Estimating Prices, Working with Contractors

Ashley:Ever marvel what the method is to run a rehab, handle contractors? Properly, at present we’re going to get into it. My title is Ashley Kehr and I’m right here with Tony J Robinson. That is the Actual Property Rookie podcast.

Tony:And welcome to the podcast the place each week, thrice per week, we carry you the inspiration motivation in tales you might want to hear to kickstart your investing journey. And at present we’re joined by the fantastic Serena Norris. Thanks for becoming a member of us at present.

Serena:Thanks for having me guys.

Ashley:And we’re reside in LA within the studio right here with Serena. So thanks a lot for driving by the LA site visitors. I do know be part of us right here at present.

Serena:I’m an LA resident once more, so hope you’re right here.

Tony:So Serena, I believe simply actually fast for the listeners, you’ve been on the Ricky podcast earlier than, however for individuals who possibly don’t know your story, what number of flips do you suppose you’ve been concerned in over the past a number of years?

Serena:Yeah, so I’ve finished round 100 thirty, 100 thirty 5 flips and been part of undoubtedly much more transactions, most likely as much as 200 transactions and for the final 10 years, it’ll be 10 years in April.

Ashley:And in addition burrs too. You’ve finished rehabs on leases

Serena:Additionally? Yeah, so about most likely 30 to 40% of these ended up being burrs. And so I’ve a couple of dozen long-term leases proper now between single household and industrial retail. And I’ve one Airbnb short-term slash midterm

Ashley:To make Tony proud.

Speaker 4:There you

Ashley:Go. So with this partnership, what was your major function taking up these tasks?

Serena:Yeah, so to start with 10 years in the past, I simply began aiding with every thing with my mentor after which after a couple of years actually took on all of the design points of it, high quality management and serving to with systemization. After which over time I grew into simply app challenge administration function after which being extra near the numbers. Then I turned underwriting as nicely for acquisitions and simply type of the glue between going from acquisitions into rehab after which to disposition additionally was our actual property dealer of the crew. So I listed all of our flips on the backend in the event that they weren’t already hooked up to an acquisitions firm. And so yeah, the design challenge administration, managing the contractors, systemizing and principally the operations.

Ashley:So do you suppose we will use this episode to utterly break down that technique of when that property is handed off to you? So is it when it’s beneath contract, is it once they shut on the property, when does it really transferred to you and what are the primary steps you need to take?

Serena:Yeah, so our course of with our crew, we had a major acquisitions particular person they usually have been those that have been analyzing a bunch of the offers, making the connections with both wholesalers or direct to vendor themself as soon as a property handed what we name the sniff take a look at. So that they’re like, Hey, we predict we’ve got a deal right here we

Ashley:Could make, so it meets your purchase field,

Serena:Sure, it meets our purchase field and what the numbers are , they’re going to margin, it could possibly be a deal that we need to take down. Then they begin amassing the entire data that I say, Hey, I want this data a Z with a purpose to decide, sure or no. And normally in that guidelines there could be a ton of images as a lot as doable, a preliminary type of fast flooring plan simply drawn even on the again of a serviette simply so as a result of remotely I might perceive then the movement and type of see, hey, we’ve got to not add a toilet right here. And I’m like, I don’t suppose that is proper. So then comps, preliminary comps, what the acquisition worth could be, how a lot they’re pondering, the rehab could be, all of that element. After which just about remotely, I wouldn’t even want to go to the property I’d go to just about after which be capable of decide sure or no.

Serena:So though I used to be major challenge supervisor and operation submit buy, I undoubtedly had a hand within the acquisition the place at a sure level the place we failed as a crew was that acquisitions half and the submit acquisitions half have been very segregated and we didn’t talk. And so when building costs ended up rising by like 20, 30% and simply their rehab numbers weren’t matching mine and I inherited a pair properties to handle the place I am going, this doesn’t work, this doesn’t pencil, that is going to be one the place we hope that we will make it again on the backend. And in order that’s the place I mentioned, okay, we must be extra like a Venn diagram and work collectively. And so creating these processes, I made an acquisitions guidelines for them, additionally acquisitions, preliminary scope of labor and price range the place they might simply go in and shortly sort in what number of home windows doorways, will it want a separate restore, will it want this?

Serena:After which a worth per sq. footage, they’ll simply put within the worth per sq. foot and inside 5 minutes they’d be capable of give a ballpark rehab estimate that I used to be snug with that would translate to post-acquisition. In order that’s actually the place it began starting after I’m going to be like, okay, we’re going to say sure to a deal, there’s nonetheless some closing time. And so in that point then we even begin the planning course of. We all know we’re going to shut, and so to get forward of our holding prices, that’s once we’d get in, see if we will get in somebody to take the ground plan. Plenty of hoarder homes generally we will’t at all times try this, we’ve got to attend for trash out. However yeah, that’s the place we’d actually start it.

