Managing Rehab Deals From Out Of State
i have the oppurtunity to purchase rehab deals in alabama. i live in nj and can commute to alabama 6-10 days monthly. what advice would you give in putting together a team that can manage these projects.
i am building a relationship with a knowledgeable investor friendly realtor in the area.
If you are doing a long distance rehab, I would say that you are going to have a GC do all the work and not have a "team".
I am a pretty experienced rehabber and most of my rehabs are within 20 minutes from my home and I can still pull my hair out trying to get it done.
Check out this TCI thread:
http://www.thecreativeinvestor.com/residential/ViewTopic54599-20-33.html
Jim
My suggestions for the GC was that there would be one person in charge of getting the rehab done. Last thing you want is the painter blaming the flooring guy and the flooring guy blaming the painter for the doors not being hung properly. Have one person that is responsible for all the subcontractors. Now of course you are going to pay more for the GC and you still must have a pretty tight contract or everything will be additional money.
Being able to visit only a few days a month is asking for trouble. You definitely needs somewhere for the buck to stop. Otherwise you could get a whole song and dance from the workers that will delay and overrun the costs.
A GC is a good bet. If you are time constrained make sure it is in the contract the start and end date as well as the penalty for not ending on time.
Is it possible for you to partner up with someone in Alabama?
Sometimes the best way to make a project like this work is to get someone else involved that has an equitable interest in the deal, and some risk involved.
I do a lot of rehabs in Florida, but last year I had the opportunity to buy a few houses on Long Island in NY.
I had a friend up there that I brought in as a partner on these deals, and essentially he managed the entire rehab projects from start to finish.
I just negotiated the purchases, sales, and sent him some money.... and we split the profits. Other than a few trips up to check on progress, it was a completely hands off investment.
In fact, I am going to do a few more with him in the spring.
Best,
John
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ADVERTISING REMOVED[ Edited by JohnLocke on Date 12/11/2006 ]
Hummm.....I would continue to shop. Did your agent tell you thats the best way to go because I strongly dissagree. You would be better off getting a course of construction/remodeling policy as that will cover the home at its finished value and the vacant property policy will not. A vacant policy covers you at ACV, not good if the home needs alot of work!
A vacant policy is also the most expensive policy you can purchase and it will not cover your needs.
You can go to the Zurich website and obtain a proposal. 200,000 for remodeling policy should run you between 750 and 1000 for the year. A much better deal. Good Luck!
Let me also add that the remodeling policy will cover your tools, theft, vandalism, etc... its already structured in the policy and will not need to be added by endorsment.
Your rates may differ from VA to CT. Have an Agent that understands both contracts give you a comparison.
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Brian - I have stuggled to find the right policy in Richmond. Who do you use for a remodeling type policy?
My guess is that Foremost is the company the Agent used.
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Turns out the company was Llyods of London and that I am paying the $1590 for 12months of coverage that is earned after 3months.
I am Very HAPPY with that price.
Were you able to get a solid comparison between the Lloyds policy and any other options? Lloyds is many times the "last option" over other carriers...
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Best regards,
Tim[ Edited by norrist on Date 10/27/2005 ]
Brookview is good. I have worked with them.
There are much better rehab lenders available.
Ranging from low credit to high ltv.
Some will add in the payments to the loan while others will not.
Lower costs too.
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I have done several deal with these lenders (Smith Rothchild and Omni here in Chicago) and have been very satisfied. They are a bit restrictive on LTV (70% of ARV max), but are used to working with rehabbers so the process is easy.
Getting the funds is always a challenge. We use mainly private funds for our deals but have liked merchants mortgage in the past. They are usually 2 points and 10-11% I think.
email my associate Josh at **Please See My Profile** and he will be able to give you contact information and parameters.
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The best that we have worked with fees and timeline wise has been merchants mortgage out of Colorado.
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I have done several rehabs, and they are all different, but this is my basic formula:
1. Roof and siding, demo inside at same time
2. windows at same time plumbing and electrical
3. any framing work
4. drywall
5. painting
6. flooring
7. kitchen and bath cabinets and fixtures
8. molding and other finishing touches
This is a bit vague, but this business is definately not cut and dried. You basically want to keep the workers out of each others way and move as quicky as possible. If the workers are tripping on each other, it will slow the project down more than if you just waited a day or two to bring in the next crew.
I hope this helps and good luck with your project!
As loon eluded to.........prioritize your rehab according to
what in need of repair first and foremost.
Many rehabs (major - not cosmetic) often have foundation
or drainage issues. Tackle the the things that in dire need of repair with consideration how those repairs may effect the others.
Rehabbing is more of an art then a science.....unlike new construction. There truly is no specific formula........case by base basis.
regards
NC
I use a technique that I call storyboarding. I go to the property that i am rehabbing and write the way that the rehab story would go. When I write it in story form, it often will bring up issues that could come up later to haunt me. My order for rehab usually goes like this.
1. Exterior protection the Goal here is to keep out all outside elements, but if its just for curb appeal then I will wait.
a. Roof
b. Siding
c. damp proofing
2. HVAC (especially important if your rehabbing in the winter somewhere
3. Electrical
4. Plumbing (pipes and toilet only if fixtures are being replaced because you need cabinets first)
5. Drywall after doors and windows have been replaced
6. Paint
7. Cabinets
8 counters
9 finish plumbing (sinks, toilets, showers)
10 flooring.
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The main thing is to have a plan in place prior to begining.
I usually will order the window first thing because it takes an average of 3 weeks to get them after I place the order.
Then I do the electrical, plumbing etc. (anything that will mess up my drywall) followed by cabinets, painting, carpet, floors, tile etc.
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