The One Task You Must Do To Avoid Chaos on your Flips
Nearly every discounted property that you come across will require some type of rehab to be done to list the home at market value.
Putting together a plan is a must even if the rehab process is not very extensive. A plan is going to give your team a better idea of what is expected from them and what the job will consist of. By having a plan it eliminates the number of unknowns on the project which will allow for a more successful project. A more successful project equates to more profit for you and your team.
The worse the condition of the home you are rehabbing is in, the more planning and care it will take to keep a project run smoothly.
So the one task that you must do for all of your rehab project is..... putting together a Scope of Work.
A scope of work is a in depth description of what each division of your project with entail. It is basically a "to do" list of each phase of the process. This is the document that all of your contractors (subs) will work off of.
It is never to early to start planning. If you find an investment property that you feel you will have a good chance of closing on, I would advise you to begin to make a deficiancy list as soon as possible. The more information you have on a home before you close and start the rehab the better your projects will run.. plain and simple. To me in order to make a good guess on if you should invest in a certain property, you need to have some type of breakdown of what the rehab costs are going to entail. The rehab costs are a major piece of the puzzle on if you will be making an offer and what that offer will be. Once you decide to put an offer in and the offer is accepted, this is when the real planning begins.
Once you sign the contract, you will have about 7-10 days to do as much research as you want on the home. (just make sure your contract is contingent on an inspection). During these 7-10 days you will work with your contractors and subs to put together a detailed scope of work for the specific job you are working on.
This is a very important place to develop systems so that everytime you do a scope of work you have a specfic step by step process you follow to put one in place.
By creating a scope of work, you are going to also be able to get apple to apple estimates from subs for specific aspects of your job.
When creating your systems for your scope of work be as descriptive as possible. If you want to work by division (electrical, plumbing, HVAC, flooring) or you want to work by location (kitchen, bedroom #1, basement) whatever the case may be, make sure you are consistant throughout your scope so everyone understands exactly where that work will be happening on the project.
Having a detailed scope of work will also ensure that everything on that scope of work is completed by the contractors that you hired. If there is ever a question, you can go back to the scope and tell that sub that you missed something on the scope. This will make sure that there is no miscommunication during the rehab because we all know contractors miss certain areas of the project.
It will ensure better relationships with your contractors. If you come prepared to the job with a detailed description of what you expect out them, believe they will respect you and want to work for you. I’ve found contractors are willing to cut their prices back a bit more simply because they know it will be a drama free transaction.
By creating a detailed scope of work and being able to reproduce the same type of scope for each project you do, you will take yourself out of the business because you will eliminate the time you have to manage your properties, elminate the time you will have to watch over your contractors and eliminate the headache of miscommunication and of contractors not knowing exactly what the work entails.