Ashley:I simply need to point out one factor, Serena’s speaking about our crew and the completely different roles, however that is actually issues that you are able to do. Don’t get centered on having crew members concentrate on the precise roles and obligations that she’s stating as a result of you are able to do all of this stuff, however it’s simply the method that we would like you to remove from this you could comply with to really do your personal rehabs.

Serena:Completely. While you first get began, you’re going to put on all of these hats, what we name it. You’re going to be in all of these completely different positions and understanding, get conversant in what that function seems to be individually and possibly even when it helps you bodily. Okay, now I’m in my acquisition hat, now I’m in my building administration hat. Now I’m in my disposition hat in case you are additionally licensed. In order that method while you do need to scale or construct a crew, these transitions are extra fluid with the processes.

Ashley:Tony, you probably did that within the very starting of your online business. You probably did your org chart.

Tony:Yeah, we discovered that to be a brilliant useful train and I advised the story many instances and the explanation that we type of had this realization is as a result of in our short-term rental enterprise, there was a day Sarah and I weren’t collectively, my spouse and we each replied to the identical visitor who’s asking a query, however we gave them completely different solutions. So that they get two solutions on the identical time which are saying completely various things like, okay, we acquired to pause right here. However what you’re answering is I believe a extremely essential level that good rehab administration really begins on the acquisition section as a result of you need to know, hey, what are my prices going into this for my labor for the completely different finishes that we’re going to make use of and all these various things. So let me ask you a query. Say I dropped you in a model new market, you’re really type of doing this proper now, proper? As a result of

Serena:I You’re going by this proper now. Precisely.

Tony:Say I dropped you in a model new market. What steps are you taking to begin constructing out your labor prices for all these completely different trades? If I’m an entire rookie, I’ve by no means finished this earlier than, what is step one I have to take to begin constructing out that pricing sheet?

Serena:Completely. It goes again to your community straight away. After I knew I used to be going to be right here and that I used to be going to begin constructing a enterprise in right here and actively searching for flips in la, I knew straight away it is a completely different market. I’ve solely flipped in Seattle, Tacoma, and Portland. And my final flip, I’d been shifting round a little bit bit, my final flip was over a 12 months in the past. So even the numbers have modified then. So I need to get shut to what’s occurring within the now. I reached out to all of my connections right here in LA and located the those who they’re doing offers, they’re near the development. I imply by that. They’re really invoices, they’re getting estimates, they’re flipping homes, they perceive what the present market prices are. And I really analyzed a pair offers for a pal right here and I mentioned, Hey, can I do a scope of labor and price range for this deal?

Serena:Even for those who don’t purchase it, you thoughts taking a minute and seeking to see what my estimates, are they right? The place am I too excessive? The place am I too low for this market? And he got here again and he gave me nice suggestions. He mentioned, you may most likely get roofing much less right here. Counter tops are going to be extra. And so with all of this, it’s simply getting data, placing it down. After I get my first deal right here LA, I’m going to get as many estimates as doable from contractors straight away. Even when the primary estimate that comes again to me is what I need, I’m going to rent them. I’m nonetheless going to get extra estimates as a result of I’m simply amassing that data to have the ability to perceive what the present market charges are.

Ashley:We are attempting to get to 100,000 subscribers on YouTube, so go to youtube.com/at realestate rookie and be sure to are subscribed to our channel.

Speaker 5:We’re going to take a fast break, however whereas we’re away, are you able to ignite your actual property investing journey? Be part of us at BiggerPockets Momentum 2025. We’re prime trade consultants and buyers come collectively to share sport altering methods and actionable insights. Okay, let’s soar again into it.

Tony:So the community is one piece, getting a number of estimates. Completely. Let’s say that as a result of once more, say you’re in a singular scenario, you have got this community of individuals you may go attain out to, but when there’s a riki who possibly hasn’t constructed that community but they usually need to get these estimates, the place have you ever discovered is one of the best place to go to really supply potential contractors, subcontractors for these completely different

Serena:Yeah, so I’d have a look at networking teams, so occasions you could go to after which I additionally have a look at Fb teams and get tied into these and see for those who can shadow somebody of their challenge. In the event that they’re actively flipping, say, Hey, I need to provide you with worth in the best way, would I be capable of drive your property a few times per week? I’ll provide you with 150 images in an organized method and simply would that provide help to of their enterprise? They usually’re like, certain, somebody checking on my challenge or sending me a report, hey for that would possibly a commerce a time the place might you ship me a few of the invoices from the job there? You don’t even have a property for the go look, however you may really look off of another person’s data. I imply, who’s not going to ship you bill? Hopefully they’re organized sufficient or they’ve a Dropbox hyperlink they will ship you over they usually’re not simply of their emails however off the cuff. I really feel like that’s what I’d do and

