How to Idiot Proof Your Rehabs

A property rehab can be a exhausting experience. From the start there are so many ways that the rehab could go sideways, or even completely down the drain. Conducted properly a rehab should be broken into phases and methodically executed so that extra effort, and costs aren’t wasted on doing work twice, or more. We will briefly cover the phases of a basic rehab, the scheduling, methodology and execution to a successful rehab. We do not intend to deliver the impression that all contractors are idiots, however in case you happen to engage any that are, hopefully this short “nugget” will help you in working with them and prevent you from shooting them.

Scheduling:

Each rehab should have a scope of work (SOW) which is a detailed list of what will be completed in the rehab along with a dollar figure associated with those items. The wise rehabber attempts to make the SOW as detailed as possible. This is done for two reasons: (1) So that the persons reading the SOW do not have any doubts as to what and where in the property the work is being performed for each item, as well as the cost associated with it (2) In case there is more than one area receiving the same work or materials, the property owner, contractor and lender, if one is being used, are able to break down the cost for these areas if completed at different times in the project.

Example: If tile work is being completed in the rehab, and it is taking place in more than one area of the property, such as: foyer, bath, kitchen, shower surround, kitchen backsplash, etc. it is smart to break out these areas separately on the SOW. This eliminates confusion, offers precise direction of the areas to be tiled and allows for ease of tracking the cost to each area independently.

Tip – use an excel spreadsheet to create the SOW, or purchase one online that someone has already created and when you print it - print multiple copies, so when one of more is lost in transit of in the property, you have backups. Unless you are IT savvy enough to be able to have them saved electronically and can share them with parties in that manner.

Methodology:

Perhaps its because I have been a franchisee at more than one point in my life, or maybe because I grew up around military family members, but structure and organization are important to me and especially when it comes to getting things accomplished. Every rehab needs to follow a schedule, with the SOW being a road map for that schedule. The SOW tells what is going to be addressed, but not how or when to address it.

Create a phase schedule for your rehab using common sense in the process. What I mean by that is you don’t install the flooring at the beginning of the rehab, as it would get damaged; the flooring is addressed nearer the completion of the rehab. You would think this is common sense, however I have witnessed property owners and contractors installing flooring early in the rehab…go figure.

Phase 1 - The first phase of the rehab should be securing the property and any removal of items or demolition (demo) that is needed. By securing I mean to change locks, change doors, install the new windows, install the new roof, etc. This makes the property weatherproof and secure.

When it comes to demo, I am a believer in only removing what needs to be removed. In other words not every property needs to be a gut rehab, taking it down to the studs. A contractor will tell you that you can actually rewire or replumb a property without gutting it. Think about it, do you honestly think that if you hired a plumber to replace the plumbing lines in your house, or an electrician to run updated wiring in it that they are going to tell you that you must first move all of the furniture out and gut the place down to studs so that they can do their work….NO. Keep the demo phase to a “only what is needed” phase.

Tip – if you bring in a dumpster for the demo phase, fill it up and have it picked up all in the same day, as if you do not the neighbors, and anyone passing by, will take advantage of the space and add their trash to yours. Plus, if it takes up parking spaces, it reduces the time they are used up.

Phase 2 – bring in any updates to the plumbing, wiring, change out outlets, switches, etc. If walls are exposed now is the time to accomplish this. If they aren’t and need to be partially opened to accomplish this, then now is that time as well. Additionally this phase is where you can accomplish any drywall installation or repairs and prep for painting. Any work to be conducted in the basement can be rolled into this phase as well.

Phase 3 – Installation of tile, interior painting, installation of cabinets, toilets, any interior doors & hardware, lighting fixtures, plumbing fixtures, closet hardware, needed trim work, etc.

Phase 4 – Installation of flooring materials (carpet, wood, laminate, etc.) as well as any finishing trim work (quarter round) or caulking needed. Final cleaning and staging if desired.

Phase 5 – the exterior of the property can actually be done at any point of the rehab as long as it doesn’t conflict with or prevent any other phase from taking place. Some rehabs will have minimal exterior work, such as painting trim, gutters, etc. and this can be conducted in the final phase, while others may be more extensive with tree work, landscaping, cement work, siding installation, brick repairs, etc. and have to be conducted earlier or in stages as opposed to all in the same phase. Keep in mind that curb appeal is extremely important whether flipping or holding, so please do not skimp or cut corners on the exterior of the property even if it is conducted near the end of the rehab.

Execution:

I had mentioned that systems & organization are important to me, and as such I have always tried to employ them in my rehabs. This is evident in the breakdown of the rehab into phases, and the detailing of the line items in the SOW, but in order to make the rehab idiot proof you need to take it a step further. How? Here is how:

Guide the contractor on what products will be used within the rehab and when they will be installed. Share with them the phase scheduling (this is a person choice, but I do not share the SOW budget figures with them, just the items to be accomplished) and either purchase the materials for them that will be used or supply them the exact name brands, colors and even locations of purchase for the materials being used.

Example: Choose the faucets, lights, flooring, tile, paint colors & finishes, door hardware, etc., that will be used in the rehab. This way the rehab is being completed to your liking and appeal, and NOT the contractors. Additionally, you can guide them on the costs that will be associated with the materials so that items remain within the budget and wasteful spending doesn’t occur.

Partially because I am a control freak and partially because I didn’t trust it in the hands of the contractors, I took it to the extreme and actually recorded the SKU’s of the material that I wanted used in the rehab. Whether the materials were coming from Home Depot, Lowes, or other suppliers so that I was assured of what materials were going to be used in the rehab and assured what the finished product should look like.

I essentially made it very easy for the contractors to know what was to be addressed and what materials were to be used in the completion of their work, right down to the doorknob, switches and even the mailbox. I looked at it like this, let them concentrate on what they are skilled at (like a great musician) and let me be the conductor leading the orchestra. Hopefully you are able to accomplish the same with your rehabs.