Rehab remotely?

Question

Assuming that I engage a general contractor (who was recommended on BP) to do a rehab work on a property (nothing heavy, probably a 10K to 15K rehab work (external and internal painting, flooring, kitchen etc.), being an out of state investor and not being able to monitor his work directly, do you think I should hire someone local as a project manager to supervise the GC's work (that is if I find somebody who can take such a project manager job for 1 or 2 thousand dollars) or can rely on the GC to do his work and may be ask my property manager to check his work a couple time during rehab ( in the middle and after the rehab work)?   This is not a flip, but a buy and hold (and rent) property.  What do you think?

Dawn Anastasi · Answer

@Naga A.

There have been stories of contractors ripping people off from out of state and there have been situations where it has worked really well.  You have a greater chance of it working well if you work with contractors that are licensed versus any yahoo from Craigslist.  It's also a good idea to have someone local in the market work with you, but that person also has to be reputable and honest.

Dawn Anastasi · Answer

Sounds like you got a good deal.

NA NA · Answer

@K. Marie Poe

How did you pay the money to contractor? Do you pay the GC in parts at each complete "small project" Did they send you bill and pic of the work done?

The 15k is inclusive of material and labor cost?

Account Closed · Answer

That was a good deal.  The agents want to work more with me as I've brought them a couple of deals for their investor buyers. The agents "supervise" the rehabs and select the rehab materials, but their GC is really good.  The GC is hired to inspect and figure out what needs to get done in order to make it marketable and FHA/lender ready, and can work several houses at the same time. The GC knows houses. So the agents mostly do what the GC says.

The agents have since changed their their business model. They still buy at the court house steps with investor money.   But now they pay for the rehab out of their own pocket (all labor and materials). They then list the property for a 1% fee to cover their admin costs (they own a brokerage). Then they split the profits with the investor 50/50.  No sure I'd want to split my profit 50/50, but their investors are still going for it.

Naga A. · Answer

@Rachel  H. undefined, @K. Marie Poe undefined, @Dawn Anastasi,

Thank you for your advice.  Sounds like I should hire an agent or somebody to oversee the rehab work to be done by a GC. But, as long as I have somebody local supervising the rehab work, rehab remotely would be doable.  When I posted my question here, I was expected everybody saying "don't do it, you will be ripped off".

Account Closed · Answer

I had a good experience with a remote rehab last year.  Two agents I know specialize in buying properties for investors at trustee's sale. They do all the research and bid at sale, manage the rehab and then list the property.  I already owned the property, so I negotiated a fee for them to supervise the rehab and then they could have the listing.  They charged me $1K for supervising.  They had a GC and his crew most of the work. They had a great subs, especially their HVAC guy. Everyone on their team was very good at problem solving and making things work for the right price.  They would call directly with any concerns.The agents did all the buying/selecting of lighting, plumbing and flooring (with my input). They hired a cleaning crew at the end, and took pictures and listed it.  I had three full priced offers the first weekend, all over asking.  I paid the GC and subs directly.  I gave the agents money for materials upfront and supplemented that when we decided spend more on flooring. Total on that rehab was about $15K

I didn't visit the property during the rehab and only saw it afterwards. They sent me pictures of the materials for me to approve.  It was super easy and super fast.  I think the agents really know their market and really helped me not over improve that property.

Not visiting the property during the work was revelation.  I loved it.

Rachel H. · Answer

It depends on your comfort level. You may want to look into hiring a reliable and competent property manager to oversee the work and keep you updated. If it's a "buy and hold," you may want to retain one for the future. It's best to start creating strong relationships early. Hope that helps!

Rehab remotely?

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