Ashley:I believe even for those who simply submit on the BiggerPockets boards, right here’s my scope of labor, right here’s my price range, that is for this market, this neighborhood, does anyone have any suggestions on my pricing? And I believe there could be tons of buyers who spend money on that market that may dive in responding and giving their recommendation as a result of it’s not such as you’re going and asking the investor, are you able to do that estimate for me? Are you able to construct this price range for me? You’ve already gone and finished the work. You’re simply asking for suggestions on it now and it’s really easy. If somebody posted in Buffalo they usually mentioned, I believe this kitchen could be X quantity to rework doing this stuff myself, my contractor all on BiggerPockets might simply simply reply like, oh no, really I believe this might be extra one thing like that too.

Serena:Yeah, I believe additionally counting on Google as nicely, final week after I was going this in AI now, and I’ll not less than provide you with ranges as a result of an investor, you’re going to get higher price, proper? You’re not going to be searching for

Ashley:Excessive finish,

Serena:The excessive finish or the contractor that has the pimped out truck with the wrap and no matter you’re searching for. The unmarked car guys that appeared like type of shady, however I’ve been at the hours of darkness bands, however not less than you may get a spread from there and if that’s all you do, you’re like, Hey, I don’t know anybody but. I haven’t even been to a networking group. I’m simply going to Google every thing. What are the ranges in LA County and begin and simply begin plugging that into the scope of labor and there you’re starting a framework you could at all times change.

Tony:I believe you’d be shocked at how straightforward it’s simply to select up the cellphone and name folks, particularly subs. I really feel like GCs are a little bit bit more durable, however for instance, one of many first flips that we did the place we needed to set up new mini splits, we had by no means finished that earlier than and we simply known as all of the native HVAC firms and mentioned, Hey, right here’s the scale of the property. Give me a ballpark vary on what you suppose it’ll value to put in it. In all probability three to five,000 bucks per mini break up you might want to set up. So okay, cool. Now I’ve acquired a way of what that

Serena:Prices. That actually was what I Googled as a result of in Washington I’ve requested my HVAC man in Washington, however after I’m analyzing this deal final week they usually had this archaic LA heating and Washington heating are completely completely different and we don’t actually put AC in our properties, however clearly in a flip the place our A RV was going to be like 900 plus we would like ac. And I used to be like, I don’t know even bid for this. And so I simply googled it how a lot in LA County does putting in a mini break up they usually have been like 5 to seven Okay and I used to be like, okay, nicely let’s put seven Okay then as a result of the upper quantity simply

Ashley:In

Serena:Case there’s

Ashley:Additionally happening Lowe’s or Residence Depot or no matter, even strolling by the shop, you see the indicators that say get your carpet put in for a greenback 99 per sq. foot too. And that simply provides you a spread or an concept of what it might value is by your {hardware} shops and what they’ve their contractors charged.

Serena:Yeah, I imply the fabric prices are really easy to look

Ashley:At.

Serena:I imply happening Residence Depot and saying, okay, what would the product be that I’d select for this home? Perhaps consider a home the place discover a home on Zillow the place you’re like, this seems to be like type of what a product an A RV submit rehab flip the completed product, proper? Okay. It’s acquired LVP flooring, not the least costly however possibly mid vary. Okay, what’s that on Residence Depot as a flip? That’s what we’re doing. We’re going buying at a Residence Depot. Okay, it’s $2 and 50 cents a sq. foot. Then name up flooring set up firms and say, Hey, what do you cost per sq. foot to put in LVP? They usually’re like, we cost three 50. So simply amassing that data. The opposite factor that I believed concerning the different day is, hey, is there a easy method I might possibly name a couple of electricians and say, how do you create your estimates? Do you go off worth per sq. foot? Do you need to see the home? Do you depend all of the circuit? And simply making an attempt to know higher how they estimate. After which they’re like, oh, by sq. foot. And also you’re like, okay, nicely then might you give me a ballpark vary? If I had all of the drywall eliminated right down to the studs, how a lot wouldn’t it be then sq. foot so that you can set up? They usually’re like, I dunno, $10 sq. foot.

Serena:And I’m like, okay, that’s data. Once more, going again into my framework after which amassing it from there and having that data simply makes you a lot extra assured that you just’re going to know the prices post-purchase while you’re sourcing.

Tony:So masterclass breakdown on begin constructing that pricing sheet for potential work you want finished. However I assume that subsequent step of truly constructing out your scope of labor and your price range, which one comes first? Do you set your price range first after which construct the scope work based mostly on that or do you attempt to say, Hey, what are the comps, what’s the scope after which what price range do I have to get there?

