Wanna Be considered a Successful Rehabber? Follow This Recipe … From Paul Angelino, The Fix & Flip BOSS … I’m Italian, so there’s almost nothing more essential to me and my friends than the usual massive pot of “Sunday Gravy,” or spaghetti with meat sauce as you non-Paisan’s call it. When its my turn to cook for the family members, I fully understand there’s a process. From pulling out the perfect pots, to adding just the perfect amount of bread crumbs to the meatballs, to locating the very greatest ingredients, to carefully turning (never stirring) the sauce precisely as it slowly simmers. Its a time-tested recipe that I’ve been trained to follow. And like my 92year-old Sicilian Nanna, I For no reason deviate from the plan. Get this: it’s the same with rehabbing houses.
Fortunately there is a rehab recipe that you will need to follow if you want to be a successful fix-n-flipper. I’m shocked at the variety of real estate rehabbers, and even more shocked by the quantity of contractors, who don’t recognize the absolute critical significance of what you’re going to learn. I may well have saved so a great deal time and cash if I’d known this “rehab recipe” when I very first started – so learn now from my mistakes. Men and women have paid me a large amount to learn this 1 skill, and there’s a lot of meat here, so I’m planning to break it down for you personally into a few posts. The “Rehabbing For Success” Formula…Steps 1 Through 3 You just walked out of settlement; your palms all sweaty from signing a lot of papers, your heart pounding somewhat faster as you have just spent more cash in Forty-five minutes than you’ve spent in a long time. You’re justifiably nervous, but you have big hopes for starting immediately and getting the rehab done quickly so you can collect that fat payday. Well, where do you really start? Here, my pals is your recipe guaranteed success: STEP 1. Permits: You will have to have a building permit in almost virtually every town in the united states to do even the smallest amount of improvements on any house. I’m always asked, “Should I have permits?” The truth is; “YUP! Always!” Regardless of whether you plan to just do cosmetics including new kitchen showcases or even just a small bath…all you need is one angry neighbor to drop a dime, and BAM….you’ve got a big red STOP WORK ORDER (SWO) plastered to your front door. That SWO usually comes with a pretty hefty fine too! Have your existing contractor pull a building permit, and ensure that your mechanical contractors pull their permits as well. Step Two. Demolition: On the afternoon of closing, the the very first thing I do (just after buying the permit) is head over to Home Depot. I make a bee-line towards spray-paint department. I pick up Several cans of bright fluorescent orange spray paint, then as I’m driving back to the crappy house, I call my dumpster guy. I like to be sure the dumpster will be delivered either the day of the settlement or the morning after. Then, with paint in hand, I have an old fashioned tagging party. Go through each room marking every unwanted item; floors, carpet, walls to be removed, cabinets, lighting fixtures, plumbing fixtures, and exterior items like shudders, doors, windows, and even tree limbs. Just mark everything you want demoed with the orange spray paint. I don’t like to be in the house when demolition and dust is flying – so the spray painted items coupled with a easy walk-through with my demo guy prior to the hammers start swinging are more than enough description for his crew to do their job perfectly. The Third Step. Framing: Before you pay your demo crew, be sure that your framing contractor has already a possiblity to inspect the demo. Framing guys will not be cheap, so the last thing you want is for them to have to remove walls that should have been removed by your lower-cost demo crew. During that inspection, your prospective framing contractor should also be tasked with writing up a full material list including all wood, plywood, nails, etc. Take that list to your local building supply store and have them construct a material quote for you. Rehab tip: You’ll save money if you buy the materials and have them shipped directly to the jobsite, rather than paying contractor to do it for you. Now that you have the material quote from your local Home Depot, Lowe’s or Menards…you effectively have solved a Important section of the negotiation puzzle. If you intend to get several bids for the work, ask each contractor to bid the entire job, including the materials. Then, when you receive all the quotes – ask each contractor to remove materials from his number. Tell him, you want him to quote labor only. Now you’ve got ’em! The quotes you receive may vary significantly, but the negotiation is now MUCH easier because you already KNOW precisely what the materials cost. When each contractor returns with his labor number, your negotiation will go just like this… (The following is probably the key to this post….so take notes…) “ You: “Thanks for quoting the job…let me ask you a few questions. First, how much time do you think the job normally takes? Exactly how many days?” Contractor: “We will be done in 3 days.” You: “Wow, are you sure…just three days? I want you to be fast, but I really need to be sure if you say three days, you really mean three days.” Contractor: “Yeah, it’s not that much work. Me and my helper can finish the job, for sure in 3 days.” You: “Oh, so its you and a helper? Just the two of you?” Contractor: “Yup….that’s all we need.” You: “Well I want to give you the job and I see here that your quote is $2500. I’ve got lower bids from other guys, and I want to give you what you’re worth, but I have to ask, is $2500 your best price, because you don’t have to go to Home Depot, and you don’t have to buy materials….all you have to do is show up and everything will be here for you. $830 bucks a day seems like a lot of money, doesn’t it? Are you sure that’s your best price? You said, Mr. Contractor that, “Its not that much work.” Contractor: “Well, $2500 could be a little high. I could decrease a little.” You: “Look, I don’t wish to tell you what to pay your guys, but I’m going to guess that you pay your helper $20 per hour. Is that right?” Contractor: “Yeah…that’s pretty close.” You: “Well as I see it, that would be $160 bucks per day assuming you guys work 8 full hours. How about you, I bet you like to get paid $40 per hour.” (Most are lucky to get $25/hour.) Contractor: “That’s right. Nothing less than $40 per hour!” You: “Well, I tell ya what…I’ll pay you $45 per hour! That’s $360 per day.” Contractor: “Great!” You: “Ok, so let’s see that quote again. You said, three days…for sure! I’ll pay you $1560 for the job. Get it done in three days, and I’ll be here with a check.” ” Then shut up….and wait for your contractor to speak. 99 times out of 100 you will win the conversation! I’m just getting’ started here. Stay tuned for my next post where I’ll go through more steps of the rehab recipe!