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Author Topic: Rehab Remotely  (Read 10209 times)

Offline Jrennick

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Re: Rehab Remotely
« Reply #15 on: October 15, 2008, 04:25:16 pm »
I'm doing an out of state flip right now in san antonio.  So far we're way way over budget but we still should make a profit.  This is our first one - I'll repost and let you know how it goes.  It looks like it will take 3 months to complete before we put it on the market - so it should be done about a month from now.

Our realtor is the one who found the property.  He is also a licensed plumber and is managing the project.

We've made/are making three trips over there: one to walk thru the property, another to check on the progress midway, and the last one we'll make a punch list.  Each trip costs about $500 per person.  that covers flight, hotel, car rental, and food.  So you just factor that into the expenses when analyzing the deal.

The hardest part was picking out the materials.  Being that it's our first flip, we didn't know the places to go so we were running all over town looking for the best deals.  Next time will be much easier because we now have the knowledge of: 1. where to go, and 2. how much meterials cost.

I have a full time job, and my wife handles most of the details of the flip.  It also helps that she's an interior designer. 

Joe

Offline lionel47

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Re: Rehab Remotely
« Reply #16 on: October 15, 2008, 06:19:11 pm »
Wow, I just got back from San Antonio today.

I am very interested in knowing how you guys fare and how it turns out.  Please keep me posted.

I think it's time to stop thinking and start acting.

Offline Mr. Rehab

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Re: Rehab Remotely
« Reply #17 on: October 16, 2008, 03:17:41 pm »
Rehabbing while out of state is not really that hard.  What you will need in order to pull it off is someone who manages the project for you. 


I always tell my in state clients that they should assume the attitude of my out of state investors..Hire competent folks and then let them do their jobs without you breathing down their neck...

If you spend everyday onsite you aren't doing something right...



Mr. Rehab




Offline lionel47

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Re: Rehab Remotely
« Reply #18 on: October 16, 2008, 03:44:07 pm »
 :shocked WOW...that advice is almost the opposite of the advice I received earlier in this thread. Do you have any "must know" advice for remote rehabbers?

I will be jumping into my first rehab soon and I will be doing it while I travel.  I am taking steps to mitigate the risk so hopefully, everything works out.

Offline JaredfromIndiana

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Re: Rehab Remotely
« Reply #19 on: October 16, 2008, 03:52:32 pm »
Rehabbing while out of state is not really that hard.  What you will need in order to pull it off is someone who manages the project for you. 


I always tell my in state clients that they should assume the attitude of my out of state investors..Hire competent folks and then let them do their jobs without you breathing down their neck...

If you spend everyday onsite you aren't doing something right...



Mr. Rehab





Mr. Rehab,

Your telling lionel that on his FIRST rehab that just happens to be out of state that it's really not that hard to do?  Just hire somebody to manage it for you and off you go? 

I sincerely hope everything works out for you on this Lionel, just seemed a little too risky for me, especially for rehab #1.  Let us know your progress and good luck!

Offline lionel47

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Re: Rehab Remotely
« Reply #20 on: October 16, 2008, 04:42:13 pm »
Hmmm...well, there are a couple of things that may help me be successful:
  • My wife has agreed to take a somewhat larger role and be head designer and stop in on the work at least 3 days weekly;
  • I generally travel from Sunday through Thursday so I can pop in Friday to see what has been done over the week;
  • As this is our first, we are looking at properties with asking prices from $30K-$50K and we can probably talk them down in this market; you know: start small, risk little and learn lessons without losing too much money

The properties we are looking at (three) need an estimated $20K-$30K in repair and have an ARV of $110K-$130K.  The ARV are derived from average recent sale comps within 1 mile.  Question here is whether someone looking for a house at this ARV will be able to get the credit in this economic environment?

Does it sound like we have weighed the risks and taken steps to manage them?

Offline Mr. Rehab

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Re: Rehab Remotely
« Reply #21 on: October 17, 2008, 11:32:01 am »

:shocked WOW...that advice is almost the opposite of the advice I received earlier in this thread. Do you have any "must know" advice for remote rehabbers?

I will be jumping into my first rehab soon and I will be doing it while I travel.  I am taking steps to mitigate the risk so hopefully, everything works out.


Lionel, 


Here's what you do...

Go to a local building supply, or Sherwin Williams store and ask the guys there if they know the names of some of their regular customers who rehabs properties..(This won't work at Lowes or Home Depot).  Normally, these kinds of material suppliers build relationships with their customers and they know which crews are good. 

Ask the rehabber to provide photos of work completed, and a few references...

If the rehabber is limited in the kinds of repair services he/she offers, yet you feel comfortable with them, ask if they would accept a fee for project management services.  In other words if you have a good rapport with a painter, electrician, carpenter or lets just say plumber..Let's just call him "Joe"..If Joe the Plumber is willing he can become your PM.  Joe probably knows alot of good tradespeople that he can vouch for..Make sure that Joe has a good digital camera, knows how to use the Kodak photo gallery online, and can receive wired payments...Set up a progressive payment schedule, and payout on the project pursuant to the schedule..

