General Contractor: noun. Someone who goes over budget and takes longer than expected! All jokes aside, finding a great general contractor is the key to any successful rehab.
Rehabs can range in size, from small updates (paint and carpet), to new additions. To help provide some perspective prior to entering into any rehab, let’s go over some key points (keep in mind these are real – and actually what we are personally doing for the two we have in progress right now).
Scope of Work
- For all of you Corporate America folk, you almost certainly have come across this! A Scope of Work (SOW) is a detailed bid of everything to be completed. This will not read: “kitchen, bathroom, carpet” but instead something more like “supply and install new knobs and paint existing cabinets, new subtop, tan brown granite countertops and backsplash, stainless steel top mount sink, brush nickel faucet, disposal, GE gas range and new hood.” If you are feeling lucky, try to get each item priced out separately: “stainless steel top mount sink ($125), brush nickel faucet ($150)…"
Picking a Contractor
- If you have ever heard of the “Drop the Lowest and Highest” from a procurement/sourcing member, just keep in mind for General Contractors you get what you pay for (and what you get might be an inflated bid so be careful). Also, ALWAYSstructure payment via draws to ensure that you do not pay for a vacation to Hawaii for your GC.
Timeline and Flow
- When starting any project, you always want to have started yesterday and finish today. When interviewing GC’s and discussing the work they are going to perform, get the timeline in writing and push back if necessary!!! In a rehab to sell/rent, time is of the essence. Right now, we are working on one that we were debating to put granite countertops in. But, due to the countertop layout and timeline for install, it would have pushed us back 5-7 days on the complete project. Essentially, when we factored in the extra holding costs and potential of pushing closing past Thanksgiving, it was a no brainer to move forward without the granite.
- Trust but verify. When you can, visit the site and check in on things. Something almost everyone forgets, even if the rehab is next-door, is pictures are worth 1,000 words. Ask for tons of photos to document the before and after. More importantly, require post photos on each draw when you pay the contractor.
Ducks in a row
- One of the rehabs we are working on finishes next Wednesday. We have already planned for photos to occur on Tuesday at 4:00pm. Why you might ask? Tuesday night and Wednesday we intentionally left for final touches and minor updates. The “big picture” items are going to be wrapped up before then so that they can be used in all of the marketing materials. Wednesday we will order flyers and print material before the property hits the market on Thursday (allowing the property to show up on all property searches the Thursday and Friday before people map out their tours with their agent and Saturday and Sunday for Open Houses). If you have the timeline to do so, this is an excellent time to do some “Coming Soon” marketing (my favorite approach to any listing).
- When in doubt, inflate it out. We used a 10% contingency for this past project due to the EXTREMELEY detailed scope of work we had upfront (it was also a $30K+ project so 10% is not $9.95). Most budgets are made to go over – if you cannot plan for a contingency in your budget, cut the project scope down or do not do the project.
For the next post we will try to integrate in some before and after photos so you can see the type of work that is possible. We are also going to be writing about Rehab 102 - Is it even worth it?
Also, for those of you that remember me writing about a big announcement coming soon (this was the other note besides my wedding last time), we are planning for a hard launch on October 1st of our new brokerage – so expect a sneak peak update on Friday, September 30th.
If you ever have any questions at all, please do not hesitate to reach out. At MinnGo, we realize that real estate is not something our clients think about everyday. Lucky for you, that is what we live and breath.
Until next time.