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Rehabbers: Do you create an owners manual for the homebuyer?

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David Robertson

Rehabber from Kansas City, Missouri

Mar 01 '12, 08:53 AM
1 vote


I work in commercial construction and typically an owner will request an owners manual with a list of product installations and their associated warranties.

I think it would be a great marketing strategy for rehabbers to create an owners manual that gives product descriptions of every new and updated items/equipment in the home with their warranties.

I think some homebuyers are wary about buying a rehabbed home, simply because they do not know if the project was done right. The manual could have a copy of the building permits pulled, photos of construction in progress and cut sheets of construction assemblies/standards used during the project.

For example, if a bathroom was remodeled, take pictures of the waterproofing membrane, provide product specifications, maybe even provide a mockup for the homeowner, so they know that everything was done right and by the book.

This will reassure a homeowner that you didn't just slap some lipstick on a pig to sell it to the first sucker.

I think this is a good business practice for any rehabber/remodeler who is remodeling per code and using best construction practices.

If you are doing things right show it off!

Let me know your thoughts.

Thanks.



Steve Babiak

Real Estate Investor from Audubon, Pennsylvania

Mar 01 '12, 09:27 AM
2 votes


I have done the "owners manual" thing with flips, and I do it with my rentals. I include manuals for anything that is in the house (heating system, thermostat, appliances, etc). I include some info on basic lawn care, and the utility companies. All inside a 3-ring binder. I'm thinking of moving to all electronic PDFs, but the size of the scanned stuff can get pretty large - and the hard copy is useful anywhere in the house, not just wherever a computer is.

I don't go to the extreme of photographing every step in the contruction process. I just give the "finished product" that extra bit of "finish" with a manual intended to be helpful.

Now, if there is something like mold remediation that was done, you might want to include warranties for that sort of thing since your seller's disclosure will likely have a line explicitly mentioning this sort of repair. But I think if you give them too much, it could also make them ask questions for things where maybe you didn't touch anything - "why aren't you showing pictures of what's behind every wall" type of stuff.



Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


Chris Calabrese

Rehabber from Mt. Pleasant, South Carolina

Mar 01 '12, 09:30 AM
3 votes


We try to give them as much information as we can, such as all warranty information and manuals, contact information for key subs who provide labor warranties (i.e. roofers), pest control/termite bond info, etc. We also make sure to leave touch-up paint with the colors labeled. I also try to leave some small samples tile and wood flooring, with the brand written on the back, so they can take them to match paint, furniture, etc.

We also like to walk-thru our rehabs with the buyers after doing inspection repairs and explain various features, much like the new homebuilders do. It is comforting, especially to anxious first-time buyers, to meet us and see that we are professional and thorough, and not just the stereotypical greedy investors.



Jim S

Real Estate Investor from Virginia, DC &, Maryland

Mar 01 '12, 12:04 PM


My only concern is if you are ever sued by the homebuyer...you have given them potential ammunition. I doubt most of us pull electrical permits to move or add a switch, etc.
Just a thought.



David Robertson

Rehabber from Kansas City, Missouri

Mar 02 '12, 07:31 AM


We try to give them as much information as we can, such as all warranty information and manuals, contact information for key subs who provide labor warranties (i.e. roofers), pest control/termite bond info, etc. We also make sure to leave touch-up paint with the colors labeled. I also try to leave some small samples tile and wood flooring, with the brand written on the back, so they can take them to match paint, furniture, etc.

Chris,

That's a great idea to leave attic stock for materials used on the project, such as carpets, floor tiling and paint in case they need it.

We also like to walk-thru our rehabs with the buyers after doing inspection repairs and explain various features, much like the new homebuilders do.

Do you host an open house and walk-through the property with them?



George P.

Real Estate Investor from Livonia, Michigan

Mar 02 '12, 08:22 AM


i am not into flipping, but even if i was, i'd still think that what you are doing is a major overkill.

most people are cluless when it comes to anything that they can't see. what the TV shows on HGTV and you will see. the only thing they mention is what they hear on tv - granite, paint color, stainless, and travertine.

you think they will know the difference between schluter kerdi/4mm plastic or hardibacker? i am not a betting man, but i would put money down.

most people are lazy and clueless. they see the color of the paint and they buy the house (if rooms size and location is right). it's really this simple.

overkill, imho.



Will Barnard Moderator Donor

Real Estate Investor from Santa Clarita, California

Mar 05 '12, 01:51 PM
2 votes


I also think this is overkill and do not do it. I also agree that you open yourself up to providing the other party ammo to sue you if anything goes wrong. This is what all the disclosure forms are for.