Serena:Yeah, nice query. So I even have my scope of labor and price range collectively on one sheet. I discovered that that works one of the best for our system so we didn’t should do two separate issues. They go hand in hand. And so I’ve a template, I’ve most likely a 400 line objects scope of labor template the place I’d moderately have all of the objects there after which undergo and delete those I don’t want for the challenge than sitting at a clean paper and making a scope of labor. I imply we used to do this to start with and we’d at all times miss sure issues. I can’t inform you what number of instances we missed a dryer vent set up and Charles could be so mad and I’m like, while you make a mistake greater than a few times, three, 4 instances, I imply that ended up costing us cash on the again finish. I used to be like, the dryer vent is within the template. If we don’t want it, we delete it. And so

Tony:That was us with P trapps. We had a property that we had rehabbed and became a short-term rental and we’re like, what’s going on? Why is that this occurring within the restroom? It seems that pea trapps have been in salt, so now each rehab we’d like to verify the peach traps are in there.

Serena:It’s

Tony:Like a joke now with us in our crews. Did you place the peach? Are you certain the peach entice is in there?

Serena:Yeah, and the factor concerning the dryer vans, we sometimes didn’t put laundry machines in our flips. We simply had the hookups out there. However as soon as the dry hire must be put in at Roughin and never on the finish of the property, so we’d find yourself having to interrupt into drywall and in any case, so constructing the scope of labor template, I’d begin from there. Even for those who’re simply getting began is write out something you’d even want. We do it within the order of building. After which

Tony:What do you imply by order of building?

Serena:Order of building? Properly, so really break it out first into three completely different sections. So we’ve got preliminary companies, in order that’s going to be trash out demo. These are the stuff that we will handle to start with earlier than we even plan the remainder of the scope of exercise. We all know that we’re going to want trash out. There’s an RV on web site we have to take away or a automotive boat we have to take away or rekey sewer scope. And so we’ve got these preliminary companies. Then we’ve got our exterior after which we’ve got our inside after which we’ve got our pre-listing, so about 4 completely different, so phases. After which in every of these we’ve got an order of building. So let’s simply begin with exterior. Truly inside might be simpler to clarify. So inside, you have got your demo and you then’re going to be doing all of your framing. Then you have got hvac, your plumbing, then your electrical, then your insulation, then you have got your drywall, after which you have got the remainder of the finishes. In order if a contractor was going to go in and begin doing all of that work, that’s the order of building that they’d do it at in order that method the contractors can type of go in and comply with it. Type of taking place an inventory.

Tony:And I need to ask Ash, do you do yours the identical method in that order of building or how do you type of construct out your scopes? Barely completely different.

Ashley:I am going by room.

Tony:I additionally go room by room.

Ashley:It’s simply simpler for me to understand me and I bodily stroll by each room as to love, okay, I’m within the mud room, right here’s every thing that must be finished. Then I give it to my contractor. Then he places it by commerce,

Tony:By commerce. So I do it the identical method. I am going room by room and I simply level out every thing, however then I tag every factor by the commerce. So I’ll say like, Hey, we have to swap out eight retailers and the outlet covers and I’ll tag {that electrical}, I want six recess lights, I’ll tag {that electrical}, or hey, we have to reframe this room or no matter it might be. However for me simply visually, possibly it’s a lot simpler for me to do it by the room as nicely.

Serena:That does make sense. I imply after I, going by how I’ve set it up the place I’ve my complete checklist when I’m simply going, I’ve acquired it arrange the place I’ve the unit worth for every, after which I’ll simply go in and put portions after which I’ll add it up on the prime after which that’s my projected prices. However after I’m on the plumbing part, I’ve to suppose, okay, what number of bathrooms? And I’m like what number of loos and what number of of that as an alternative of doing it by lavatory, however both method. And that’s so cool to listen to you guys do it in another way. You are able to do works both method. Works both method.

Ashley:We’re going to take yet another brief break after which we’ll be again with Serena. Okay, let’s soar again in.

Tony:So that you’re constructing out your scope of labor and your price range on the identical time, however how do you be certain, as a result of a stability there, proper? As a result of you have got a price range you might want to hit, however you additionally should ensure that your scope of labor is sweet sufficient to get you to the after restore worth that you just’re searching for. So how do you strike that stability between scope and price range to get to the precise RV that you just want?

Serena:Yeah, so it goes again to the comps. I’m what the unique product is. I name it homes, merchandise, flips merchandise, what the unique product seems to be like, after which I have a look at the comps and which are achievable and I determine, okay, what’s that stage of end then that we have to get into? Are we extra high-end? Can we do extra mid-level finishes, decrease finish finishes? After which that may assist me determine what then the scope of labor is. And there’s nonetheless most likely going to be about 80% the place I’m certain of, after which one other 20% the place we’re like give or take is {that a} should have to succeed in our a RV or wish to have, does it assist with saleability promoting it quick or can we depart a pair issues that aren’t so nice and count on it to set a pair extra weeks in the marketplace?

