The Importance of Material Lists For Your Investment Property Rehab
So you want to take your real estate investing business to the next level?
As with any business, creating a scalable, successful company has a lot to do with the systems you have in place for each department within your business. An important system to have in place for your projects to flow smoothly is a project material list.
If you have done any renovation work to properties in the past, you understand that no material list can effect your projects in several ways.
If you will be supplying the material for the project, it is very important to have the majority of the material on site immediately after demo or during demo if you can store in a safe location.
How To Create A Material List When Rehabbing A Property
A material list is a list of all the material that you will need for your specific project.
You will gain the majority of your material list through the creation of your scope of work which will lay out the tasks that your General Contractor & sub contractors will be performing on the job. From the scope of work that has been created, you will know what material is needed for what tasks. This will allow you to compile a detailed list of material for your specific project.
We have created a master material list document along with separate vendor material list documents. The more rehabs you do, the more relationships you will build with specific vendors. This will streamline the project design process and the choosing of specific materials.
We have also created a material list binder that describes a couple different options for all finish & construction material that we use on our jobs. This material catalog allows us to more accurately estimate jobs, create accurate budgets and mitigate our risk on projects.
Here is a very brief example of what we mean when we speak of a material list. It is not a complicated process, you just need to ensure you have a system where everyone who is involved understands.
10 gallons of interior wall paint
4 (24 in) RH doors
(100 sq ft) of laminate flooring
(4) Pendant lights
(8) Recessed lights
(4) Exterior lights
How Do We Create A Material List System For Your Renovations?
So now you have a basis for what your material list will be on this specific project. You have a pretty good idea of what material you will need for each of the tasks your contractors will complete. Now, I am going to give you guys the basis for how I set up my material lists for my projects so they are very repeatable (scalable) to streamline this process.
Create a binder- Project Material Lists
Create tabs for this binder for each piece of material you use on your projects (examples) doors, interior lights, exterior lights, interior wall paint, interior bathroom paint, bathroom flooring, kitchen flooring, carpet, hardwood flooring, kitchen cabinets, kitchen counter-tops, toilets etc..
Figure out 3-4 different items that you want to use on EVERYONE of your houses you will rehab.
Print out Product data & Specs for each of the items you choose and plug them into your binder, under appropriate tabs.
Your Material System is underway
This binder will be a working document that is accumulated through out the life of your business. By creating this binder you will become much more organized, due diligence periods will be more accurate, projects will be on budget and on schedule.
Your project manager will be in charge of assembling all the material for the specific job and your administrative assistant will be in charge of putting together the final document and uploading it to the specific file folder for this project.
You have just created a system for this specific task of work for your projects. Now for every project you start you will know exactly what products you will be using. This will make it much easier on you and your contractors to finish your projects on schedule and on budget.
What Material do you buy & What materials do your contractors buy?
I made a mistake early, when I first got into this game and would allow my contractors to purchase finish material. My thought behind this was that it is going to save me a lot of time and hassle and not that much money. This was a mistake, I want you to purchase all material that is not construction based (screws, bolts, nuts etc) and I want you to purchase all this material before demo is completed. This is going to save you 10-15% on all your material costs which adds up to quite a bit of savings when your projects are complete.
Although this may take you some extra time, if you know exactly what products you are buying going into Lowes, Home Depot, Discount Centers then you should have no problem completing this material search in 1 day.
With the help of your material binder, project manager and administrative assistance, we will be looking to streamline this process to become more efficient and organized.
Wrapping Up | Material Lists For Property Rehabs
The material list is a document that several newbie rehabbers forget about. You don't realize how important this document is until you begin to implement it for your projects and begin creating a system to enhance this aspect of your business. The benefits of creating a material list are tremendous. So take the time to establish a detailed material list. The more planning you do during the due diligence period of your projects, the better your projects will run.
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