Think about your out of state deals as a district manager would think of running a local Fast Food Chain...You can't be everywhere at the same time cooking the hamburgers, making the fries, mopping the restroom, working the cash register, etc..You hire folks...You hire management..




Mr. Rehab

Offline lionel47

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Re: Rehab Remotely
« Reply #22 on: October 17, 2008, 12:23:29 pm »
Mr. Rehab,

I hear you loud and clear.  This is exactly what I have been thinking.  I appreciate the help.  I am interviewing a couple of contractors soon.  Thanks again.  I will see about starting a blog about my (mis)adventures. :smile

Offline LuckyLarson

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Re: Rehab Remotely
« Reply #23 on: October 20, 2008, 06:01:15 pm »
I am surprised nobody asked what price point, margins you are dealing with.  That makes all the difference!  IF you are dealing with a 90K home that might sell for 130K re-habbed, remote management would be very tough.  Thin margins require serious babysitting and a lot of personal sweat!  I have dealt mostly with single family homes and townhomes that I can get for 300K to $400K and sell for 100K+ higher.  It costs roughly the same to rehab a 300K home as a 150K home but often with much higher proffit margins.  I hire out most of the major work to reputable subs and I don't show up every day.  I still do a lot of detail work and being there is important sometimes, like when a tile crew (scheduled 3 weeks ago) is coming tomorrow and the demo crew didn't quite finish the prep work.

Having said that, I have a collegue who only deals with million dollar plus homes and he shows up twice a week but never even touches a lightbulb.  His margins are big enough that a budget overrun of 50K won't even make him blink.

Offline lionel47

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Re: Rehab Remotely
« Reply #24 on: October 20, 2008, 09:00:43 pm »
Thanks for the advice.  I am working on homes under $75K in areas where comps are in the $200K range.  In fact, my top prospect is on the market for $32K and comps are coming in at the $200K mark on average.  Sound reasonable?

Offline Jrennick

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Re: Rehab Remotely
« Reply #25 on: October 21, 2008, 11:15:43 am »
Wow, that's pretty good.  Is this in San Antonio?  If so, which area?
My purchase price was 121K, and the ARV is 205K.  We're buying in Windcrest.

Offline lionel47

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Re: Rehab Remotely
« Reply #26 on: October 21, 2008, 11:35:04 am »
No, it is not in San Antonio.  With 121K purchase and 205K ARV, how much profit are you planning on making?  Or, how much do you plan to spend on repairs?

Offline Jrennick

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Re: Rehab Remotely
« Reply #27 on: October 21, 2008, 11:47:58 am »
Repairs will end up costing 50K - way more than we estimated.  This is our first flip.  We're using cash so holding costs are very low.  We had foundation problems after heavy rain.  This was AFTER the inspection cleared us of any foundation issues.  The inspection also revealed that the electrical needed to be updated and the roof needed to be replaced. 
So lesson learned - get an inspection before you close and before you estimate your budget.

It's a nice area so it should sell, and we should make a 17K profit.
Next time will be much better because we already have the vendors lined up and we know what everything is going to cost.

Offline GRIDcorp

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Re: Rehab Remotely
« Reply #28 on: October 24, 2008, 07:20:45 pm »
I Rehab properties as I rebuild my credit and save money to do my own propeties. A deal I have worked out with two different individuals was:

     I look over the property give a detailed proposal of time and cost outlining ALL the work I plan to do. This sets our price.

In exchange for a small part of the profit I:

     I manage all the subcontractors from the Electricain for new services or upgrage, HVAC, Etc.

     I handle getting all the building permits and inspections.

     If it is a rental I advertise and show the apartments, run credit and criminal backgroud if the owner wishes and of course giving him final approval of all tenants.

     If the place is for sale I show it to potential buyers or work with the RE Agent to coordinate the showing.

     I understand what is really involved in REI so as I work to transition into my own investments I try to make myself as valuable as possible to my investors as I work on building my own team. It also works good to build a buyers list for wholesaling properties as I can wholesale then rehab for the same person. I enjoy taking properties from eyesores to units the neighbors can't  believe are so nice. I like the construction side of things.

     I make good money doing what I am doing and enjoy it.  So soon enough I will have the money to do my own projects. All with an education learned here, REI meetings loacally and through doing rehabs for others.

In conclusion what I would look for is someone hungry to get into the business with a knowledge of construction and have them come aboard and mentor them.

Offline monthlypayment

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Re: Rehab Remotely
« Reply #29 on: October 28, 2008, 04:41:34 pm »
Well 99% of the reply is correct.  Unless you know the person and willing to take the chance with this person don't do it.  My rule of thumb was stay within 1 hour driving distance of home.  Example; a friend of mine hired a carpenter to do some work for him at his farm three hours from his house.  He paid him 50% upfront (stupid) and the rest at inspection.  Well he couldn't make a meeting with the guy and sent him more money that totaled 80% of the fee only to find out the work was not done to code and failed inspection and the guy was never heard from again.

Be smart and don't trust anybody without checking out references and suppliers the person uses.

 




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