I do provide the buyer with any kitchen appliance manuals and warranties, as I always put new in, but that is about it. I also provide the brand and clor code for all paints used (plus some touch up will be left in garage for them) and also (when i have them) leave some tile, stone, carpet overs for samples and minor repairs.

While I have confidence in my crew's ability to perform quality work and quality materials, one must realize that with government intervention, it makes our jobs difficult at best. One may consider that code in an area may require a permit for something as simple as changing out a toilet, yet a rehabber can't possibly turn a profit if they pulled a permit for every single little item needed.
With regard to adding square footage, changing configurations, etc, I would always recommend it be done with full permits, but on other items, I would not make the same recommendation even though it may be code.



Medium_be_logoWill Barnard, Barnard Enterprises, Inc.
E-Mail: [email protected]
Website: http://www.barnardenterprises.com
http://www.InvestorExperts.com


J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Mar 05 '12, 06:22 PM
3 votes


I don't give "owners manuals," but if it's a property where I did a full remodel, I'll hand my business card to the buyer at the closing table and tell him/her to call me if they have any issues.

If there are (reasonable) issues, I'll happily have my guys fix the problem for free, as there shouldn't be any problems on a newly renovated property.



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


David Robertson

Rehabber from Kansas City, Missouri

Mar 05 '12, 10:04 PM
1 vote


Good input, I'm not sure if I understand the ammo to sue comments if you disclose too much...You only provide the homeowner ammo if things were not properly installed or not per code in the first place...

If anything if you show proof that you pulled permits for reasonable items and show evidence that you remodeled to current building standards and practices, that should be enough to limit your legal liability. Honestly, the best way to limit your legal liability is to do everything correctly and show a good faith effort that you did everything per code.

Building permits don't kill deals, and if you included the costs in your remodeling budget, it's just another cost of work item.

Personally, if I walked through a flipped house and knew that permits weren't pulled, and had no proof that everything was installed per code, I wouldn't buy it...

Jscott, I think that is a good idea to leave a business card. It's a good way to show the homeowner that you care and will be accountable for any reasonable issues that arise. If there ever are any issues, correcting them could be costly upfront, but not correcting them could cost you your reputation.



David Wedemire

Real Estate Investor from Bellingham, Washington

Mar 06 '12, 06:18 AM


On a couple of occasions, the new owner has had me do a walk through when they first move in. I like the owner's manual idea. That way they have details of the work done.



Luis A.

Real Estate Investor from Atlanta, Georgia

Mar 06 '12, 06:57 AM


David, I think this is a good idea as I have seen many would-be buyers hesitant to buy a home that was once a foreclosure and has been rehabbed. There is always the stigma that the investor is "trying to cover up something".

However I do share others hesitation that it could also be used against you.

Originally posted by David Robertson:
Good input, I'm not sure if I understand the ammo to sue comments if you disclose too much...You only provide the homeowner ammo if things were not properly installed or not per code in the first place...

Not true. Basically if the homeowner is a jerk or an idiot or both and gets it in his head that when something goes wrong with the house it is somehow your fault. On the other hand you can control this with being selective about what you put in the book. I am not sure if pictures of the before and during might be appropriate but warranties and contacts for contractors might be. Paint and carpet color codes, floor types, tile origin etc. might all be a good idea.



Will Barnard Moderator Donor

Real Estate Investor from Santa Clarita, California

Mar 06 '12, 08:33 AM


Personally, if I walked through a flipped house and knew that permits weren't pulled, and had no proof that everything was installed per code, I wouldn't buy it...
That is coming from an investor's point of view, remember, it is retail buyers who we sell to, not investors and they usually do not have that perspective.
My point was that there are many items that all rehabbers do in rehab homes that technically would require permits, but they are simple things and most rehabbers simply don't bother with the city on these items. By providing before and fater pictures and full details of each item fixed, you would have to have permits pulled for all those items (at least in some cities - including mine)



Medium_be_logoWill Barnard, Barnard Enterprises, Inc.
E-Mail: [email protected]
Website: http://www.barnardenterprises.com
http://www.InvestorExperts.com


David Robertson

Rehabber from Kansas City, Missouri

Mar 06 '12, 08:55 AM


That is coming from an investor's point of view, remember, it is retail buyers who we sell to, not investors and they usually do not have that perspective.
My point was that there are many items that all rehabbers do in rehab homes that technically would require permits, but they are simple things and most rehabbers simply don't bother with the city on these items. By providing before and fater pictures and full details of each item fixed, you would have to have permits pulled for all those items (at least in some cities - including mine)

I agree, the before and after photos is probably overkill and may lead an owner to have more questions than answers. Also, seeing a before photo of the home in complete disarray could also be a major turn-off to potential homebuyers.