Serena:That’s type of the place simply expertise is available in. However you have got your earlier than product, you have got your after product. What’s going to find out my scope of labor, and that is the place it type of goes again to the deal evaluation and going, Hey, is that this simply going to be a beauty flip the place we might do a full intestine rehab and repair every thing up however these numbers don’t work? Can we make numbers work the place we simply do a beauty flip, {the electrical}’s high quality, it’s not excellent. We are able to repair a pair issues and obtain a much less a RV and the deal, really pencils higher that method. So two completely different choices. We sometimes went to due to our market, we needed to do full renovations, I imply right down to the studs, all new electrical, all new plumbing.

Serena:And so to return to your query is I’ve that scope of labor template, that’s every thing there. I’ll undergo and I’ll write in all of the portions and have that add up and if it finally ends up being much more than what it must, I am going, okay, is there something I can take off right here in my preliminary then? However as soon as it’s good solidified, I’ll delete the entire different line objects that I don’t want from that template. After which there you go. There’s my scope of labor, there’s my price range. The largest factor to start with once we began was our scope of works have been simply bullet factors on a phrase doc. And there’s a lot interpretation there, particularly with contractors. And we discovered one another discovered instances that we’d ship the PDF phrase doc to the contractor, they’d write us an estimate and their estimate could be pages lengthy, particularly if it was a gc.

Serena:I’m speaking a couple of normal contractor right here, pages lengthy they usually’re writing out the entire line objects in their very own verbiage and possibly they’re even not line objects, they’re all bulk collectively. After which through the challenge we’d have all of those sure arguments as a result of I believed drywall repairs went this. They thought the drywall repairs went that. And since it wasn’t clear sufficient in writing, we had two completely different interpretations of repair the identical factor. Then we ended up with these, I don’t need to say arguments, however these turn into stress factors the place he then needs more cash as a result of it has a special expectation after which we’re additionally delaying the job. And so why I created the template is I’ll have, okay for all of drywall then I’ve an outline of drywall repairs. That is stage of end and I’m particular. I deal with it prefer it’s going to be a contract, would this maintain up in court docket?

Serena:And that has labored so nicely and it takes the stress off of my relationship with my contractors. Anytime they’d be confused about one thing on the job, I am going, nicely, what does the scope of labor say? And we’d pull it up and I am going, oh, proper right here it says this and this. They usually’re like, oh, okay, okay, okay, proper. And I’m protected then I’m not getting a change order. I don’t should spend more cash or I’m like, oh, you’re proper. I solely mentioned six of this and there’s seven. And I’m like, nicely, that’s an additional value. I missed it. However there was no battle between us and it’s saved lots of relationships with contractors.

Ashley:So when you’ve constructed that scope of labor, you might be clearly taking your numbers out of it, you’re giving them these line objects after which they take that to construct their estimate that they’re giving again to you. What’s your expectation for an estimate? So that you had talked about, you mentioned you get some which are similar to, right here’s the majority worth. What do you count on again from a contractor and what ought to our rookies be searching for once they’re given an estimate?

Serena:So again within the day, they used to ship us an estimate all in their very own phrases, in their very own format. And one which takes a lot of their time to do, they should, outdoors of truly being on the job and both working bodily themselves or being a superintendent, managing their crew, they should go house and spend late nights away from their household to write down these estimates. And so lots of instances I’d method them and say, Hey, if I simply provide the scope of labor line merchandise, the descriptions fill within the quantity, does that give you the results you want? They’re like, hell yeah. And so I’d actually export my template into an Excel, take away the numbers, what I had, give them into it and I’d label subsequent to ’em, that is what I need you to, I’d put GC subsequent to the entire objects I needed them to estimate, after which they’d come again.

Serena:After which that method once we’re speaking on the cellphone and negotiating or speaking about this line merchandise’s this a lot and that’s that a lot and negotiating, then we’re evaluating apples to apples as an alternative of their interpretation, how they bid it. And that simply labored a lot smoother for us. Then there have been different instances the place I labored with GCs that weren’t good at estimating and truthfully listeners, you can see this, particularly when as a flip and also you’re looking for inexpensive contractors, lots of them won’t be as savvy for estimating. I had one in all my GCs the place he was like, simply inform me what you suppose it’s going to be. He trusted me that I knew the numbers and ultimately you would possibly get there the place it’s like or you’ll get there may be I’d say, Hey, I believe that that is actually cheap for the job. And I’d ship him my numbers. He’d be like, okay, it’s a little bit low on this.

Ashley:I do it lots of leg work.

