REHABBING 101, BY AN ACTUAL HUSBAND AND WIFE INVESTOR TEAM
What I am about to teach you are what we have learned mostly by trial and error. Rehabbing a house is very profitable and very tricky. You have to make sure you have all the pieces working from finding the right property all the way through to selling the property. You will see as we go on in this report, we will document actual pitfalls we ran across that were unexpected and could have been avoided. These pitfalls cost us a lot of money along the way. The following is a Renovation checklist you will find helpful as you begin your new rehab:
1. Do a thorough inspection of Interior and Exterior.
2. Measure the property and draw an interior layout. Please remember to take photos throughout the stages.
3. Determine what you think should be done to the property. You want to ask yourself what the property needs to bring it to the best value for the area and price range. Be sure to remember all systems, such as: Plumbing, Roof, HVAC, Electrical and don’t forget appliances.
4. Complete your Scope of Work and be as specific as possible – always better to overestimate the under. In our experience, it will always cost more than you expect! So estimate higher and you will not be surprised at the end.
5. Prepare a Budget
6. Search for Contractors for each trade or you can find a General contractor who can do the entire project. We have found it costs quite a bit more for a General Contractor, but if you don’t have the time to watch over and manage your project a General Contractor is the way to go.
7. Review your bids making sure you are comparing all the apples to apples. Ask lots of questions before you decide on the contractor. Be sure you get a workers compensation certificate issued directly from the insurance carrier and not one provided by the contractor. Please remember to get all contact numbers from the contractor so you can reach them at any time.
8. Sign the contract with the contractor and make sure that it is clear how payment will work. Most of the time there is a down payment so they can start the job, and the following to be paid in increments when jobs are completed. DO NOT PAY ALL AT ONCE.
9. Once you settle with any individual, be sure that you get a signed “Lein Waiver” upon final payment. If you have used a general contractor, also get a signed “Lein Waiver” from each subcontractor prior to paying the general contractor. This happened to us on one of our houses when we used a General Contractor, we paid him, but he never paid his subcontractors. We just assumed he was paying his people to work, but we found out he was not.
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