As far as permits, it's obviously not practical to pull permits on cosmetic upgrades including installing new air registers, plumbing fixtures, light switches/fixtures, etc, but any major MEP upgrades, additions or structural upgrades permits should be pulled, and I think obtaining permits can be a good selling point to lend your renovation credibility.



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Mar 06 '12, 11:48 AM


As someone who probably puts more about my rehabs out there than almost anyone (including pictures, budgets, detailed profit data, etc), I can attest to the fact that providing too much information to a potential home-buyer *can* be a bad thing.

It's only happened a couple times, but I've had buyers who have come across my blog, have seen the before pictures and the rehab budgets and have gotten very concerned because they had no idea that *THEIR HOUSE* was ever in such poor condition -- buyers don't like to think they are living in a house that once had mold, termite damage, etc. I *think* I've lost one potential buyer in the past 4 years because of this.

Now, I've decided that the benefit of having my blog outweighs the risk of scaring buyers, but if I didn't have my blog, I almost certainly wouldn't be sharing BEFORE pictures or intimate rehab details. I don't care if they know, but my guess is that most buyers would prefer not to know.

Of course, just my $.02...and not being a typical buyer, my perception could be off...



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Will Barnard Moderator Donor

Real Estate Investor from Santa Clarita, California

Mar 06 '12, 12:16 PM


As far as permits, it's obviously not practical to pull permits on cosmetic upgrades including installing new air registers, plumbing fixtures, light switches/fixtures, etc, but any major MEP upgrades, additions or structural upgrades permits should be pulled, and I think obtaining permits can be a good selling point to lend your renovation credibility.
We are in agreement here. As i stated, major additions or re-configurations should always be done with permits, not only because you are required to, but getting it on title adds value to the home which is your goal. Not doing such remodles with permits hurts your end value.

@J Scott - I think your perception and concerns are valid, yet your benefits of the blog are worth having. Perhaps not displaying addresses to photos on your blog would help "hide" the new buyer's home . . .?



Medium_be_logoWill Barnard, Barnard Enterprises, Inc.
E-Mail: [email protected]
Website: http://www.barnardenterprises.com
http://www.InvestorExperts.com


J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Mar 06 '12, 12:37 PM


Originally posted by Will Barnard:

J Scott - I think your perception and concerns are valid, yet your benefits of the blog are worth having. Perhaps not displaying addresses to photos on your blog would help "hide" the new buyer's home . . .?

We never put addresses on our blog. But, if a buyer sees our company name on our For Sale sign (or somewhere else) and Google's it, they'll find my blog. From there, if they look at the House Pictures, they can easily figure out which house they're buying and then read all about it.

It's only happened a couple times, so it's not too concerning, and I have a feeling a lot of buyers wouldn't be bothered by knowing anyway. But, there are always a few...



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Luis A.

Real Estate Investor from Atlanta, Georgia

Mar 06 '12, 02:12 PM


I don't know if you guys have considered the possibility of someone intentionally looking for some kind of ammo to use against you to bring up a lawsuit. Not because there is anything wrong with the house but because they smell money...



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Mar 06 '12, 02:24 PM


Originally posted by Luis A.:
I don't know if you guys have considered the possibility of someone intentionally looking for some kind of ammo to use against you to bring up a lawsuit. Not because there is anything wrong with the house but because they smell money...

Anyone can sue anyone for anything, but they actually have to prove you did something fraudulent, negligent or otherwise illegal to win. So, as long as you don't do anything fraudulent, negligent or otherwise illegal, i wouldn't worry too much... :)



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


James Vermillion Donor

Real Estate Investor from Lexington, Kentucky

Mar 06 '12, 02:38 PM
1 vote


Originally posted by J Scott:
Originally posted by Luis A.:
I don't know if you guys have considered the possibility of someone intentionally looking for some kind of ammo to use against you to bring up a lawsuit. Not because there is anything wrong with the house but because they smell money...

Anyone can sue anyone for anything, but they actually have to prove you did something fraudulent, negligent or otherwise illegal to win. So, as long as you don't do anything fraudulent, negligent or otherwise illegal, i wouldn't worry too much... :)

In a way being very public could help in certain cases. It will show that you are not trying to hide anything and highlight your reputation and previous business dealings. The potential of someone using that as ammo in a lawsuit is far less than the potential benefits.



Medium_kvJames Vermillion, K&V Investing
E-Mail: [email protected]
Website: http://www.kandvinvesting.com
Invested in the Bluegrass!


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