Serena:A lot time and figuring, particularly if they’re disorganized on their backend too. I name, I believe contractors are extra artists than they’re engineers. And so by giving them some construction to work off of, it’s sometimes not their robust go well with. They actually respect it.

Ashley:What’s go into confrontation?

Tony:Ash’s favourite phrase?

Ashley:How do you deal with that confrontation in addition to avoiding it? I was such an avoider of confrontation

Serena:After which I labored in building for 10 years.

Ashley:So let’s give us a little bit instance or function play of one thing’s going fallacious on the job web site and you need to confront the contractor. What’s a good way to begin this dialog and to have it with them the place it doesn’t really feel such as you’re attacking them or saying they don’t know what they’re doing? Yeah, I’m most likely

Serena:Higher at confrontation with contractors than I most likely am my private relationships. However when say you stroll in and the standard’s not there, I by no means assume something. You by no means know if the GCs already talked concerning the high quality together with his guys, I don’t need to assume that unhealthy intentions, I at all times need to go in with good intentions or assume they’ve one of the best of intentions. So I’ll be curious and search to know. I’ll ask lots of questions and I’ll say, Hey, this seems to be, do you guys have a plan for this? That was most likely what I mentioned not less than 10 instances on the job. Do you guys have a plan for this? They usually’re like, say it was finished and this seems to be actually unhealthy. They’re like, no, it’s good. And I am going, okay, I believe it must be cleaned up a little bit bit. You would possibly want, and so then I’d attempt to be tactful and say, really I used to be pondering of this fashion. And generally relating to interpretation of what one thing appeared not, I can’t actually write that on the contract as a lot as doable. I attempt to connect as many photos as doable in order that method we will paint the identical image in our minds and expectations.

Serena:However sensei, it’s like a distinction in, nicely, I believed you meant this on the scope of labor after which it meant this on the scope of labor. And I’d type of return to my accountability and being like, if I wasn’t clear on that, then I would have to chew the fee or I’m going to say, Hey, I tousled. I ought to have been extra clear. We must always have had a walkthrough collectively and speak about this. You’re saying that that is going to take you additional time and supplies. Can you’re employed with me on this? And sometimes while you’re coming from that viewpoint, they’re a lot prepared to work with you on it they usually’re being like, no, that’s what I meant. You may have recognized that, have a look at it. So yeah,

Ashley:Somewhat little bit of give and take to maintain issues.

Serena:Completely. And going again to I could be such a perfectionist with issues and when it was one in all our increased finish homes, they simply wanted to be excellent they usually understood. I’d be like, it is a home the place the paint must be prime notch. We are able to’t simply depart. It must be excellent. After which they understood that. After which there have been different homes the place decrease to mid vary, much less purchaser expectation. And as I’m going by they usually’re working exhausting and we’re at our second stage of blue tape, I bear in mind, okay, what do the comps actually appear like? Or what are we going to do to realize our A RV? And I’m like, I’d type of look over sure issues like, Hey, subsequent time guys, this actually must be finished higher. And I’d the give and tackle that. I’d undoubtedly say, Hey, sooner or later can we do that? However that is ok for this challenge. And that’s the best way that I’d deal with that.

Tony:What would you say is the error you see lots of rookies make relating to managing the rehab? As a result of lots of shifting items right here, however is there one thing that you just’ve possibly seen constantly from newer flippers as they step into this?

Serena:Yeah, lots of ’em is that they get the keys they usually simply resco straight away they usually don’t do lots of planning on the onset. I believe a part of that cause comes from they don’t know what they need to be planning for. So that they’re like, I’ll simply come, I’ll simply take the sneakers and I can remedy them once they occur.

Ashley:Yeah, I don’t need to

Serena:Waste time. I acquired to get began day one. Yeah, my holding prices, I’m being charged $250 a day or no matter. And right here, and what finally ends up occurring is that I’ve had a shopper about final 12 months that he was like, Hey, I simply purchased my first flip. And I used to be like, nice, let’s speak about it on the primary name. He goes, yeah, I already employed a gc. And I used to be like, I like, nicely, the place’s your scope of labor? He’s like, I don’t have one. And I used to be like, how didn’t you rent a

Tony:GC with out scope, scope of labor?

Serena:And I used to be like, oh no, proper? I renew straight away. I used to be like, okay. And my first thought was hopefully this GC is a extremely good man. And so I used to be like, ship me over his estimate. And I used to be trying by it and I am going, okay, I’m not making an attempt to freak you out right here, however there’s rather a lot as much as interpretation and there’s rather a lot that they’re simply bulking in, okay, we’re going to rework kitchen

Tony:15,

Serena:What does that imply? Okay, what does that imply? I imply what high quality cupboards? Okay, the supplies are included. Properly, I imply is he getting

Ashley:His cupboard? Is there an allowance for the way a lot you may spend to pick your fixtures and cupboards?

