There is nothing many contractors like more than to happen upon a prospective customer new to the rehab business. While not exactly a ‘license to steal,’ newcomers often follow contractor’s recommendations into unduly expansive and costly renovation.
Savvy Investors Have Their Own Punch List Guiding The Work
The professional rehabber on the other hand, has a short list – a ‘punch list,’ if you will – of what to look for and what to correct in order to put the property back in service. We’re not suggesting contractors’ recommendations be ignored, their advice is always taken into account. But it is important to stay in the drivers seat, to have a clear understanding of that Middle Road that stops short of gutting the house while nevertheless curing the significant deferred maintenance.
Depending on the market, rehabbers may or may not elect to substantially upgrade or “modernize” their project. In an upscale market, it may be essential that the home be improved to contemporary standards, including blow out kitchens and master suites. This is undertaking “rehab” much as the custom builder approaches his market, catering to the tastes of a decidedly upscale clientele. Rehab as it is understood in this essay concentrates on curing what the industry calls “deferred maintenance.”
Production Rehabbers Cater To The Broadest Real Estate Market
We refer to the Production Rehabber, the builder entrepreneur who elects to cater to the broadest possible market: those content with “used housing” in established neighborhoods that today offer the greatest housing value. In some markets, this is referred to as Affordable Housing, where the median housing prices roughly correspond with median household incomes.
The Production Rehabber (those who’ve made a full time commitment to the business) quickly establishes a somewhat standardized approach to his rehab projects. This strategy results in Production Efficiency and Economies of Scale. The rehabber, after taking into account exceptional conditions, tends to follow an established regimen of correcting both obvious and subtle adverse conditions diminishing the value of the home. The Scope of Work (more about that later) will quickly become repetitive, according to formula. The happy result will be an appropriate, reliable repair of a “tired dwelling,” according to the builder rehabber’s personal measure of quality and integrity.
Similarity in problems with older homes
Given the typical age of the homes the rehabber has opportunity to improve, the conditions to be examined and the tasks undertaken will follow a pattern. Learn to spot the common problems, work out your own individual solutions to these problems, and you’ll be well underway in becoming an accomplished rehabber or savvy investor.
The 5 Steps To Successful Rehabbing
In developing these skills it is well to follow what are arguably “industry standard” construction practices. There are essentially 5 steps to this process:
1. Identify the work to be done: The Scope of Work
2. Quantify the work to be done: Pricing & Budget
3. Control costs: Systematic, contractual Progress Payments
4. Work efficiently: Effective Project Management
5. Work safely: Job site safety protocols; appropriate Insurance
6. Create Value: Synergy (The Result is more than the sum of the parts.)
We will examine each of these important steps during the course of this Construction Practices article series.
By Philip Elmes