% to manage a rehab is actually pretty cheap, I suspect you have never done that yourself, otherwise you'd know how much work that is. A recent article in the Remodeling Magazine (a publication for professional contractors) made the case that if you don't mark up your subs by 40% you might loose money as a GC. Obviously as an investor we can't live with that kind of cost structure, but it gives you a sense of reality.

I have been rehabbing houses in Milwaukee for 15 years and I am on my jobs at least 2-3 times a week - even though we use the same trades and typically do the same work. A full rehab takes us about 12-16 weeks. So you can do the math.

Stuart Udis · Answer

@Yixiong Pan This has disaster outcome written all over it. Why are you considering hiring a property manager and not a general contractor? My guess is the 10% mark up because that's far less than any reputable GC will charge for their services. A PM may have construction relationships but they are not equipped to understand the complexities of construction outside of perhaps unit turnovers. Perhaps hire the PM as a second set of eyes for quality control but that should be in addition to the GC you should hire from day one.

Michael Smythe · Answer

@Yixiong Pan if you have no renovation experience, there's a high chance you will get eaten alive by contractors!

We've seen it happen as we've been hired many times to clean up messes and finish projects.

Andrew Syrios · Answer

It's possible to oversee a rehab remotely but not ideal by a long shot. I would only do so on light rehabs or with contractors I have a lot of trust in.

Adam Bartomeo · Answer

I have managed MANY rehabs for our owners, so, yes, it is possible. But, you need a VERY good team in place. Most PM's don't really know how to manage a property let alone manage a rehab project. I advise to be very careful of who you have work on this project.

Gregory Schwartz · Answer

I add 20-30% to any rehab budget for contingencies / as a buffer, and Im local to my projects.

Make sure you have an appropriate buffer and expect to be over budget. Just my experience.

Evan Polaski · Answer

@Yixiong Pan, there has not been a rehab that I have done that I have not, personally, felt comfortable letting go for more than maybe 2 days without having eyes on it.  So for me, it is not really possible.

If you sort of don't care about quality and just want it "done", then yes it can be done remotely.  But renovations and tenant selection are the most critical parts to a successful deal.  A botched renovation can cost you a LOT of money.  And a bad tenant, primarily one that destroys a house, will also cost you a LOT of money (and put you back into renovation mode again).

I would only consider taking on something like this in a partnership manner, where a local person, be it the contractor, a real estate agent, flipper, property manager, etc has real skin in the game, too, to help align their interests.

Also, this: https://www.biggerpockets.com/forums/67/topics/1216049-my-la...

Chere Grunion · Answer

I believe, it’s possible to do a remote rehab by working directly with a contractor, but it can be challenging without being there in person. A property manager can help manage things for you, but if you trust your contractor and have good communication, you can handle it yourself. Just be prepared for extra coordination and make sure you have clear agreements in place.

Is it possible to do rehab remotely?

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