Serena:Yeah, precisely.

Serena:Is he really going to a cupboard store and shopping for the right measurement cupboards or is he shopping for them secondhand off Fb market? I imply, what are we doing right here? And so I mentioned, okay, we’re going to want to construct a scope of labor. And I knew at that time he simply went from not so steep hill to a extremely steep hill that you just would possibly have to step up. So I’d say taking that additional time to plan out a scope of labor, have a look at the comps and get as many estimates as doable earlier than leaping in as a result of we have been responsible of it, we type of generally went too quick and we set ourselves up for failure for few tasks for certain.

Tony:What’s that saying? I believe it’s Lincoln or one of many presidents, however in order for you me to cut down a tree, I’ll spend the primary eight hours sharpening my noticed. Similar factor, proper? It’s such as you acquired to be sure to’re happening with a stable sport plan. I do know you talked about earlier that a few of these stuff you’re in a position to do remotely and we simply interviewed Dominique a couple of episodes in the past and he or she had, I dunno, I believe 12 flips happening, however she RVs throughout the nation. So there may be a capability to do that remotely, however how typically do you are feeling that it’s mandatory so that you can really be on the job web site? And as you’re going, I assume, what particular issues are you searching for to verify the issues are shifting on monitor with the job?

Serena:That’s really nice. That really ties into what I needed to make some extent for. The second query is the opposite mistake that I see that’s that they really feel like they should be there each single day and that they turn into rather more reactive. Most of my flipping profession, I spent most likely 5% of the time on the job web site and 95% of the time on the pc and making an attempt to be proactive in planning the subsequent sourcing estimates, possibly strolling the property with the contractors too, however planning, getting the estimates, getting the knowledge down, re-analyzing the comps and being proactive. And so we have been lucky sufficient, it didn’t really feel like a time as a result of we have been driving rather a lot, however all of our flips have been about an hour to an hour and a half away from the place each tarla and I lived. And so we have been like, we’re solely going to go down as soon as per week if we will keep away from it. And in order that made us be extra proactive and begin systemizing and begin successfully speaking with our contractors. So what my course of was to ensure that contractors have been well timed and really displaying up and likewise that the standard management was there. My cadence was I went down as soon as per week to take full photos of the property that was like it doesn’t matter what, whether or not

Ashley:It was additionally you may any individual else to do this

Serena:Or another person go down. And it ended up going into another person that did that and taking full photos of property even when nothing modified. And for legal responsibility causes, if somebody broke in that’s your weekly much more. So you probably have somebody it burned down, image it burned down you what it seems to be like have earlier than for the insurance coverage firm to say, Hey, two days earlier than it appeared like this, the place for those who don’t have photos for 4 weeks, they’re like, nicely, who is aware of what it really appeared

Ashley:Like? Or possibly the final photos you have got the place it demoed in these 4 weeks, a ton of progress occurred, however no

Serena:Documentation.

Ashley:Precisely,

Serena:And also you don’t know what kind of data and movie that you just’re looking for till you really need it. Want it. Oh my gosh. And so there have been instances the place I acquired lazy as a result of all of us do. And I used to be like, oh, okay, it’s the final property out of 10 at present and I’m going by, after which in two weeks I’m like, I wanted that image of that wall two weeks in the past. And I used to be like, dang it. That’s what I get for skipping steps. And so taking full photos, I imply 150 to 200 per week, I did it systematically all in the identical method. I do all the outside first, then I’d go to the entrance door and stroll by the home, not clinic psychotic the place it was like each room the identical method, however not less than that course of helped. So after I was going again to the images folders, I knew that my exterior was going to be to start with within the folder and the again of the home inside was going to be in the direction of the tip of the, so simply saving time.

Tony:Tremendous small detailed query.

Serena:Tremendous.

Tony:Properly, one comply with up really. Have been you taking the images on an iPhone or have been you doing old fashioned digital digital camera

Serena:IPhone, which meant that I’ve 150,000.

Tony:That’s what I used to be asking. For those who’re doing 150 images per week, I simply questioned if possibly a little bit digital digital camera, however

Ashley:Properly, Henry in Washington, he has two telephones in the marketplace and he mentioned all of his work stuff is on that cellphone as a result of he doesn’t need photos of homes combined with the images of his youngsters and is totally separate for that cause.

Serena:Again within the day too, the iPhone photos are so massive that I needed to then resize all of them simply to slot in our Dropbox as a result of then our Dropbox acquired too massive. I imply it was a complete factor, however we understood the significance of it. I just like the second cellphone factor. That’s really, I acquired two

Ashley:Telephones. I used to be like, why don’t you simply get a Google Voice quantity? He’s like, it’s not concerning the cellphone quantity, it’s about all

Serena:The separating. So going again to how do you retain your contractors on time, ensuring they’re displaying up. High quality management, being distant. By the best way, listeners, we used to do 15 flips at a time and in the direction of the tip there are about six to eight greater rehabs at a time. And there instances the place I went to South Africa for a couple of months at a time and had boots on the bottom, however following the identical precise processes. So taking photos each single week. The contractors know you’re going to be there week. I’d by no means inform them after I was going to be there until I’m assembly them particularly for a gathering walkthrough and or twice per week take full photos. I’d do drive stories on the tasks. That was particularly useful after I had crew members driving the properties for me. So who’s engaged on the job, what progress has been finished? Is the home secured if nobody is there, verify all of the home windows, verify all of the doorways, verify that the heating isn’t at 90 levels. That was large. I imply a pair payments we acquired proper? Like cadet heaters, simply loopy. And so doing that, I additionally had, on the scope of labor on the prime, I’d have some procedures for the contractor to conform to. So keys at all times return to the lockbox. The code has by no means modified with out permission or it’s advised to. Heating’s at all times set under 65

Ashley:While you depart. That’s one thing I’ve by no means considered, is creating insurance policies and procedures outdoors of the scope of labor of the way you need the roles web site to run.

Serena:No change in designer finishes until authorized by me or whoever is proving them. What else would we’ve got? Be certain all of the home windows and doorways are locked while you depart. Plenty of these interactions I’m having with contractors, particularly GCs, however even electricians, I’m speaking to the principle man. I’m speaking to the proprietor of the corporate, however he has all of his laborers and employees and that data, not my, so I used to have him posted up on the property as nicely. And so that may assist a stage of protection of being there with out being there. No smoking within the property, no smoking,

Ashley:By no means had that.

Serena:No be in a

Ashley:Water bottle, didn’t have that one as a result of I discovered that rather a lot, even most likely the storage of supplies, ensuring the supplies are locked inside the home, not not noted or that’s the

Serena:Different advantage of having photos was that generally supplies walked off our job web site and with a purpose to determine what day that occurred, I’m trying, going proper again to these photos. And though possibly the property have been sitting for 2 weeks due to some cause, there have been nonetheless photos taken. And so I can see, nicely, they walked off between this date and this date who was on web site. And so the opposite factor is working into contracts, timelines for completions. So subs are a little bit bit simpler relating to that as a result of they’re actually fast out and in. Their set up would possibly take only a day or two they usually’ve acquired a full calendar. They need the cash turnover. So not as a lot an issue with them, however I sometimes ask my gc, Hey Tyler, the Tyler, the Tyler is meant to begin at the present time. Let me know if he doesn’t present up. Okay, didn’t present up. All proper, texting so I can get on it as an alternative of ready a pair days and I present up and I’m like, shoot,

Speaker 4:There’s no

Serena:Tile now I’ve misplaced 4 days. After which so for the GC contracts, we at all times had a, I’d have them, I’d ask them first, when do you suppose your completion date shall be for the scope of labor that we’ve agreed upon? And it goes, I want eight weeks. And so, okay, that’s December twenty first, no matter. And I am going, how about does December eighth work higher for you? Proper, like an additional week or additional two weeks if I believe that they’re a little bit bit too brief. After which in fact they’re going to be like, yeah, really no matter. They at all times want it. And I’d say, okay, you get a bonus of $150 a day for those who full earlier than this date, that’s consists of punch checklist completion, every thing, or you’ll be fined $150 a day. So

Ashley:Subtract

Serena:It, subtract it from the ultimate fee. With that although, you need to preserve monitor for those who delay them for any cause. And in order that solely actually ever turned an insurance coverage to us when a contractor was simply actually going south. And we’ve got determined at that time we’re not going to maneuver ahead with them on a special challenge. No less than we might argue with them that we’re like, we’re solely going to pay you half of the factor as a result of it took an additional 4 weeks to finish and it was unreasonable simply not displaying up. And we solely paid the bonus one or two instances, possibly as soon as, however not less than they understand it’s there and there’s some incentivization, but additionally some

Ashley:Penalty. This has been superior, Serena, thanks a lot. I really like speaking techniques and processes with you as a result of I at all times be taught one thing new that I can implement in my very own rehab challenge. Superior. Thanks a lot for coming and becoming a member of us in particular person. The place can folks discover you and attain out to you?

Serena:Yeah, finest place Instagram at Serena dot Claire. And from there I’ve hyperlink to assets after which ship me a DM and for those who’re doing flips already, I’d like to see him ship me some photos. Yeah,

Ashley:Thanks for having me. Yeah, thanks. Respect it. I’m Ashley. And he’s Tony. And this has been an episode of Actual Property Rookie. We’ll see you guys subsequent time.